-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, qDp3nnfC8S5bTG4GTHbgZK1qRhpuNohhzsu2ZnkbHOCqoKPZEmrXdaFjlY83h1q+ SyJagxlGuAOcpSdKphkqqQ== 0000950130-94-001202.txt : 19940817 0000950130-94-001202.hdr.sgml : 19940817 ACCESSION NUMBER: 0000950130-94-001202 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19940801 FILED AS OF DATE: 19940812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TAMBRANDS INC CENTRAL INDEX KEY: 0000096277 STANDARD INDUSTRIAL CLASSIFICATION: 2670 IRS NUMBER: 131366500 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08714 FILM NUMBER: 94543414 BUSINESS ADDRESS: STREET 1: 777 WESTCHESTER AVE CITY: WHITE PLAINS STATE: NY ZIP: 10604 BUSINESS PHONE: 9146966000 FORMER COMPANY: FORMER CONFORMED NAME: TAMPAX INC DATE OF NAME CHANGE: 19840502 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------------------------- FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-8714 TAMBRANDS INC. ----------------- (Exact name of registrant as specified in its charter) Delaware 13-1366500 -------- ---------- (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 777 Westchester Avenue, White Plains, New York 10604 - - ---------------------------------------------- ----- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (914) 696-6000 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No _____. ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common Stock, par value $.25 per share: 36,623,772 shares as of July 29, 1994 Index to Exhibits is set forth at page 10. PART I - FINANCIAL INFORMATION Item 1. Financial Statements TAMBRANDS INC. AND SUBSIDIARIES Consolidated Statements of Earnings and Retained Earnings Three and Six Months Ended June 30, 1994 and 1993 (in thousands, except per share amounts) (Unaudited)
Three Months Ended June 30 Six Months Ended June 30 --------------------------- --------------------------- 1994 1993 1994 1993 -------- -------- -------- -------- Net sales $165,624 $149,041 $304,797 $303,389 Cost of products sold 52,590 48,096 96,511 97,314 -------- -------- -------- -------- Gross profit 113,034 100,945 208,286 206,075 Selling, administrative and general expenses: Marketing, selling and distribution 65,251 56,434 109,573 96,811 Administrative and general 13,557 17,091 27,572 31,402 Restructuring and other charges - 30,042 - 30,042 -------- -------- -------- -------- 78,808 103,567 137,145 158,255 -------- -------- -------- -------- Operating income (loss) 34,226 (2,622) 71,141 47,820 Interest, net and other (2,468) (618) (4,392) 38 -------- -------- -------- -------- Earnings (loss) before provision for income taxes and cumulative effect of accounting change 31,758 (3,240) 66,749 47,858 Provision for income taxes 11,751 147 24,698 19,054 -------- -------- -------- -------- Earnings (loss) before cumulative effect of accounting change 20,007 (3,387) 42,051 28,804 Cumulative effect of accounting change - - - (10,252) -------- -------- -------- -------- Net earnings (loss) 20,007 (3,387) 42,051 18,552 Retained earnings at beginning of period 437,112 440,264 430,822 433,851 -------- -------- -------- -------- 457,119 436,877 472,873 452,403 -------- -------- -------- -------- Dividends 15,375 14,531 31,184 29,424 Net issuance of treasury stock 352 953 297 1,586 -------- -------- -------- -------- 15,727 15,484 31,481 31,010 -------- -------- -------- -------- Retained earnings at end of period $441,392 $421,393 $441,392 $421,393 ======== ======== ======== ======== Per share: Earnings (loss) before cumulative effect of accounting change $0.54 ($0.09) $1.13 $0.74 Cumulative effect of accounting change - - - (0.26) -------- -------- -------- -------- Net earnings (loss) $0.54 ($0.09) $1.13 $0.48 ======== ======== ======== ======== Dividends per share $0.42 $0.38 $0.84 $0.76 ======== ======== ======== ======== Average number of shares outstanding 36,781 38,534 37,284 38,810
See accompanying notes to consolidated financial statements on page 5. -2- TAMBRANDS INC. AND SUBSIDIARIES Consolidated Balance Sheets June 30, 1994 and December 31, 1993 (in thousands)
1994 ASSETS (Unaudited) 1993 - - ------ ----------- --------- Current Assets: Cash and cash equivalents $15,208 $15,298 Marketable securities - 639 Accounts receivable, less allowance for doubtful accounts of $1,500 in 1994 and $1,453 in 1993 92,573 75,592 Inventories: Raw materials 9,728 10,140 Finished goods 31,468 27,860 ---------- --------- 41,196 38,000 Deferred taxes on income 20,427 20,427 Prepaid expenses and other current assets 22,055 23,806 ---------- --------- Total Current Assets 191,459 173,762 Property, Plant and Equipment 294,060 275,349 Less accumulated depreciation (103,299) (94,953) ---------- --------- 190,761 180,396 Brands, Trademarks, Patents and Other Intangibles, Net 7,571 8,240 ---------- --------- Total Assets $389,791 $362,398 ========== ========= LIABILITIES AND SHAREHOLDERS' EQUITY - - ------------------------------------ Current Liabilities: Short-term borrowings $94,850 $64,368 Accounts payable 27,519 25,793 Accrued expenses 91,011 81,083 Taxes on income 22,213 15,137 ---------- --------- Total Current Liabilities 235,593 186,381 Medium-Term Notes Payable 59,979 30,000 Deferred Taxes on Income 17,494 17,119 Other Liabilities 13,868 13,873 ---------- --------- Total Liabilities 326,934 247,373 Shareholders' Equity: Common Stock 10,887 10,887 Retained earnings 441,392 430,822 Cumulative foreign currency translation adjustment (15,628) (20,659) Treasury stock (371,419) (303,948) Unamortized value of restricted stock and pension costs (2,375) (2,077) ---------- --------- Total Shareholders' Equity 62,857 115,025 ---------- --------- Total Liabilities and Shareholders' Equity $389,791 $362,398 ========== =========
See accompanying notes to consolidated financial statements on page 5. -3- TAMBRANDS INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows Six Months Ended June 30, 1994 and 1993 (in thousands) (Unaudited)
1994 1993 -------- -------- Cash Flows from Operating Activities: Net earnings $42,051 $18,552 Adjustments to reconcile Net earnings to Net Cash Provided by Operating Activities: Depreciation and amortization 11,424 9,185 Deferred income taxes 65 (57) Cumulative effect of accounting change - 10,252 Restructuring and other (6,301) 26,201 Change in: Accounts receivable (14,656) (2,311) Inventories (2,007) (6,205) Prepaid expenses and other current assets 2,487 (550) Taxes on income 6,874 (10,329) Accounts payable and accrued expenses 14,144 1,274 -------- -------- Net Cash Provided by Operating Activities 54,081 46,012 -------- -------- Cash Flows from Investing Activities: Capital expenditures (18,866) (25,212) Proceeds from sales of property, plant and equipment 1,750 1,163 Proceeds from sales of marketable securities 639 334 -------- -------- Net Cash Used in Investing Activities (16,477) (23,715) -------- -------- Cash Flows from Financing Activities: Payment of dividends (31,184) (29,424) Purchase of shares for treasury (68,458) (48,719) Short-term debt changes 30,482 35,917 Issuance of Medium-Term Notes 29,979 - Proceeds from exercise of stock options and other 961 4,371 -------- -------- Net Cash Used in Financing Activities (38,220) (37,855) -------- -------- Effect of Exchange Rate Changes on Cash 526 615 -------- -------- Net Decrease in Cash and Cash Equivalents (90) (14,943) Cash and Cash Equivalents at Beginning of Period 15,298 21,987 -------- -------- Cash and Cash Equivalents at End of Period $15,208 $7,044 ======== ========
See accompanying notes to consolidated financial statements on page 5. -4- Notes to Consolidated Financial Statements - - ------------------------------------------ 1. The financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of the information contained therein, and are subject to audit and adjustment at the end of the fiscal year, with the exception of the Consolidated Balance Sheet at December 31, 1993, which has been derived from the audited financial statements at that date. 2. The 1993 Statements of Earnings and Retained Earnings and Statement of Cash Flows have been restated to reflect the cumulative effect of the adoption of Statement of Financial Accounting Standards (SFAS) No. 112, "Employers' Accounting for Postemployment Benefits," effective January 1, 1993. Item 2. Management's Discussion and Analysis of Financial Condition and - - ------- --------------------------------------------------------------- Results of Operations --------------------- Results of Operations - - --------------------- Second-quarter Net sales increased 11.1% compared with the same period of the prior year. The increase was primarily due to higher unit sales in the United States driven by the stabilization of retail trade inventories after significant reductions in recent quarters, particularly in the second quarter of 1993. For the six months ended June 30, Net sales were up .5% from the first six months of the prior year. Sales volume increases in the United States, Russia, Ukraine and China were somewhat offset by shipment declines in Europe, principally due to the continuing competitive environment. Additionally, sales volume gains were mitigated somewhat by foreign exchange translations. Gross profit as a percent of Net sales was 68.2% and 68.3% for the second quarter and six months of 1994 versus 67.7% and 67.9% for the corresponding periods of 1993. Current-year results reflect increased volume, the Company's continued support of its worldwide manufacturing efficiency programs and capital expenditures for productivity improvements. Marketing, selling and distribution expenses were up 15.6% and 13.2% for the second quarter and six months of 1994, respectively, compared with the prior year. The higher spending was the result of increased advertising and promotions principally in the United States in support of the TAMPAX tampon franchise. For the second quarter and first six months of 1994, the tampon category in the United States grew, supported by the Company's advertising campaign. However, the Company's market share continued to be below both the six-month and second-quarter periods of last year due primarily to heavy promotional activity of competitors. -5- Exclusive of 1993 Restructuring and other charges, Operating income for the second quarter increased from 1993 by 24.8%, but for the six months ended June 30 decreased from 1993 by 8.6%. The second-quarter increase in Operating income was principally attributable to higher sales combined with the effect of overhead reduction programs, partially offset by the increased brand support discussed above. Operating income for the six-month period was below the comparable period of the prior year due primarily to higher marketing expenses as the Company continues to invest in the core tampon business. Interest, net and other reflected a significant increase in expense for the second quarter and six months over the same periods of the prior year. Foreign exchange transactions resulted in costs in the current year versus gains in 1993. Additionally, interest expense was higher as a result of an increase in the Company's debt level and higher average interest rates. The six months' effective tax rate was 37% compared with 39.8% for the same period in 1993. The higher effective tax rate in 1993 was due to the Restructuring and other charges, the cost of which was not fully deductible for tax purposes. Earnings per share for the six months ended June 30, 1994 were $1.13 in comparison to $.74 in the same period of last year, giving effect to the Restructuring and other charges but before the cumulative effect of the adoption of SFAS No. 112. Including the cumulative effect of the accounting change, second-quarter 1993 Earnings per share were $.48. The increase in Earnings per share was greater than that of Net earnings because fewer shares were outstanding on average due to the Company's share repurchase program. Outlook - - ------- The Company believes that the trend by retailers and distributors to reduce inventories and the related adverse impact on shipments will continue in future periods. However, the rate of inventory reduction in future periods is expected to be less than the rate of reduction previously experienced and therefore shipments are expected to more closely match retail sales. Management expects that highly competitive conditions will continue, including higher levels of promotional activities and new product introductions by competitors and continued activity in the private label tampon sector. The Company intends to continue the increased advertising and promotional activities in the United States and Europe to provide support for the TAMPAX tampon franchise. In 1994, such expenditures will substantially exceed 1993 spending levels. In addition, new product introductions are planned by the Company for the second half of 1994 in both the United States and Europe. -6- Financial Condition - - ------------------- At June 30, 1994, there was a working capital deficit of $44.1 million compared with a deficit of $12.6 million at December 31, 1993. The net reduction in working capital primarily reflects increased short-term borrowings utilized for the Company's share repurchase program. Additionally, higher accounts receivable balances on strong sales in the current period were partially offset by increased brand support accruals, driven by heavy advertising and promotional activity. Cash flows from operating activities for the six months of 1994 were $54.1 million versus $46.0 million in the prior year, reflecting an improvement in operating working capital management. Capital expenditures of $18.9 million relate primarily to the Company's continued investment in equipment to improve productivity and reduce costs. The Company anticipates that its future cash requirements will continue to be met by its cash flows from operations and the ability to borrow from a variety of sources. At June 30, 1994, total Shareholders' equity was $62.9 million compared with $115.0 million at December 31, 1993. The net increase in Retained earnings of $10.6 million was offset by $69.4 million related to the acquisition of Common Stock under the share repurchase program. -7- PART II - OTHER INFORMATION --------------------------- Item 1. Legal Proceedings - - ------- ----------------- The Company or a subsidiary is a defendant in a small number of pending product liability lawsuits based on allegations that toxic shock syndrome ("TSS") was contracted through the use of tampons. One TSS lawsuit, served on the Company in July 1994, purports to be a class action on behalf of all women who have contracted TSS through the use of tampons. The Company does not believe that class certification is warranted, and intends to vigorously contest any motion for class certification filed by the plaintiffs, as well as the allegations contained in the plaintiffs' complaint. A small number of pre-suit claims involving similar TSS allegations have also been asserted. The damages alleged vary from case to case and often include claims for punitive damages. The Company and certain of its present and former officers have been named as defendants in certain shareholder lawsuits that have been filed in the United States District Court for the Southern District of New York and that have been consolidated under the caption In Re Tambrands Inc. Securities Litigation. The ------------------------------------------ consolidated lawsuit purports to be a federal securities fraud class action on behalf of all purchasers of the Company's common stock during the period December 14, 1992 through June 2, 1993. The complaint alleges that the Company's disclosures during the alleged class period contained material misstatements and omissions concerning its anticipated future earnings. The complaint seeks an unspecified amount of damages on behalf of the purported class. The Company is a nominal defendant in three purported shareholder derivative lawsuits that have been filed in the Supreme Court of the State of New York for Westchester County and that have been consolidated into a single action. Named collectively in the consolidated complaint as individual defendants are the Company's directors (and certain of its former directors) and two of its former officers. The complaint alleges that the officer-defendants exposed the Company to liability in the purported shareholder class action described in the preceding paragraph and misappropriated corporate opportunities by trading in the Company's stock on the basis of nonpublic information. One of the former officers is also alleged to have received improper reimbursements from the Company for alleged personal expenses. The director-defendants are alleged to have acquiesced in the aforesaid alleged violations. The complaint seeks to recover on behalf of the Company an unspecified amount of damages from the individual defendants. No relief is sought against the Company. The Company is involved in certain other legal proceedings incidental to the normal conduct of its business. -8- While it is not feasible to predict the outcome of these legal proceedings and claims with certainty, management is of the belief that any ultimate liabilities for damages either are covered by insurance, are provided for in the Company's financial statements or, to the extent not so covered or provided for, should not individually or in the aggregate have a material adverse effect on the Company's financial position. Item 4. Submission of Matters to a Vote of Security Holders - - ------- --------------------------------------------------- At the Annual Meeting of Shareholders held on April 26, 1994, the shareholders of the Company elected 11 directors for a one-year term and approved an amendment to the Company's 1992 Directors Stock Incentive Plan to reflect the postponement by the Securities and Exchange Commission of the effective date of certain amendments to Rule 16(b)-3 under the Securities Exchange Act of 1934. The number of votes cast at such meeting with respect to each of these matters is as follows:
Votes Votes Votes Broker Matter For Against Withheld Abstentions Non-Votes - - --------------------- ----------- ---------- --------- ----------- --------- Election of Directors - - --------------------- Lilyan H. Affinito 30,446,982 307,920 Charles J. Chapman 30,435,831 319,071 Paul S. Doherty 30,455,335 299,567 Floyd Hall 30,452,116 302,786 Robert P. Kiley 30,454,762 300,150 John Loudon 30,427,342 327,560 Ruth M. Manton 30,446,755 308,147 John A. Meyers 30,452,999 301,903 H. L. Tower 30,456,565 298,337 Howard B. Wentz, Jr. 30,458,135 296,767 Robert M. Williams 30,451,105 303,797 Amendment to 1992 Directors Stock Incentive Plan 28,509,071 2,043,321 202,510 - - ------------------
Further information regarding these matters is set forth in the Company's proxy statement, dated March 11, 1994, and is incorporated herein by reference. Items 2, 3 and 5 of Part II have been omitted since either the Company's response to the Item would be negative or the Item is inapplicable. -9- Item 6. Exhibits and Reports on Form 8-K - - ------ -------------------------------- a) Exhibits -------- Exhibit Number Description ------- ----------- 4(1) Description of the rights of security holders set forth in the Certificate of Incorporation of the Company, as amended through April 28, 1987, filed April 30, 1987 as Exhibit 4(a) to the Company's Form S-8 Registration Statement (Reg. No. 33-13902), incorporated herein by reference. 4(2) Description of the rights of security holders set forth in the Certificate of Amendment of Certificate of Incorporation of the Company, dated April 28, 1992, filed May 15, 1992 as Exhibit 4(2) to the Company's Form 10-Q Report for the quarter ended March 31, 1992, incorporated herein by reference. 4(3) Rights Agreement between the Company and First Chicago Trust Company of New York, as Rights Agent, dated as of October 24, 1989, which includes the Form of Right Certificate as Exhibit A and the Summary of Rights to Purchase Common Shares as Exhibit B, filed October 27, 1989 as Exhibit 1 to the Company's Form 8-A Registration Statement, incorporated herein by reference. 4(4)(a) Indenture dated as of December 1, 1993 between the Company and Citibank, N.A., as trustee, relating to the Company's Medium- Term Note Program, filed March 31, 1994 as Exhibit 4(4)(a) to the Company's Form 10-K Report for the year ended December 31, 1993, incorporated herein by reference. -10- 4(4)(b) Form of Floating Rate Debt Security, filed December 16, 1993 as Exhibit 4-a to the Company's Report on Form 8-K, incorporated herein by reference. 4(4)(c) Form of Fixed Rate Debt Security, filed December 16, 1993 as Exhibit 4-b to the Company's Report on Form 8-K, incorporated herein by reference. 10(1) Letter Agreement between the Company and Mr. Edward T. Fogarty, dated as of April 25, 1994, filed herewith. 10(2) Employment Protection Agreement between the Company and Mr. Edward T. Fogarty, dated as of May 31, 1994, filed herewith. 10(3) Restricted Stock Agreement between the Company and Mr. Edward T. Fogarty, dated May 31, 1994, filed herewith. 10(4) Stock Option Agreement between the Company and Mr. Edward T. Fogarty, dated May 31, 1994, filed herewith. 10(5) Resolution of the Board of Directors of the Company with respect to the compensation of the Chairman of the Board, adopted on June 28, 1994, filed herewith. 10(6) Supplemental Executive Retirement Plan, effective July 1, 1986, as amended and restated effective July 1, 1994, filed herewith. 10(7) Fourth Amendment to the Tambrands Inc. 1992 Directors Stock Incentive Plan, effective as of April 28, 1994, filed herewith. 12 Computation of Ratio of Earnings to Fixed Charges, filed herewith. Exhibits 2, 11, 15, 18, 19, 22, 23, 24 and 99 have been omitted as inapplicable. Exhibit 27 is not currently required to be filed. -11- b) Reports on Form 8-K ------------------- The Company filed a Report under Item 5 of Form 8-K on April 27, 1994 in order to file two press releases, issued by the Company on April 26, 1994, one of which contained the Company's first-quarter 1994 results, and one of which announced the appointment of Mr. Edward T. Fogarty as President and Chief Executive Officer of the Company, effective May 31, 1994. -12- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TAMBRANDS INC. --------------------------- (Registrant) /s/ Raymond F. Wright --------------------------- Raymond F. Wright Senior Vice President - Chief Financial Officer and Authorized Signatory Date: August 10, 1994 --------------- 10Q2ND.94 -13- EX-10.1 2 LETTER AGREEMENT EXHIBIT 10.1 April 25, 1994 Mr. Edward T. Fogarty 15 Canoe Trail Darien, Connecticut 06820 Dear Mr. Fogarty: We are pleased to confirm the terms of your proposed employment with Tambrands Inc. (the "Company"). 1. Duties. You will become an employee of the Company on May 31, 1994 ------ (the "Commencement Date"). Effective as of the Commencement Date, you will be the Chief Executive Officer and President of the Company and a member of the Board of Directors. You will devote all of your skill, knowledge and full working time (reasonable vacation time and absence for sickness or disability excepted) solely and exclusively to the conscientious performance of your duties hereunder. 2. Base Salary. As compensation for the duties to be performed by you ----------- under the terms of this letter agreement, the Company will pay you a base salary in the amount of $525,000 per annum, payable in semi-monthly installments at the same time as the Company pays salary to its other executive employees and subject to all applicable deductions or reductions therein made pursuant to your elections under the Company's compensation plans or programs. It is contemplated that the Company will review your base salary from time to time and, at the discretion of the Board of Directors, may increase your base salary based upon your performance, then generally prevailing industry salary scales and other relevant factors, including, without limitation, the Company's general compensation practices for its executive officers. (Such annual base salary, as it may hereafter be increased, will be referred to as your "Base Salary"). 3. Incentive Bonus. While you are providing services pursuant to this --------------- letter, you will be entitled to participate in the Company's Annual Incentive Plan (the "AIP") as in effect from time to time. Your annual bonus opportunity under the AIP at the target level of performance will be equal to 60% of your Base Salary. Under the terms of the AIP, you may receive more or less than 60% of your Base Salary if performance exceeds or falls short of target levels. Any bonus payable to you under the AIP will be paid to you at the same time as bonuses are paid to other executives under the AIP and subject to the terms and conditions of the AIP. Notwithstanding the foregoing, in no event shall the amount payable to you as an annual bonus in respect of 1994 services be less than 60% of the base salary payable to you for 1994 services. 4. Stock Options. Effective as of the Commencement Date, you will be ------------- granted a stock option having a ten-year term for 125,000 shares of the Company's common stock (the "Option") under the terms of the Company's 1991 Stock Option Plan (the "1991 Plan"). The Option will be exercisable in three approximately equal annual installments on each of the first three anniversaries of the Commencement Date, but will become exercisable earlier upon the date, if any, on which a Change of Control (as defined in the 1991 Plan) occurs or on which your employment terminates due to your (i) death, (ii) Disability (as - -- defined in the 1991 Plan), (iii) retirement prior to age 65 with the consent of --- the committee responsible for administering the 1991 Plan or (iv) retirement at -- age 65. The per share exercise price for the shares subject to the Option will be determined in accordance with the following schedule: Number of Shares Exercise Price - - ---------------- -------------- 60,000 Fair market value of a share on the Commencement Date as determined under the 1991 Plan (hereafter referred to as the "Fair Market Value"). 21,666 The greater of (i) Fair Market Value plus $5.00 or (ii) - -- $45.00. 21,667 The greater of (i) Fair Market Value plus $10.00 or - (ii) $50.00. -- 2 21,667 The greater of (i) Fair Market Value plus $15.00 or - (ii) $55.00. -- All other terms of the Option will be as provided in the 1991 Plan and the agreement relating to such grant. You shall be eligible to receive future awards under the 1991 Plan (or any successor thereto) at a level commensurate with your position and in accordance with the Company's compensation practices and policies generally applicable to the Company's executive officers as in effect from time to time, provided that you will not receive any additional stock option grants in 1994 - - -------- ---- (except to the extent that you choose to participate in the Company's Exchange Option Program, if made available to executives generally during 1994). At current Company stock prices and under the Company's current executive compensation practices, the level of option award for the Chief Executive Officer position is approximately 42,000 shares per year. 5. Restricted Stock. Effective as of the Commencement Date, you will ---------------- be granted 13,500 restricted shares of the Company's common stock (the "Award") which will vest if you are continuously employed by the Company from the Commencement Date until the date set forth in the following schedule: Number of Shares Vesting Date - - ---------------- ------------ 4,500 Third anniversary of the Commencement Date 4,500 Fourth anniversary of the Commencement Date 4,500 Fifth anniversary of the Commencement Date Notwithstanding the foregoing, the shares subject to the Award will become fully vested on the date, if any, on which a Change of Control (as defined in the 1989 Restricted Stock Plan (the "1989 Plan")) occurs or on which your employment terminates due to your (i) death, (ii) Disability (as defined in the 1989 Plan), - -- (iii) retirement prior to age 65 with the consent of the committee responsible --- for administering the 1989 Plan or (iv) retirement at age 65. You may vote -- these shares and will be entitled to receive any dividends payable thereon. If your employment with the 3 Company terminates prior to the time at which all of the shares subject to the Award become vested, all unvested shares will be forfeited on the date of such termination. All other terms and conditions of this Award will be as provided in the 1989 Plan and the agreement relating to the Award. 6. Change of Control Agreement. As of the Commencement Date, you and --------------------------- the Company will enter into an "Employment Protection Agreement" substantially in the form attached hereto as Exhibit A. 7. Employee Benefits. While you are providing services pursuant to ----------------- this letter agreement, you will be eligible to participate in the employee benefit plans and programs generally available to the Company's employees (including, but not limited to, coverage under the Company's medical, dental, life and disability insurance plans and participation in the Company's Pension Plan and Savings Plan) as in effect from time to time on the same basis as the Company's other employees, subject to the terms and provisions of such plans and programs. You will receive four weeks paid vacation per annum. You will not be designated as an Executive Participant or a Designated Participant for purposes of the Company's Supplemental Executive Retirement Plan (the "SERP"). You will be eligible to participate in the SERP to the extent that the benefits that you may accrue, or the compensation that may be taken into account in calculating the benefits that you may accrue, under the Company's Pension Plan are affected by any limitation required for the Pension Plan to satisfy the applicable requirements of the Internal Revenue Code. Under the SERP, in the event that your employment with the Company is "Involuntarily Terminated" within two years following the occurrence of a "Change of Control" (as each such term is defined in the SERP), your benefits accrued thereunder shall be calculated as though you had two additional years of service and you shall be deemed to be fully vested in such benefits. 8. Executive Perquisites. You will be eligible to receive the --------------------- perquisites and other personal benefits made available to the Company's senior executives from time to time, including, without limitation, payment of or reimbursement for up to $10,000 per annum for personal tax and financial planning. 4 9. Expenses. The Company will reimburse you for all reasonable -------- expenses incurred by you in connection with your performance of services under this letter agreement in accordance with the Company's policies, practices and procedures. 10. Termination of Employment. If the Company terminates your ------------------------- employment prior to age 65 for any reason other than Cause or Disability or you terminate your employment as a result of a Termination for Good Reason: (i) the Company will pay you severance benefits in an aggregate amount - equal to three (3) times your then current Base Salary in two lump sum payments over two calendar years, unless you specifically request and the Company agrees to accelerate the payment of all or any portion of the second payment into the preceding calendar year; and (ii) if you are not otherwise vested in the retirement benefits -- accrued on your behalf under the Company's Pension Plan and SERP through the date of your termination of employment (your "Accrued Benefit"), the Company shall provide you with a retirement benefit equal to your Accrued Benefit, payable at the same time and subject to the same terms and conditions as would apply under the Pension Plan to a participant whose employment terminates after having attained five years of service, but before qualifying for early retirement. In the event your employment terminates (i) due to your death or - Disability or after age 65, (ii) is terminated by the Company for Cause or (iii) -- --- is terminated by you other than as a result of a Termination for Good Reason, you will be entitled to receive the compensation and benefits payable to you under the Company's otherwise applicable employee benefit plans or programs. Any benefits payable to you pursuant to this paragraph 10 will be in full satisfaction of all liabilities to you under this agreement and with respect to any other claim you may have in conjunction with your termination of employment (excluding any vested benefits you may have under the terms of the Company's SERP, Pension Plan or Savings Plan, but including, without limitation, any claim for benefits under the Company's Executive Severance Program). These benefits will not be subject to any offset, mitigation 5 or other reduction as a result of your receiving salary or other benefits by reason of your securing other employment. For purposes of this paragraph 10, the following terms will have the meanings set forth below: "Cause" means (i) your willful failure to perform substantially your - duties as an officer and employee of the Company (other than due to physical or mental illness), (ii) your engaging in serious misconduct that -- is injurious to the Company, (iii) your having been convicted of, or --- entered a plea of nolo contendere to, a crime that constitutes a felony, or ---- ---------- (iv) your unauthorized disclosure of confidential information (other than -- to the extent required by an order of a court having competent jurisdiction or under subpoena from an appropriate government agency) that has resulted or is likely to result in material economic damage to the Company. "Disability" means that, as a result of your incapacity due to physical or mental illness, you have been absent from your duties to the Company on a substantially full-time basis for 180 days in any twelve-month period. "Termination for Good Reason" means a voluntary termination of your employment which occurs within 90 days following the occurrence of any of the following events without your prior written consent: (i) any assignment - to you of any duties which are significantly different from, and result in a diminution of, the duties you are to perform as Chief Executive Officer of the Company pursuant to this letter agreement, (ii) your removal or any -- failure to reelect or redesignate you to the position of Chief Executive Officer of the Company, except in connection with a termination of your employment by the Company for Cause or (iii) a material reduction in your --- Base Salary. 11. Binding Effect. This letter agreement will inure to the benefit -------------- of and be enforceable by your personal or legal representatives, executors, administrators, heirs, distributees, devisees and legatees. If you should die while any amounts would still be payable to you under this letter agreement if you had continued to live, all such amounts, unless otherwise provided herein, will be paid in accordance with the terms of this letter agreement to your 6 personal or legal representatives, executors, administrators, heirs, distributees, devisees, legatees or estate, as the case may be. 12. Indemnification. The Company agrees to indemnify you to the --------------- fullest extent permitted under its By-laws as in effect from time to time. 13. General Provisions. No provisions of this letter agreement may ------------------ be modified, waived or discharged unless such modification, waiver or discharge is approved by the Company's Board of Directors and is agreed to in a writing signed by you and such Company officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or impled, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this letter agreement. The invalidity or unenforceability of any one or more provisions of this letter agreement will not affect the validity or enforceability of any other provision of this letter agreement, which will remain in full force and effect. This letter agreement may be executed in one or more counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same instrument. 7 All amounts payable to you hereunder will be paid net of any and all applicable income or employment taxes required to be withheld therefrom under applicable Federal, State or local laws or regulations. The validity, interpretation, construction and performance of this letter agreement will be governed by the laws of the State of New York, without giving effect to its conflict of laws provisions. * * * * If the foregoing accurately sets forth the terms of your employment with the Company, please so indicate by signing below and returning one signed copy of this letter agreement to me. Sincerely, TAMBRANDS INC. /s/Howard B. Wentz, Jr. ----------------------------- Howard B. Wentz, Jr. Chairman ACCEPTED AND AGREED as of this 25th day of April, 1994 /s/Edward T. Fogarty - - ---------------------------- Edward T. Fogarty 8 EX-10.2 3 EMPLOYMENT PROTECTION AGREEMENT EXHIBIT 10.2 EMPLOYMENT PROTECTION AGREEMENT ------------------------------- THIS AGREEMENT between Tambrands Inc., a Delaware corporation (the "Corporation"), and Edward T. Fogarty (the "Executive"), dated as of this 31st day of May 1994. W I T N E S S E T H : - - - - - - - - - - WHEREAS, the Corporation and the Executive have agreed to enter into an agreement providing the Corporation and the Executive with certain rights upon the occurrence of a Change of Control (as defined below) to assure the Corporation of continuity of management in the event of any Change of Control; NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is hereby agreed by and between the Corporation and the Executive as follows: 1. Operation of Agreement. The effective date of this Agreement shall ---------------------- be the date on which a Change of Control occurs (the "Effective Date"), provided that if the Executive is not employed by the Corporation on the Effective Date this Agreement shall be void and without effect. This Agreement shall terminate on May 31, 1997, provided that the termination date of this Agreement shall be extended for one additional year on June 1, 1995 and each subsequent June 1, unless the Executive shall have received written notice from the Corporation prior to the March 1 immediately preceding such June 1 that the Board of Directors of the Corporation (the "Board") has determined that the termination date of this Agreement shall not be so extended. Notwithstanding the foregoing, this Agreement shall not terminate on the date determined in accordance with the preceding sentence if a Change of Control shall have occurred prior to such date. 2. Definitions. (a) Change of Control. For purposes of this ----------- ----------------- Agreement, a "Change of Control" shall be deemed to have occurred if: (i) any --- person (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended from time to time (the "Exchange Act"), and as used in Sections 13(d) and 14(d) thereof)), excluding the Corporation, any majority owned subsidiary of the Corporation (a "Subsidiary") and any employee benefit plan sponsored or maintained by the Corporation or any Subsidiary (including any trustee of such plan acting as trustee), but including a "group" as defined in Section 13(d)(3) of the Exchange Act (a "Person"), becomes the beneficial owner of shares of the Corporation having at least 20% of the total number of votes that may be cast for the election of directors of the Corporation (the "Voting Shares") provided, however, that such an event shall not constitute a Change of Control if the acquiring Person has entered into an agreement with the Corporation approved by the Board which materially restricts the right of such Person to direct or influence the management or policies of the Corporation; (ii) the shareholders ---- of the Corporation shall approve any merger or other business combination of the Corporation, sale of the Corporation's assets or combination of the foregoing transactions (a "Transaction") other than a Transaction involving only the Corporation and one or more of its Subsidiaries, or a Transaction immediately following which the shareholders of the Corporation immediately prior to the Transaction continue to have a majority of the voting power in the resulting entity excluding for this purpose any shareholder owning directly or indirectly more than 10% of the shares of the other company involved in the Transaction, or (iii) within any 24-month period beginning on or after May 31, 1994, the persons - - ----- who were directors of the Corporation immediately before the beginning of such period (the "Incumbent Directors") shall cease (for any reason other than death) to constitute at least a majority of the Board or the board of directors of any successor to the Corporation, provided that any director who was not a director as of May 31, 1994 shall be deemed to be an Incumbent Director if such director was elected to the Board by, or on the recommendation of or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors either actually or by prior operation of this Section 2(a)(iii). (b) Participation by Executive. Notwithstanding the foregoing, no -------------------------- Change of Control shall be deemed to have occurred for purposes of this Agreement by reason of any actions or events in which the Executive participates in a capacity other than in his capacity as the Executive (or as a director of the Corporation or a Subsidiary, where applicable). 3. Employment Period. If the Executive is employed on the Effective ----------------- Date, the Corporation agrees to continue the Executive in its employ, and the Executive agrees to remain in the employ of the Corporation, for the period (the "Employment Period") commencing on the Effective Date and ending on the earliest to occur of (i) the second anniversary of the Effective Date, (ii) the --- ---- Executive's normal retirement date under the Corporation's retirement plans as in effect from time to time and (iii) the date of any termination of the ----- Executive's employment in accordance with Section 6 of this Agreement. 4. Position and Duties. (a) No Reduction in Position. During the ------------------- ------------------------ Employment Period, the Executive's position (including titles), authority and responsibilities shall be at least commensurate with the highest of those held, exercised and assigned at any time during the 90-day period immediately preceding the Effective Date. (b) Business Time. From and after the Effective Date, the Executive ------------- agrees to devote his full business time during normal business hours to the business and affairs of the Corporation and to use his best efforts to perform faithfully and efficiently the responsibilities assigned to him hereunder, to the extent necessary to discharge such responsibilities, except for (i) reasonable time spent in serving on corporate, civic or charitable boards or committees approved by the Board, in each case only if and to the extent not substantially interfering with the performance of such responsibilities, and (ii) periods of vacation and sick leave to which he is entitled. It is expressly understood and agreed that the Executive's continuing to serve on any boards and committees on which he is serving or with which he is otherwise associated with the consent or approval of the Corporation immediately preceding the Effective Date shall not be deemed to interfere with the performance of the Executive's services to the Corporation. 5. Compensation. (a) Base Salary. During the Employment Period, the ------------ ----------- Executive shall receive a base salary ("Base Salary") at a monthly rate at least equal to the monthly salary paid to the Executive by the Corporation and any of its affiliated companies immediately prior to the Effective Date. The Base Salary shall be reviewed at least once each year after the Effective Date, and may be increased (but not decreased) at any time and from time to time by action of the Board or any committee thereof or any individual having authority to take such action in accordance with the Corporation's regular practices. Neither payment of the Base Salary nor payment of any increased Base Salary after the Effective -2- Date shall serve to limit or reduce any other obligation of the Corporation hereunder. For purposes of the remaining provisions of this Agreement, the term "Base Salary" shall mean Base Salary as defined in this Section 5(a) or, if increased after the Effective Date, the Base Salary as so increased. (b) Annual Bonus. In addition to the Base Salary, the Executive shall ------------ be awarded for each fiscal year of the Corporation ending during the Employment Period an annual bonus (either pursuant to a bonus plan or program of the Corporation or otherwise) in cash at least equal to the last annual bonus (annualized, if awarded in respect of a partial year) awarded to the Executive under the Annual Incentive Plan of the Corporation prior to the Effective Date ("Annual Bonus"). If a fiscal year of the Corporation begins, but does not end, during the Employment Period, the Executive shall receive an amount with respect to such fiscal year at least equal to the amount of the Annual Bonus multiplied by a fraction, the numerator of which is the number of days in such fiscal year occurring during the Employment Period and the denominator of which is 365. Each amount payable in respect of the Executive's Annual Bonus shall be paid not later than the last day of March of the year next following the year for which the Annual Bonus (or prorated portion) is earned or awarded, unless electively deferred by the Executive pursuant to any deferral programs or arrangements that the Corporation may make available to the Executive, in which event such deferred amount shall be payable in accordance with the terms of such deferral program or arrangement. Neither the Annual Bonus nor any bonus amount paid in excess thereof after the Effective Date shall serve to limit or reduce any other obligation of the Corporation hereunder. (c) Incentive and Savings Plans and Retirement Programs. In addition --------------------------------------------------- to the Base Salary and Annual Bonus payable as hereinabove provided, during the Employment Period, the Executive shall be entitled to participate in all incentive and savings plans and programs, including stock option plans and other equity based compensation plans, and in all retirement plans, on a basis providing him with the opportunity to receive compensation (without duplication of the amount payable as an Annual Bonus) and benefits equal to those provided by the Corporation to the Executive on an annualized basis under such plans and programs as in effect at any time during the 90-day period immediately preceding the Effective Date. (d) Benefit Plans. During the Employment Period, the Executive and his ------------- family shall be entitled to participate in or be covered under all welfare benefit plans and programs of the Corporation and its affiliated companies, including all medical, dental, disability, group life, accidental death and travel accident insurance plans and programs, as in effect at any time during the 90-day period immediately preceding the Effective Date. (e) Expenses. During the Employment Period, the Executive shall be -------- entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the policies and procedures of the Corporation as in effect at any time during the 90-day period immediately preceding the Effective Date. (f) Vacation and Fringe Benefits. During the Employment Period, the ---------------------------- Executive shall be entitled to paid vacation and fringe benefits in accordance with the policies of the Corporation as in effect at any time during the 90-day period immediately preceding the Effective Date. (g) Office and Support Staff. During the Employment Period, the ------------------------ Executive shall be entitled to an office or offices of a size and with -3- furnishings and other appointments, and to secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Executive at any time during the 90-day period immediately preceding the Effective Date. 6. Termination. (a) Death, Disability or Retirement. Subject to the ----------- ------------------------------- provisions of Section 1 hereof, this Agreement shall terminate automatically upon the Executive's death or attainment of normal retirement age under the Corporation's retirement plans as in effect from time to time, provided that, after the Effective Date, the normal retirement age may not be lowered for purposes of this Agreement without the Executive's consent. The Corporation may terminate this Agreement, after having established the Executive's Disability, by giving the Executive written notice of its intention to terminate his employment, and his employment with the Corporation shall terminate effective on the 90th day after receipt of such notice if, within 90 days after such receipt, the Executive shall fail to return to full-time performance of his duties. For purposes of this Agreement, "Disability" means disability which, after the expiration of more than 26 weeks after its commencement, is determined to be total and permanent by a physician selected by the Corporation or its insurers and acceptable to the Executive or his legal representatives (such agreement to acceptability not to be withheld unreasonably). (b) Voluntary Termination. Notwithstanding anything in this Agreement --------------------- to the contrary, the Executive may, upon not less than 30 days' written notice to the Corporation, voluntarily terminate employment during the Employment Period for any reason (including early retirement under the terms of the Corporation's retirement plan as in effect from time to time), provided that any termination by the Executive pursuant to Section 6(d) of this Agreement on account of Good Reason (as defined therein) shall not be treated as a voluntary termination under this Section 6(b). (c) Cause. The Corporation may terminate the Executive's employment ----- during the Employment Period for Cause. For purposes of this Agreement, "Cause" means (i) an act or acts of dishonesty or gross misconduct on the Executive's --- part which result or are intended to result in material damage to the Corporation's business or reputation or (ii) repeated material violations by the ---- Executive of his obligations under Section 4 of this Agreement which violations are demonstrably willful and deliberate on the Executive's part. (d) Good Reason. The Executive may terminate his employment during the ----------- Employment Period for Good Reason. For purposes of this Agreement, "Good Reason" means (i) a good faith determination by the Executive that, without his prior written consent, the Corporation or any of its officers has taken or failed to take any action (including, without limitation, (A) exclusion of the --- Executive from consideration of material matters within his area of responsibility, (B) statements or actions which undermine the Executive's --- authority with respect to persons under his supervision or reduce his standing with his peers, (C) a pattern of discrimination against or --- harassment of the Executive or persons under his supervision and (D) the --- subjection of the Executive to procedures not generally applicable to other similarly situated executives) which changes the Executive's position (including titles), authority or responsibilities under Section 4 of this Agreement or reduces the Executive's ability to carry out his duties and responsibilities under Section 4 of this Agreement; (ii) any failure by the Corporation to comply with any of the provisions of Section 5 of this Agreement, other than an insubstantial or inadvertent failure remedied by the Corporation promptly -4- after receipt of notice thereof from the Executive; (iii) the Corporation's requiring the Executive to be employed at any location more than 50 miles further from his principal residence than the location at which the Executive was employed immediately preceding the Effective Date; or (iv) any failure by the Corporation to obtain the assumption of and agreement to perform this Agreement by a successor as contemplated by Section 14(b) of this Agreement, provided that the successor has had actual written notice of the existence of this Agreement and its terms and an opportunity to assume the Corporation's responsibilities under this Agreement during a period of 10 business days after receipt of such notice. (e) Notice of Termination. Any termination by the Corporation for --------------------- Cause or by the Executive for Good Reason during the Employment Period shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 15(c) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice given, in the case of a termination for Cause, within 10 business days of the Corporation's having actual knowledge of all of the events giving rise to such termination, and in the case of a termination for Good Reason, within 180 days of the Executive's having actual knowledge of the events giving rise to such termination, and which (i) indicates the specific termination provision in this Agreement relied upon, - - --- (ii) sets forth in reasonable detail the facts and circumstances claimed to - - ---- provide a basis for termination of the Executive's employment under the provision so indicated, and (iii) if the termination date is other than the date ----- of receipt of such notice, specifies the termination date of this Agreement (which date shall be not more than 15 days after the giving of such notice). The failure by the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason shall not waive any right of the Executive hereunder or preclude the Executive from asserting such fact or circumstance in enforcing his rights hereunder. (f) Date of Termination. For purposes of this Agreement, the term ------------------- "Date of Termination" means (i) in the case of a termination for which a Notice --- of Termination is required, the date of receipt of such Notice of Termination or, if later, the date specified therein and (ii) in all other cases, the actual date on which the Executive's employment terminates during the Employment Period. 7. Obligations of the Corporation upon Termination. (a) Death. If ----------------------------------------------- ------ the Executive's employment is terminated during the Employment Period by reason of the Executive's death, this Agreement shall terminate without further obligations to the Executive's legal representatives under this Agreement other than those obligations accrued hereunder at the date of his death, including, for this purpose (i) the Executive's full Base Salary through the Date of --- Termination, (ii) the product of the Annual Bonus and a fraction, the numerator ---- of which is the number of days in the current fiscal year of the Corporation through the Date of Termination, and the denominator of which is 365 (the "Pro- rated Bonus Obligation"), (iii) any compensation previously deferred by the ----- Executive (together with any accrued earnings thereon) and not yet paid by the Corporation and (iv) any other amounts or benefits owing to the Executive under ---- the then applicable employee benefit plans or policies of the Corporation (such amounts specified in clauses (i), (ii), (iii) and (iv) are hereinafter referred to as "Accrued Obligations"). Unless otherwise directed by the Executive (or, in the case of any employee benefit plan qualified (a "Qualified Plan") under Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), as may be required by such plan), all such Accrued Obligations shall be paid to the Executive's legal representatives -5- in a lump sum in cash within 30 days of the Date of Termination. Anything in this Agreement to the contrary notwithstanding, the Executive's family shall be entitled to receive benefits at least equal to the most favorable level of benefits available to surviving families of executives of the Corporation and its affiliates under such plans, programs and policies relating to family death benefits, if any, of the Corporation and its affiliates in effect at any time during the 90-day period immediately preceding the Effective Date. (b) Disability. If the Executive's employment is terminated by reason ---------- of the Executive's Disability, the Executive shall be entitled, after the Date of Termination until the date when the Employment Period would otherwise have terminated, to continue to participate in or be covered under the benefit plans and programs referred to in Section 5(d) of this Agreement or, at the Corporation's option, to receive equivalent benefits by alternate means at least equal to those provided in accordance with Section 5(d) of this Agreement. Unless otherwise directed by the Executive (or, in the case of any Qualified Plan, as may be required by such plan), the Executive shall also be paid all Accrued Obligations in a lump sum in cash within 30 days of the Date of Termination. Anything in this Agreement to the contrary notwithstanding, the Executive shall be entitled to receive disability and other benefits at least equal to the most favorable level of benefits available to disabled employees and/or their families in accordance with the plans, programs and policies main- tained by the Corporation or its affiliates relating to disability at any time during the 90-day period immediately preceding the Effective Date. (c) Cause and Voluntary Termination. If, during the Employment Period, ------------------------------- the Executive's employment shall be terminated for Cause or voluntarily terminated by the Executive (other than on account of Good Reason), the Corporation shall pay the Executive the Accrued Obligations other than the Pro- rated Bonus Obligation. Unless otherwise directed by the Executive (or, in the case of any Qualified Plan, as may be required by such plan), the Executive shall be paid all such Accrued Obligations in a lump sum in cash within 30 days of the Date of Termination and the Corporation shall have no further obligations to the Executive under this Agreement. (d) Termination by Corporation other than for Cause or Disability and ------------------------------------------------------------------ Termination by Executive for Good Reason. (i) Lump Sum Payment. If, during - - ---------------------------------------- ---------------- the Employment Period, the Corporation terminates the Executive's employment other than for Cause or Disability, or the Executive terminates his employment for Good Reason, the Corporation shall pay to the Executive in a lump sum in cash within 15 days after the Date of Termination the aggregate of the following amounts: (A) if not theretofore paid, the Executive's Base Salary through the Date of Termination at the rate specified in Section 5(a) of this Agreement; (B) a cash amount equal to three times the sum of (1) the Executive's annual Base Salary at the rate specified in Section 5(a) of this Agreement; (2) the Annual Bonus; and (3) the present value, calculated using the annual federal short- term rate as determined under Section 1274(d) of the Code, of (without duplication) (x) the annual cost to the Corporation (based on the --- premium rates or other costs to it) of obtaining coverage equivalent to the coverage under the plans and programs described in Section 5(d) of this Agreement, and (y) the annual- --- -6- ized value of the fringe benefits described under Section 5(f) of this Agreement; provided, however, that in no event shall the Executive be entitled to receive under this clause (B) more than the product obtained by multiplying the amount determined under this clause by a fraction whose numerator shall be the number of months (including fractions of a month) which at the Date of Termination remain until the Executive's normal retirement date under the Corporation's retirement plan or any successor plan as in effect from time to time and whose denominator shall be 24, and provided further that, with respect to the life and medical insurance coverage referred to in Section 5(d) of this Agreement, at the Executive's election made prior to the Date of Termination, the Corporation shall use its best efforts to secure conversion coverage and shall pay the cost of such coverage in lieu of paying the lump sum amount attributable to such life or medical insurance coverage; and (C) a cash amount equal to any amounts (other than amounts payable to the Executive under any Qualified Plans) described in Sections 7(a)(iii) and (iv) of this Agreement. (ii) Discharge of Corporation's Obligations. Subject to the performance -------------------------------------- of its obligations under this Section 7(d), the Corporation shall have no further obligations to the Executive in respect of any termination by the Executive for Good Reason or by the Corporation other than for Cause or Disability, except to the extent expressly provided under any of the plans referred to in Section 5(c) or 5(d) of this Agreement. 8. Non-exclusivity of Rights. Nothing in this Agreement shall prevent ------------------------- or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Corporation or any of its affiliated companies and for which the Executive may qualify, nor shall anything herein limit or otherwise prejudice such rights as the Executive may have under any stock option or other plans or agreements with the Corporation or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Corporation or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan or program. 9. Certain Additional Payments by the Corporation. ---------------------------------------------- (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Corporation to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 9) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code (or any successor provision) or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes with respect to the Gross-Up Payment (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. -7- (b) Subject to the provisions of Section 9(c), all determinations required to be made under this Section 9, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by KPMG Peat Marwick or other firm then auditing the accounts of the Corporation (the "Accounting Firm") which shall provide detailed supporting calculations both to the Corporation and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Corporation. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, or is unwilling or unable to perform its obligations pursuant to this Section 9, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Corporation. Any Gross-Up Payment, determined pursuant to this Section 9, shall be paid by the Corporation to the Executive within five days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Corporation and the Executive. As a result of the potential uncertainty in the application of Section 4999 of the Code (or any successor provision) at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Corporation should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Corporation exhausts its remedies pursuant to Section 9(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Corporation to or for the benefit of the Executive. (c) The Executive shall notify the Corporation in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Corporation of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than 10 business days after the Executive is informed in writing of such claim and shall apprise the Corporation of the nature of such claim and the date on which such claim is requested to be paid. the Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Corporation (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Corporation notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall: (i) give the Corporation any information reasonably requested by the Corporation relating to such claim, (ii) take such action in connection with contesting such claim as the Corporation shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Corporation, (iii) cooperate with the Corporation in good faith in order effectively to contest such claim, and (iv) permit the Corporation to participate in any proceedings relating to such claim; -8- provided, however, that the Corporation shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on a after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limiting the foregoing provisions of this Section 9(c), the Corporation shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Corporation shall determine; provided, however, that if the Corporation directs the Executive to pay such claim and sue for a refund, the Corporation shall advance the amount of such payment to the Executive, on an interest-free basis, and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statue of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Corporation's control of the contest shall be limited to issues with respect to which a Gross- Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Executive of an amount advanced by the Corporation pursuant to Section 9(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Corporation's complying with the requirements of Section 9(c)) promptly pay to the Corporation the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Corporation pursuant to Section 9(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Corporation does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 10. Full Settlement. The Corporation's obligation to make the payments --------------- provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Corporation may have against the Executive or others whether by reason of the subsequent employment of the Executive or otherwise. In no event shall the Executive be obligated to seek other employment by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, and no amount payable under this Agreement shall be reduced on account of any compensation received by the Executive from other employment. In the event that the Executive shall in good faith give a Notice of Termination for Good Reason and it shall thereafter be determined by mutual consent of the Executive and the Corporation or by a tribunal having jurisdiction over the matter that Good Reason did not exist, the employment of the Executive shall, unless the -9- Corporation and the Executive shall otherwise mutually agree, be deemed to have terminated, at the date of giving such purported Notice of Termination, by mutual consent of the Corporation and the Executive and, except as provided in the last preceding sentence, the Executive shall be entitled to receive only those payments and benefits which he would have been entitled to receive at such date otherwise than under this Agreement. 11. Legal Fees and Expenses. In the event that a claim for payment of ----------------------- benefits under this Agreement is disputed, the Corporation shall pay all reasonable legal fees and expenses incurred by the Executive in pursuing such claim, provided that the Executive is successful as to at least part of the disputed claim by reason of litigation, arbitration or settlement. 12. Confidential Information. The Executive shall hold in a fiduciary ------------------------ capacity for the benefit of the Corporation all secret or confidential information, knowledge or data relating to the Corporation or any of its affiliated companies, and their respective businesses, (i) obtained by the --- Executive during his employment by the Corporation or any of its affiliated companies and (ii) not otherwise public knowledge (other than by reason of an ---- unauthorized act by the Executive). After termination of the Executive's employment with the Corporation, the Executive shall not, without the prior written consent of the Corporation, unless compelled pursuant to an order of a court or other body having jurisdiction over such matter, communicate or divulge any such information, knowledge or data to anyone other than the Corporation and those designated by it. In no event shall an asserted violation of the provisions of this Section 12 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement. 13. Employment Contract or Severance Benefits. Notwithstanding ----------------------------------------- anything else in this Agreement to the contrary, any amount payable to the Executive hereunder on account of his termination of employment shall be reduced on a dollar for dollar basis by each dollar actually paid to the Executive with respect to such termination under the terms of any employment contract between the Executive and the Corporation or under any severance program or policy applicable to the Executive. Nothing in this Agreement shall be construed to require duplication of any compensation, benefits or other entitlements provided to the Executive by the Corporation under the terms of any employment contract which may address similar matters. 14. Successors. (a) This Agreement is personal to the Executive and, ---------- without the prior written consent of the Corporation, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Corporation and its successors. The Corporation shall require any successor to all or substantially all of the business and/or assets of the Corporation, whether direct or indirect, by purchase, merger, consolidation, acquisition of stock, or otherwise, by an agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Corporation would be required to perform if no such succession had taken place. 15. Miscellaneous. (a) Applicable Law. This Agreement shall be ------------- -------------- governed by and construed in accordance with the laws of the State of Delaware, applied without reference to principles of conflict of laws. (b) Amendments. This Agreement may not be amended or modified ---------- -10- otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (c) Notices. All notices and other communications hereunder shall be ------- in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: at the address listed below If to the Corporation: Tambrands Inc. 777 Westchester Avenue White Plains, New York 10604 Attention: Secretary (with a copy to the attention of the General Counsel) or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notices and communications shall be effective when actually received by the addressee. (d) Tax Withholding. The Corporation may withhold from any amounts --------------- payable under this Agreement such Federal, State or local taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) Severability. The invalidity or unenforceability of any provision ------------ of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. (f) Captions. The captions of this Agreement are not part of the -------- provisions hereof and shall have no force or effect. IN WITNESS WHEREOF, the Executive has hereunto set his hand and the Corporation has caused this Agreement to be executed in its name on its behalf, and its corporate seal to be hereunto affixed and attested by its Treasurer, all as of the day and year first above written. -11- ATTEST: TAMBRANDS INC. /s/Martha B. Lindsay By /s/Kevin J. Paradise - - ------------------------- -------------------------------- Treasurer Title: Vice President - Human Resources (Seal) EXECUTIVE: Edward T. Fogarty /s/Edward T. Fogarty ---------------------------------- Address: Tambrands Inc. 777 Westchester Avenue White Plains, New York 10604 FOGARTY.EPA -12- EX-10.3 4 RESTRICTED STOCK AGREEMENT EXHIBIT 10.3 [LETTERHEAD OF TAMBRANDS] May 31, 1994 Mr. Edward T. Fogarty Tambrands Inc. 777 Westchester Avenue White Plains, New York 10604 Restricted Stock Agreement -------------------------- Dear Mr. Fogarty: We are pleased to advise you that you have been selected as a participant in the Tambrands Inc. Restricted Stock Plan. This letter will confirm the following agreement made as of the date of this letter between you and Tambrands Inc. (the "Company") pursuant to the Plan, a copy of which is attached hereto and made a part hereof. All capitalized terms used herein shall have the meanings ascribed to them by the Plan. 1. Number of Shares of Restricted Stock; Date of Grant. The Company has --------------------------------------------------- granted you 13,500 shares of Restricted Stock as of May 31, 1994. A stock certificate representing these shares will be held by the Company for safekeeping until such time as the Restricted Period lapses with respect to all or any portion of such shares. At that time, a stock certificate representing your shares will be forwarded to you for that number of shares as to which the Restricted Period has lapsed. 2. Restriction on Transfer. The shares of Restricted Stock granted to you ----------------------- hereunder may not be sold, assigned, transferred, pledged or otherwise encumbered until the dates determined pursuant to the following schedule:
Restrictions Lapse As To The Date Following Number of Shares ---- ---------------------------- May 31, 1997 4,500 May 31, 1998 4,500 May 31, 1999 4,500
Notwithstanding the foregoing schedule, the restrictions on the shares of Restricted Stock shall lapse on such earlier date as shall otherwise be determined under the terms of the Plan and this agreement. 3. Forfeiture of Restricted Stock. Except as otherwise provided in ------------------------------ paragraph 4 hereof or the Plan, if your employment with the Company and its Subsidiaries terminates for any reason prior to the time at which the restrictions described in paragraph 2 lapse as to all of the shares of Restricted Stock granted hereunder, any shares which are then subject to such restrictions shall be cancelled without any payment to you and you shall cease to have any rights with respect to such shares of Restricted Stock. 4. Termination of Employment By Reason of Death, Disability or Retirement. ---------------------------------------------------------------------- If your employment with the Company and its Subsidiaries terminates prior to the end of the Restricted Period by reason of your death, your disability (as determined in accordance with the Company's policies), your retirement at or after age 65, or your early retirement with the consent of the Committee prior to attaining age 65, the Restricted Period shall lapse Page 2 Mr. E.T. Fogarty May 31, 1994 with respect to all of the Restricted Stock granted hereunder upon your termination of employment. 5. Change of Control. The Restricted Period shall lapse with respect to ----------------- all of the Restricted Stock granted hereunder upon the occurrence of a Change of Control of the Company. 6. Rights as a Shareholder. You shall have all the rights of a ----------------------- shareholder of Common Stock with respect to the Restricted Stock granted hereunder, including the right to vote and the right to receive dividends. 7. Adjustment. In the event the Restricted Stock granted hereunder is ---------- exchanged for or converted into securities other than Common Stock or in the event that any distribution is made with respect to such Restricted Stock either in Common Stock or in other property, the securities or other property that you receive shall be subject to the same restrictions as apply to such Restricted Stock. 8. Other Terms. All applicable terms and provisions of the Plan shall be ----------- deemed to be included herein by reference and shall be controlling in the event of any conflict or inconsistency between the Plan and this agreement. Please indicate your acceptance of the terms and conditions of this agreement and of the Plan by signing and returning the enclosed copy of this letter. Very truly yours, Tambrands Inc. By /s/Kevin J. Paradise ----------------------- Kevin J. Paradise Vice President - Human Resources Accepted: /s/Edward T. Fogarty Date: 6/12/94 - - ------------------------- ----------------------- Employee Signature Enclosure: 1. 1989 Restricted Stock Plan EX-10.4 5 STOCK OPTION AGREEMENT EXHIBIT 10.4 [LETTER HEAD OF TAMBRANDS] May 31, 1994 Mr. Edward T. Fogarty Tambrands Inc. 777 Westchester Avenue White Plains, New York 10604 Stock Option Agreement ---------------------- Dear Mr. Fogarty: We are pleased to inform you that, effective May 31, 1994, you have been granted Options to purchase 125,000 shares of Common Stock of the Company (the "Options") pursuant to the Tambrands Inc. 1991 Stock Option Plan (the "Plan"). The Options are not intended to be "incentive stock options" as that term is defined in section 422 of the Internal Revenue Code. This letter will confirm the following agreement between you and the Company pursuant to the Plan, a copy of which is attached hereto and made a part hereof. Capitalized words used in this letter are as defined in the Plan. The Options may be exercised upon the terms and conditions of the Plan, as supplemented by this agreement, and not otherwise. 1. Number and Price of Options --------------------------- You shall have Options to purchase from the Company 125,000 shares of Common Stock of the Company at the per share prices determined in accordance with the following schedule:
Number of Shares Price Per Share ---------------- --------------- 60,000 $35.50 21,666 $45.00 21,667 $50.00 21,667 $55.00
2. Exercisability Dates -------------------- Except as otherwise provided by this paragraph 2 or paragraph 4 hereof or under Sections 6(a)(iv) and 7 of the Plan, the Options granted to you hereby shall become exercisable as follows:
Number of Shares at Each Date Exercise Price Exercisable ------------------------ ------------ $35.50 $ 45.00 $ 50.00 $ 55.00 ------- ------- ------- 20,000 7,222 7,222 7,222 May 31, 1995 20,000 7,222 7,222 7,222 May 31, 1996 20,000 7,222 7,223 7,223 May 31, 1997 - - -------------- ------- ------- ------- 60,000 21,666 21,667 21,667
Upon (i) your death while an employee of the Company, (ii) your retirement - -- at or after age 65 or your early retirement (with the Committee's consent) or (iii) the termination of your employment by reason of disability (within --- the meaning of section 22(e)(3) of the Page 2 Mr. E.T. Fogarty May 31, 1994 Internal Revenue Code), all Options shall immediately become exercisable. All Options that have become exercisable may be exercised, and if exercised in part, the unexercised Options shall remain outstanding and exercisable according to their terms, through the end of their period of exercisability as described in paragraph 3 hereof. 3. Termination of Options That Have Become Exercisable --------------------------------------------------- Any unexercised Options shall in all events terminate on May 31, 2004. Any unexercised Options that have not previously terminated shall terminate prior to May 31, 2004 upon the expiration of (i) five years after any termination of employment due to your retirement at or after age 65 or your early retirement (with the Committee's consent), your death while an employee of the Company or the termination of your employment by reason of disability (as defined in paragraph 2 hereof) (each, a "Special Termination") or (ii) three months after any termination of employment for any reason other than a Special Termination. Notwithstanding the foregoing, any unexercised Options shall terminate immediately upon (i) the termination of your employment by you in violation of any agreement between you and the Company, (ii) the termination of your employment for cause (as defined in Section 7(c) of the Plan) or (iii) the discovery by the Company after your separation from service that you had engaged in conduct that would have justified termination of your employment for cause. Notwithstanding anything else contained herein to the contrary, any Option that has not become exercisable in accordance with paragraph 2 or paragraph 4 hereof on or before the date your employment terminates shall terminate at the close of business on the date of your termination of employment. 4. Acceleration of Exercisability on Change of Control --------------------------------------------------- Upon a Change of Control of the Company all Options not previously exercisable shall become fully exercisable to the same extent and in the same manner as if they had become exercisable by passage of time in accordance with the provisions of the Plan relating to periods of exercisability and to termination of employment. 5. Nontransferability ------------------ The Options shall not be transferable by you otherwise than by will or under the applicable laws of descent and distribution. Upon any attempt to transfer, assign, negotiate, pledge or hypothecate any Option, or in the event of any levy upon any Option by reason of attachment or similar process, such Option shall immediately become null and void. 6. Procedure for Exercise ---------------------- Any exercise of Options shall be in writing addressed to the Secretary at the Company's general offices, and shall be substantially in the form attached hereto and, unless otherwise specified by the Committee, shall be accompanied by payment in immediately available U.S. funds or a certified check, bank draft or postal or express money order payable to the order of the Company, each in the amount of the purchase price of the shares covered by the exercise. Notwithstanding the foregoing, if the Committee shall on your written request permit payment of all Page 3 Mr. E.T. Fogarty May 31, 1994 or any portion of such purchase price through the delivery to the Company of shares of the Company's Common Stock, you shall deliver with the exercise form certificates for the appropriate number of such shares, valued at their then Fair Market Value, properly endorsed or accompanied by a properly completed stock power, with signature guaranteed in either case by a bank or stock exchange firm. Upon receipt of payment, the Company shall deliver to you as soon as practicable a certificate or certificates for the shares purchased. In connection with such exercise, the Company shall make such provisions as it deems necessary and appropriate to satisfy its obligation to withhold federal, state or local income taxes and other taxes incurred by reason of such exercise. 7. Other Terms ----------- All applicable terms and provisions of the Plan shall be deemed to be included herein by reference and shall be controlling in the event of any conflict or inconsistency between the Plan and this agreement. Please indicate your acceptance of the terms and conditions of this agreement and of the Plan by signing and returning the enclosed copy of this letter. Very truly yours, Tambrands Inc. By/s/Kevin J. Paradise ------------------------------------- Kevin J. Paradise Vice President - Human Resources Accepted:/s/Edward T. Fogarty ------------------------------ (Optionee's Signature) Date: 6/12/94 ----------------------- Enclosures: 1. 1991 Stock Option Plan 2. Form Letter for Option Exercise EX-10.5 6 RESOLUTION OF THE BOARD OF DIRECTORS EXHIBIT 10.5 RESOLUTION OF THE BOARD OF DIRECTORS June 28, 1994 ------------- RESOLVED, that in consideration of his services as Chairman of the Board of -------- Directors of the Corporation, the Corporation shall pay Howard B. Wentz, Jr. (i) for the period from May 31, 1994 until August 31, 1994, a cash fee of $2,500 per diem, in addition to the other compensation otherwise payable to him for his services as a non-employee director of the Corporation under the Corporation's standard practices and policies, except that Mr. Wentz shall not receive any per meeting fees for attendance at meetings of the Board of Directors or any of its committees, and (ii) for the period from September 1, 1994 until the Annual Meeting of Shareholders to be held in 1995, such compensation as shall mutually be agreed hereafter by the Board and Mr. Wentz. reslbddr.jun EX-10.6 7 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN EXHIBIT 10.6 - - -------------------------------------------------------------------------------- TAMBRANDS INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN Effective July 1, 1986 As Amended and Restated Effective July 1, 1994 - - -------------------------------------------------------------------------------- TABLE OF CONTENTS -----------------
Page ---- ARTICLE I....................................................................... 1 Introduction............................................................... 1 ARTICLE II...................................................................... 2 Definitions................................................................ 2 ARTICLE III..................................................................... 12 Retirement Income.......................................................... 12 3.1 Retirement Income........................................................ 12 3.2 Normal Retirement Income................................................. 12 3.3 Deferred Retirement Income............................................... 15 3.4 Early Retirement Income.................................................. 15 3.5 Reduction for Benefits Received Under Other Retirement Plans................................................... 16 3.6 Form of Benefits......................................................... 18 3.7 Vesting of Retirement Benefit............................................ 19 3.8 Involuntary Termination of Employment Following a Change of Control............................................ 19 ARTICLE IV...................................................................... 20 Death Benefits............................................................. 20 ARTICLE V....................................................................... 22 Administrative and General Provisions...................................... 22 5.1 Administration........................................................... 22 5.2 Claims Procedure......................................................... 23 5.3 Inalienability and Forfeiture of Benefits................................ 24 5.4 Unsecured General Creditor............................................... 25 5.5 Trust.................................................................... 25 5.6 Not a Contract of Employment............................................. 26 5.7 Captions................................................................. 26 5.8 Governing Law............................................................ 26 5.9 Validity................................................................. 27 5.10 Notice................................................................... 27 5.11 Incompetent Participant.................................................. 27 ARTICLE VI...................................................................... 28 Amendment and Termination...................................................... 28 APPENDIX A...................................................................... 28
TAMBRANDS INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN ARTICLE I Introduction ------------ The Tambrands Inc. Supplemental Executive Retirement Plan (the "Plan") has been adopted to provide supplemental retirement and death benefits to certain officers and other key employees of Tambrands Inc., its subsidiaries and its divisions. The purpose of this Plan is to attract and retain in the employ of Tambrands Inc. and its subsidiaries and divisions officers and other key employees of superior competence. This Plan was established effective July 1, 1986, and no employee who terminated employment with the Company for any reason before such date shall have any rights under this Plan. This Plan was amended and restated effective July 1, 1988, July 1, 1990, and July 1, 1991 and is hereby amended and restated effective July 1, 1994. Any employee who terminated employment prior to this amendment and restatement shall have no rights under this Plan as amended and restated, but shall look solely to the terms of this Plan prior to this amendment and restatement. ARTICLE II Definitions ----------- "Actuarial Equivalent" means the equivalent in value, based on an -------------------- interest rate and mortality tables and other actuarial methods and assumptions selected from time to time by the Company or an actuary selected by the Company. "Adjusted" means the cost of living adjustment factor prescribed by -------- the Secretary of the Treasury under Section 415(d) of the Code, as applied to such items and in such manner as such Secretary shall provide. "Affiliate" means the Company and any entity affiliated with the --------- Company within the meaning of Code Sections 414(b) with respect to controlled groups of corporations, 414(c) with respect to trades or businesses under common control with the Company, 414(m) with respect to affiliated service groups, and any other entity required to be aggregated with the Company pursuant to regulations under Section 414(o) of the Code. No entity shall be treated as an Affiliate for any period during which it is not part of the controlled group, under common control or otherwise required to be aggregated under Code Section 414. 2 A "Change of Control" shall occur if: ----------------- (i) any person (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended from time to time (the "Exchange Act"), and as used in Sections 13(d) and 14(d) thereof), excluding the Company, any Affiliate and any employee benefit plan sponsored or maintained by the Company or any Affiliate (including any trustee of such plan acting as trustee), but including a "group" as defined in Section 13(d)(3) of the Exchange Act (a "Person")), becomes the beneficial owner of shares of the Company having at least 20% of the total number of votes that may be cast for the election of directors of the Company (the "Voting Shares") provided, however, that such an event shall not constitute a Change of Control if the acquiring Person has entered into an agreement with the Company approved by the Board of Directors which materially restricts the right of such Person to direct or influence the management or policies of the Company; (ii) the shareholders of the Company shall approve any merger or other business combination of the Company, sale of the Company's assets or combination of the foregoing transactions (a "Transaction") other than a Trans- action involving only the Company and one or more of its Affiliates or a Transaction immediately following which the 3 shareholders of the Company immediately prior to the Transaction continue to have a majority of the voting power in the resulting entity excluding for this purpose any share-holder owning directly or indirectly more than 10% of the shares of the other company involved in the Transaction; or (iii) within any 24-month period beginning on or after April 30, 1989, the persons who were directors of the Company immediately before the beginning of such period (the "Incumbent Directors") shall cease (for any reason other than death) to constitute at least a majority of the Board of Directors or the board of directors of any successor to the Company, provided that any director who was not a director as of May 1, 1989 shall be deemed to be an Incumbent Director if such director was elected to the Board of Directors by, or on the recommendation of or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors either actually or by prior operation of this Section. "Code" means the Internal Revenue Code of 1986, as amended from time ---- to time. "Committee" means the Compensation Committee of the Board of Directors --------- of Tambrands Inc. "Company" means Tambrands Inc., its successors and assigns and any ------- company which shall acquire all or substan- 4 tially all of its assets, and certain of their Affiliates as selected by the Committee. "Deferred Retirement Date" means the first day of the month coinciding ------------------------ with or next following the retirement of the Participant after his Normal Retirement Date. "Deferred Retirement Income" means an amount determined, with respect -------------------------- to any Participant, under Section 3.3. "Designated Participant" means any executive (i) who immediately ---------------------- - prior to July 1, 1994, was eligible to have his retirement income hereunder determined under the formula contained in Subsection 1.1(B) of Appendix A, (ii) -- who, assuming he remained a Participant until such time, would accrue a greater benefit under that formula at age 62 than under the benefit formula contained in Section 3.2(b) and (iii) who the Committee specifically designated as remaining --- eligible for the benefits under that benefit formula. "Early Retirement Date" means the first day of the month coinciding --------------------- with or next following the retirement from the Company and any Affiliate of a Participant on or after the attainment of his 55th birthday and the completion of 10 Years of Service. 5 "Early Retirement Income" means an amount determined with respect to ----------------------- any Participant under Section 3.4. "Earnings" for Plan Years on or after July 1, 1989, means "wages" as -------- defined under Section 3121(a) of the Code for purposes of calculating social security taxes, but determined without regard to the wage base limitation in Section 3121(a)(1) of the Code, the special rules in Section 3121(v) of the Code (except that elective nonqualified deferred compensation shall be included), any rules that limit covered employment based on the type or location of an Employee's employer, and any rules that limit the remuneration included in wages based on familiar relationship or based on the nature or location of the employment or the services performed (such as the exceptions to the definition of employment in Section 3121(b)(1) through (20) of the Code). Without limiting the generality of the foregoing, Earnings shall include amounts contributed on behalf of an Employee as part of a salary reduction agreement under a qualified cash or deferred arrangement pursuant to Code Section 401(k), amounts contributed to a plan under Code Section 125 pursuant to a salary reduction election, and elective nonqualified deferred compensation, including, without limitation, any amount that would otherwise have been paid to a Participant as salary or an annual bonus which is for- 6 gone by such Participant in order to receive a grant of stock options, but exclude all noncash compensation, non-elective nonqualified deferred compensation, reimbursements or other expense allowances, fringe benefits (cash and non-cash), moving expenses, welfare benefits and any lump sum severance payments other than two weeks severance payments in lieu of notice. For Plan Years prior to July 1, 1989, "Earnings" means the Employee's total cash compensation received during the period, including but not limited to base salary, bonuses, Annual Incentive Plan payments, prior to application of any deferrals pursuant to Code Section 125 or 401(k) or pursuant to any nonqualified plan or elective deferrals, and excluding moving allowances, expense reim- bursement, value of stock options, value of equity units, any other stock awards or grants, any fringe benefits or other non-cash items or any payments to, or from, any benefit or deferred compensation plan except as otherwise speci- fically provided. With respect to any Participant who is employed by an Affiliate not otherwise designated as a participating company in the Plan, the Committee may decide, in its sole discretion, to include compensation earned by such Participant while employed by such Affiliate in the calculation of Earnings under the Plan; provided, however, that the same inclusions and exclusions applicable to Earn- 7 ings of other Participants shall apply to the Participant's compensation earned while employed by such Affiliate. "Employee" means any person who is regularly employed by the Company. -------- "Executive Participant" means any corporate officers or other key --------------------- employees of Tambrands Inc. or of a Company or division of a Company as are designated by the Committee and approved by the Chief Executive Officer of Tambrands Inc. to be included as a Participant for purposes of the benefit formula under Section 3.2(b). "Grandfathered Participant" means any Participant who, as of June 30, ------------------------- 1990, had attained age 55 and completed 10 Years of Service and was determined by the Committee to be a principal officer of the Company. "Highest Average Earnings" means the arithmetical average of the ------------------------ annual Earnings received by a Participant in each of those five consecutive Plan Years of employment, out of the last ten Plan Years of employment ending with (or immediately preceding) the date as of which Highest Average Earnings is being determined, which produce the highest average. In the event that a Participant shall have been employed by the Company for less than five completed Plan Years, his Highest Average Earnings shall be his average 8 annual Earnings for the completed Plan Years of his employment. "Involuntarily Terminated" means a termination of a Participant's ------------------------ employment (i) by the Company or (ii) by the Participant within ninety days following (a) a material reduction in such Participant's compensation and - benefits (including the termination of this Plan or the reduction of benefits under this Plan, in which case the Participant shall be deemed to have been vested as of the date of the termination of this Plan or the reduction in benefits hereunder), (b) a material change in such Participant's duties or - responsibilities or (c) a transfer of the Participant's principal place of - employment to a location more than 35 miles from the location at which such Participant was principally employed immediately prior to the transfer, unless the Participant shall consent in writing to any such reduction, change or transfer. "Normal Retirement Date" means the first day of the month coinciding ---------------------- with or next following the 65th birthday of the Participant. "Normal Retirement Income" means an amount determined, with respect ------------------------ to any Participant, under Section 3.2. "Participant" means (i) an Employee whose benefits under the Pension ----------- - Plan are limited by reason of the limita- 9 tions under the Code specified in Section 3.2(a) or because certain elements of compensation included in the definition of Earnings are not taken into account under the Pension Plan, (ii) an Executive Participant, (iii) a Designated -- --- Participant or (iv) a Grandfathered Participant. Any person who was a -- Participant but does not qualify under the ongoing definition of Participant shall cease to be a Participant and shall have no further rights hereunder. The participation of a Participant in this Plan shall terminate automatically if the Participant ceases to qualify as a Participant hereunder, unless the Committee authorizes and approves such Participant's renewed or continued participation in this Plan. The Committee, in its sole discretion, shall have the right to terminate the participation of a Participant in this Plan at any time. In the event any Participant ceases to be a Participant either automatically or as a result of Committee action, his rights to benefits he has accrued and is vested in, if any, through his date of ceasing to be a Participant may not be altered or impaired. "Pension Plan" means the Pension Plan for Employees of Tambrands Inc., ------------ as amended from time to time. "Plan" means the Tambrands Inc. Supplemental Executive Retirement ---- Plan. 10 "Plan Year" means each twelve (12) consecutive month period beginning --------- on July 1 and ending on June 30 of the succeeding calendar year. "Primary Social Security Benefit" means the Primary Insurance Amount ------------------------------- as defined under the Federal Social Security Act, computed on an annual basis, and based upon the following assumptions: (i) Payments commence on the later of the last day of the month following the date on which a Participant attains age 62, or the date on which a Participant's retirement income under this Plan commences to be paid; (ii) The Participant had no Earnings during the year which includes the date his employment with the Company terminates or at any time thereafter; (iii) The Participant's Earnings in each prior year are equal to the maximum amount of wages subject to tax under the Federal Insurance Contributions Act. "Retirement Benefit" means the benefit determined under Section 3.1. ------------------ "Trust" means the trust, if any, described in Section 5.4. ----- "Years of Service" means the service credited to a Participant under ---------------- the Pension Plan, provided, that the Com- -------- 11 mittee shall have the discretion to grant additional Years of Service to Participants. Wherever appropriate, words used in this Plan in the singular may include the plural or the plural may be read as the singular; the masculine gender may include the feminine, and the feminine may include the masculine. 12 ARTICLE III Retirement Income ----------------- 3.1 Retirement Income. A Participant who has satisfied the vesting ----------------- conditions related to such benefits set forth in Section 3.7 shall receive retirement income in the amount determined under Section 3.2, 3.3, or 3.4 as such amount may be reduced under Section 3.5, provided that the retirement ------------- income payable to a Designated Participant or a Grandfathered Participant shall be determined under Appendix A, if it will result in such a Participant receiving a greater amount of retirement income. Any such vested retirement income ("Retirement Benefit"), which shall include any retirement income payable pursuant to Appendix A, shall be payable in the form specified in Section 3.6. 3.2 Normal Retirement Income. Subject to his meeting the applicable ------------------------ requirements of Section 3.7, a Participant shall receive monthly payments under this Section 3.2 ("Normal Retirement Income") commencing at the date specified in and in an annual amount determined under Subsection 3.2(a) or (b). Notwithstanding the foregoing, the Committee in its sole discretion may increase the amount of Normal Retirement Income payable under this Plan. (a) A Participant who has attained his Normal Retirement Date, terminated employment with the Company and 13 notified the Company of his desire to commence benefits under this Plan, shall receive annually, commencing on his Normal Retirement Date, an amount equal to the benefit payable under the benefit formula in the Pension Plan in the form of a straight life annuity without regard to the $150,000 maximum salary limitation, as such limitation may be Adjusted, under Section 401(a)(17) of the Code, and without regard to the $90,000 maximum dollar limitation, as such limitation may be Adjusted, on benefits (or, if applicable, the percentage limit set forth therein) under Section 415(b) of the Code. (b) An Executive Participant who meets the conditions to receive a benefit under Subsection 3.2(a) shall receive annually, commencing on his Normal Retirement Date, an amount equal to the greater of (i) the amount payable to - such Executive Participant under Subsection 3.2(a) or (ii) (x) 3% of his Highest -- - Average Earnings multiplied by his Years of Service not in excess of 15 years, less (y) 3% of his Primary Social Security Benefit multiplied by his Years of - Service not in excess of 15 years. 3.3 Deferred Retirement Income. A Participant who continues in ------------------------------- employment after his Normal Retirement Date shall continue to accrue benefits under this Plan after his Normal Retirement Date which shall be determined under Sec- 14 tion 3.2 based on Years of Service and Earnings to the Deferred Retirement Date. Alternatively, the Committee, in its sole discretion, may adjust the Normal Retirement Income of a Participant who retires after he attains his Normal Retirement Date to provide a benefit which is the Actuarial Equivalent of the accrued benefit the Participant would have received at his Normal Retirement Date or at any time thereafter, provided that in no event shall a Participant's Deferred Retirement Income be less than that determined under the first sentence of this Section 3.3. 3.4 Early Retirement Income. Subject to his meeting the requirements ----------------------- of Section 3.7, a Participant who has attained his Early Retirement Date and who wishes to receive benefits determined in accordance with Section 3.2 before the attainment of his Normal Retirement Date shall so notify the Company and shall thereupon receive Early Retirement Income commencing before his Normal Retirement Date. The annual amount of Early Retirement Income shall be equal to the greater of (i) the Normal Retirement Income credited under Section 3.2(a) - based on Years of Service and earnings, as defined in the Pension Plan, to his Early Retirement Date and (ii) the Normal Retirement Income credited under -- Section 3.2(b) whichever is applicable, assuming that the Participant retired at the later of age 62 or his age on his Early 15 Retirement Date (without giving effect to the requirement of Section 3.2 that the Participant have attained his Normal Retirement Date) and based on his current Highest Average Earnings, multiplied by a fraction, the numerator of which is his actual Years of Service and the denominator of which is his projected Years of Service had he continued employment until the attainment of the later of age 62 or his age on his Early Retirement Date. The amount determined under the preceding sentence (whether under Subsection 3.2(a) or 3.2(b) shall be reduced by 1/3 of 1% for each month by which his age, when payment commences, is less than 62. No adjustment shall be made for commencements after age 62. The Committee shall have complete discretion as to whether to decrease or eliminate the reductions described in this Section 3.4, and its decision shall be final in all respects. 3.5 Reduction for Benefits Received Under Other Retirement Plans. ------------------------------------------------------------ The amount of Normal Retirement Income payable to a Participant shall be reduced by the Actuarial Equivalent of any amount paid or payable to the Participant under any plan, program or agreement providing pension, retirement, or related benefits (but excluding benefits under any savings, stock bonus or incentive plan unless the Committee in its sole discretion determines to include such 16 a plan at either the time a person becomes eligible for this Plan or at the time of the awarding of recognition of additional Years of Service pursuant to Article I hereof or an additional benefit pursuant to Section 3.2 hereof, but in the event of such additional recognition of service or additional benefit, the reduction shall not be greater than the additional Retirement Income created by such additional recognition of service or additional benefit (an "Other Retirement Plan")) maintained by the Company or any Affiliate (unless it expressly provides otherwise). In the event the Committee, in its sole discretion, grants additional Years of Service to Participants based on prior service with previous employers, the amount of Normal Retirement Income described in the preceding sentence shall be further reduced by the Actuarial Equivalent of any amount paid or payable to the Participant under any Other Retirement Plan maintained by the Participant's previous employers (unless the Committee in its sole discretion modifies such reduction). 3.6 Form of Benefits. If a Participant is married on the date his ---------------- Retirement Benefit commences to be paid such Benefit shall be payable in the form of a joint and survivor annuity which is the Actuarial Equivalent of such Benefit and is payable to the Participant for his lifetime and following his death to his surviving spouse for the 17 lifetime of the spouse in one-half the amount payable to the Participant. If a Participant is not married on the date his Retirement Benefit commences to be paid such Benefit shall be payable in the form of a life annuity for his life. Notwithstanding the foregoing, with the consent of the Committee, which it may grant or deny in its sole discretion, a Participant may receive his Retirement Benefit in a form other than specified above, if such optional form of payment is available under the Pension Plan and the Participant meets each requirement under the Pension Plan respecting the election of such form of payment. Each optional form of payment shall be the Actuarial Equivalent of the Participant's Retirement Benefit. If an amount is payable under this Plan in respect of a Participant, and the present value of such amount does not exceed $3,500, such present value may be immediately distributed to the Participant (or his beneficiary, as the case may be) at the discretion of the Company, without the consent of the Participant. 3.7 Vesting of Retirement Benefit. Except as provided in Section ----------------------------- 3.8, no amount shall be payable to a Participant as a Retirement Benefit unless such Participant is vested in such Retirement Benefit in accordance with the 18 provisions of this Section 3.7. A Participant who has completed 5 Years of Service shall be vested in the Retirement Benefit payable under Subsection 3.2(a). A Participant who has attained his Early Retirement Date (age 55 with 10 Years of Service) while a Participant shall be vested in the Retirement Benefit described in Subsection 3.2(b) and payable under Section 3.4. A Participant who has attained his Normal Retirement Date and completed 10 Years of Service while a Participant shall be vested in the Retirement Benefit described in Subsection 3.2(b) and payable under either Section 3.2 or 3.3. 3.8 Involuntary Termination of Employment Following a Change of ------------------------------------------------------------ Control. Notwithstanding anything else in this Plan to the contrary, in the - - ------- event a Participant is Involuntarily Terminated within two years following the occurrence of a Change of Control, regardless of the Participant's age and Years of Service at such termination, such Participant shall be entitled to receive a monthly benefit commencing at or after the later of age 55 and such termination of employment equal to the benefit that would have been payable to such Participant at his Normal Retirement Date (but subject to an actuarial reduction for early commencement to the extent such reduction would be imposed under Section 3.4) based on the number of Years of Service such 19 Participant had completed prior to such termination, plus two additional Years of Service. ARTICLE IV Death Benefits -------------- If a Participant dies after becoming eligible (other than satisfying the requirement for actual retirement) for Early Retirement Income under Section 3.4 and is survived by a spouse, such spouse shall be paid a benefit (a "Surviving Spouse's Benefit") commencing on the first day of the month in which the Participant would have attained his Early Retirement Date had he survived. The monthly amount of the Surviving Spouse's Benefit payable in accordance with this Article shall be equal to the monthly amount which would have been payable to the Participant's spouse if the deceased Participant had separated from service on the date of death, survived until his Early Retirement Date, retired on his Early Retirement Date with a "joint and survivor annuity" as described in Section 3.6, and died on the day following his Early Retirement Date. If a Participant dies while employed by the Company and is not married, no death benefit shall be payable under this Plan. 20 Notwithstanding the preceding provisions of this Article IV, (i) if a - Participant dies while employed by the Company and after properly electing an optional form of payment in accordance with Section 3.6 that has been consented to by the Committee, payment shall be made in accordance with such election or (ii) if a Participant who is entitled to receive a Retirement Benefit under -- Subsection 3.2(a) dies, the Company shall pay a death benefit hereunder to the beneficiary, if any, to whom the Pension Plan pays a death benefit in respect of such Participant in an amount equal to the amount which would have been payable to such beneficiary under the Pension Plan had such Retirement Benefit been payable under the Pension Plan. ARTICLE V Administrative and General Provisions ------------------------------------- 5.1 Administration. This Plan shall be administered by Tambrands -------------- Inc. Tambrands Inc. shall have the power, subject to the terms of this Plan, to make all interpretations and other determinations not reserved to the Committee which may be necessary or desirable for this Plan's administration. Any interpretations and determinations of the Committee or Tambrands Inc. shall be final and conclusive. No member of the Committee or employee of 21 Tambrands Inc. may act or vote upon a decision specifically relating to his own participation in this Plan. No member of the Board of Directors of Tambrands Inc. or the Committee and no employee of Tambrands Inc. shall be liable for any action or determination made in good faith with respect to this Plan or the rights of any person under this Plan, nor shall Tambrands Inc. be liable for any such action or determination. Tambrands Inc. or its agents shall keep such records as may be necessary for the administration of this Plan and shall furnish Participants such statements as it may determine to be necessary or desirable to show their interests in this Plan. 22 5.2 Claims Procedure. ---------------- (a) The Committee shall be responsible for determining all claims for benefits under this Plan by Participants or their beneficiaries. Within 90 days after receiving a claim (or within up to 180 days, if the claimant is so notified, including the reason for the delay), the Committee shall notify the Participant or beneficiary of its decision in writing, giving the reasons for its decision if adverse to the claim. If the decision is adverse to the claimant, the Committee shall advise him of the Plan provisions involved, of any additional information which he must provide to perfect his claim and why, and of his right to request a review of the decision. (b) A claimant may request a review of an adverse decision by written request to the Committee made within 60 days after receipt of the decision. The claimant, or his attorney, may review pertinent documents and submit written issues and comments. (c) Within 60 days after receiving a request for review, the Committee shall notify the claimant in writing of (i) its decision, (ii) the reasons therefor, and (iii) the Plan provisions upon which it is based. (d) The Committee may at any time alter the claims procedure set forth above, so long as the revised 23 claims procedure complies with ERISA and the regulations issued thereunder. 5.3 Inalienability and Forfeiture of Benefits. Except as set forth ----------------------------------------- below, the benefits payable under this Plan shall not be subject to alienation, transfer, assignment, garnishment, execution or levy of any kind, and any attempt to cause any benefits to be so subjected shall not be recognized. If any Participant entitled to a benefit under this Plan is discharged for cause, enters into competition with the Company, interferes with the relations between the Company and any customer, discloses confidential information that has an adverse effect on the Company, or engages in any activity that would result in any decrease in sales or income of the Company, the rights of such Participant to a benefit under this Plan will be forfeited, unless the Committee in its sole discretion determines that such activity is not detrimental to the best interest of the Company. The foregoing sentence of this Section 5.3 shall not apply (a) to any event or action occurring after a Change of Control, or (b) to any event occurring prior to a Change of Control unless the Participant had been notified in writing prior to such Change of Control of implementation of the foregoing sentence or the Committee had otherwise taken formal actions to implement the foregoing sentence. 24 5.4 Unsecured General Creditor. Participants shall have no legal or -------------------------- equitable rights, interest or claims in any property or assets of the Company. Except as expressly otherwise provided by the Company pursuant to Section 5.5, no assets of the Company shall be held under any trust for the benefit of Participants, or held in any way as collateral security for the fulfilling of the obligations of the Company under this Plan. The Company's obligation under this Plan shall be merely that of an unfunded and unsecured promise of the Company to pay money in the future. Notwithstanding any other provision of this Plan, any claim for benefits under this Plan shall be subordinate to claims by general creditors of the Company against the assets of the Company and against the assets of any trust that may be established by the Company pursuant to Section 5.4. 5.5 Trust. The Company shall be responsible for the payment of all ----- benefits provided under this Plan. At its discretion, Tambrands Inc. may establish one or more trusts, with such trustees as the Committee may approve, for the purpose of providing for the payment of such benefits. Such trust or trusts may be irrevocable, but the assets thereof shall be subject to the claims of the Company's creditors. To the extent any benefits provided under this Plan are actually paid from any such trust, the Company 25 shall have no further obligation with respect thereto, but to the extent not so paid, such benefits shall remain the obligation of, and shall be paid by, the Company. In the event that assets of any such trust are applied to satisfy claims of creditors of the Company, an amount equal to the amount so applied shall be contributed promptly to the trust by the Company. 5.6 Not a Contract of Employment. The terms and conditions of this --------------------------- Plan shall not be deemed to constitute a contract of employment between the Company and the Participant, and the Participant shall have no rights against the Company except as may otherwise be specifically provided herein. Moreover, nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of the Company or to interfere with the right of the Company to discipline or discharge him at any time for any reason whatsoever. 5.7 Captions. The captions of the articles, sections and paragraphs -------- of this Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions. 5.8 Governing Law. The provisions of this Plan shall be construed ------------- and interpreted according to the laws of the State of New York. 26 5.9 Validity. In case any provision of this Plan shall be illegal or -------- invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal and invalid provision had never been inserted herein. 5.10 Notice. Any notice or filing required or permitted to be given ------ to the Committee or the Company under this Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, to the Committee or the Company, as the case may be, at the principal office of the Company. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. 5.11 Incompetent Participant. In the event that it shall be found ----------------------- upon evidence satisfactory to the Company that any Participant to whom a benefit is payable under this Plan is unable to care for his affairs because of illness or accident, any payment due (unless prior claim therefor shall have been made by a duly authorized guardian or other legal representative) may be paid, upon appropriate indemnification of the Company and the Committee, to the spouse or other person deemed by the Company to have incurred expense 27 for such Participant. Any such payment shall be a payment for the account of the Participant and shall be a complete discharge of any liability of this Plan therefor. ARTICLE VI Amendment and Termination ------------------------- The Committee may terminate or amend this Plan in any respect at any time, provided that no action of the Committee may, without the consent of the person involved, alter or impair the rights of a Participant to any benefits accrued and vested hereunder. IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly authorized officer, as of this 1st day of June, 1994. TAMBRANDS INC. By: /s/Kevin J. Paradise -------------------- Title: Vice President - Human Resources 28 APPENDIX A ---------- Notwithstanding anything else to the contrary, this Appendix A shall apply for determining the benefits of Designated Participants and Grandfathered Participants. All capitalized terms used herein shall have the meaning set forth in the Plan. 1.1 Benefits. -------- A. A Designated Participant or a Grandfathered Participant who has satisfied the vesting conditions related to such benefits set forth in Subsection 1.1(E) below shall receive annually, commencing on his Normal Retirement Date, retirement income in the amount determined under Section 1.1(B) or 1.1(C) below, as such amount may be reduced under Section 3.5 of the Plan. B. A Designated Participant who meets the conditions to receive a benefit under Subsection 1.1(A) shall receive annually, commencing on his Normal Retirement Date, an amount equal to (i) 45% of his Highest Average Earnings - times the lesser of (x) one or (y) a fraction, the numerator of which is the - - Designated Participant's Years of Service and the denominator of which is the remainder of 62 minus the Participant's age at his or her birthday occurring in the calendar year in which he or she first became an employee of the Company less (ii) the product of his Primary Social Security Benefit times a percentage -- equal to the percentage determined under subclause (i). C. A Grandfathered Participant who meets the conditions to receive a benefit under Subsection 1.1(A) shall receive annually, commencing on his Normal Retirement Date, an amount equal to the greater of (i) an amount equal to 1.5% - of his Highest Average Earnings multiplied by the number of his Years of Service, less $762, and (ii) an amount equal to 3% of his Highest Average -- Earnings multiplied by the number of his Years of Service not in excess of 15 Years of Service, less $762. D. A Designated Participant or a Grandfathered Participant who has attained his Early Retirement Date may elect to have his retirement income payable at the same time and subject to the same offsets and reductions as apply with respect to any retirement income payable under Section 3.4 29 of the Plan. A Designated Participant or a Grandfathered Participant who continues in employment after his Normal Retirement Date shall have his retirement income payable at the same time and subject to the same offsets and reductions as apply with respect to any retirement income payable under Section 3.3 of the Plan. E. Except as provided in Subsection 1.1(F) below, no amount shall be payable to a Participant as a Retirement Benefit under this Appendix A unless such Participant is vested in such Retirement Benefit in accordance with the provisions of this Subsection 1.1(E). A Designated Participant who has attained his Early Retirement Date (age 55 with 10 Years of Service) while a Participant or who has attained his Normal Retirement Date and completed 10 Years of Service while a Participant shall be vested in the Retirement Benefit described in Subsection 1.1(B). A Grandfathered Participant who has completed 5 Years of Service shall be vested in the Retirement Benefit payable under Subsection 1.1(C). F. Notwithstanding anything else in this Appendix A or the Plan to the contrary, in the event a Designated Participant or a Grandfathered Participant is Involuntarily Terminated within two years following the occurrence of a Change of Control, regardless of the Participant's age and Years of Service at such termination, such Participant shall be entitled to receive a monthly benefit commencing at or after the later of age 55 and such termination of employment equal to the benefit that would have been payable to such Participant at his Normal Retirement Date (but subject to an actuarial reduction for early commencement to the extent such reduction would be imposed under Section 3.4 of the Plan) based on the number of Years of Service such Participant had completed prior to such termination, plus two additional Years of Service. 30 EX-10.7 8 AMENDMENT DIRECTORS STOCK INCENTIVE PLAN EXHIBIT 10.7 FOURTH AMENDMENT TO THE TAMBRANDS INC. 1992 DIRECTORS STOCK INCENTIVE PLAN ----------------------------------- WHEREAS, TAMBRANDS INC. (the "Company") adopted the 1992 Directors Stock Incentive Plan (the "Plan"); and WHEREAS, pursuant to Section 13 of the Plan, the Board of Directors retained the right to amend the Plan; NOW, THEREFORE, the Plan is amended as follows: 1. Section 8(b) is amended to delete the first sentence thereof and to substitute a new first sentence thereof, to read as follows: The date of each grant shall be November 15 for Awards granted in 1991, August 15 for Awards granted in 1992 to Participating Directors, August 24 for Awards granted in 1993 to Participating Directors, August 23 for Awards granted in 1994 to Participating Directors and September 15 for Awards granted in 1994 to Eligible Directors (the "Date of Grant"). 2. Section 8(d) is amended to delete the first sentence thereof and to substitute a new first sentence thereof, to read as follows: A Participant who wishes to elect to receive an Exchange Option in accordance with Section 8(a) shall deliver to the Secretary of the Company a written irrevocable election, in a form acceptable to the General Counsel of the Company, not later than November 8, 1991 for grants to be made in November 1991, August 10, 1992 for grants to be made in August 1992, August 17, 1993 for grants to be made in August 1993, August 16, 1994 for grants to be made in August 1994 and September 8 for grants to be made in September 1994, specifying the type and amount of compensation such Participant wishes to forgo. -2- 3. This Fourth Amendment to the Plan shall be effective as of March 1, 1994. IN WITNESS WHEREOF, the Company has caused this Fourth Amendment to be executed by its duly authorized officer on the 28th day of April, 1994. TAMBRANDS INC. By:/s/Helen G. Goodman --------------------------- Title: Senior Vice President - Human Resources ------------------------ WITNESS: /s/Concetta Bazzano - - -------------------------- Title: Executive Secretary -------------------- EX-12 9 COMPUTATION OF RATIO EARNINGS TO FIXED CHARGES TAMBRANDS INC. FORM 10-Q PART II, ITEM 6., EXHIBIT 12 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Unaudited) The following table sets forth the Company's ratio of earnings to fixed charges for the periods indicated.
Six months Three months Three months ended ended ended Year Ended (in thousands, except ratios) June 30, 1994 June 30, 1994 March 31, 1994 December 31, --------------- --------------- --------------- ----------------------------------------------- 1993 1992 1991 1990 1989 ---- ---- ---- ---- ---- Earnings: Income before income taxes 66,749 31,758 34,991 118,652 191,863 131,825 154,696 30,859 Fixed charges 4,901 2,478 2,423 6,549 9,897 10,258 13,149 9,490 ------ ------ ------ ------- ------- ------- ------- ------ EARNINGS 71,650 34,236 37,414 125,201 201,760 142,083 167,845 40,349 ====== ====== ====== ======= ======= ======= ======= ====== Fixed charges: Interest portion of operating lease expense: Operating lease expense 2,029 1,105 924 5,027 4,031 4,204 2,221 2,053 Assumed interest factor 0.33 0.33 0.33 0.33 0.33 0.33 0.33 0.33 ------ ------ ------ ------- ------- ------- ------- ------ Interest portion of operating lease expense 670 365 305 1,659 1,330 1,387 733 677 Interest expense 4,231 2,113 2,118 4,890 8,567 8,871 12,416 8,813 ------ ------ ------ ------- ------- ------- ------- ------ FIXED CHARGES 4,901 2,478 2,423 6,549 9,897 10,258 13,149 9,490 ====== ====== ====== ======= ======= ======= ======= ====== RATIO OF EARNINGS TO FIXED CHARGES 14.6 13.8 15.4 19.1 20.4 13.9 12.8 4.3 ====== ====== ====== ======= ======= ======= ======= ======
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