-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DifGjZXqVUoFmDWuOvwg0zP2AOSfP1hoaRYhjQqpsn/AiPTJyaEGqhutdbB3soJI ZdvkPXFZ/wyrfOk1/U3c8w== 0000009892-96-000008.txt : 19960327 0000009892-96-000008.hdr.sgml : 19960327 ACCESSION NUMBER: 0000009892-96-000008 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960326 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BARD C R INC /NJ/ CENTRAL INDEX KEY: 0000009892 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 221454160 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06926 FILM NUMBER: 96538397 BUSINESS ADDRESS: STREET 1: 730 CENTRAL AVE CITY: MURRAY HILL STATE: NJ ZIP: 07974 BUSINESS PHONE: 9082778000 MAIL ADDRESS: STREET 1: 730 CENTRAL AVENUE CITY: MURRAY HILL STATE: NJ ZIP: 07974 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended December 31, 1995 Commission File Number 1-6926 C. R. BARD, INC. (Exact name of registrant as specified in its charter) New Jersey 22-1454160 (State of incorporation) (I.R.S. Employer Identification No.) 730 Central Avenue, Murray Hill, New Jersey 07974 (Address of principal executive offices) Registrant's telephone number, including area code: (908) 277-8000 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered Common Stock - $.25 par value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. [ X ] The aggregate market value of the voting stock held by nonaffiliates of the registrant was approximately $2,059,900,000 based on the closing price of stock traded on the New York Stock Exchange on February 29, 1996. As of February 29, 1996, there were 57,419,373 shares of Common Stock, $.25 par value per share, outstanding. The Company's definitive Proxy Statement dated March 8, 1996 has been incorporated by reference with respect to certain information contained therein in Part III and Part IV of this Form 10-K. The exhibit index is located in Part IV, Item 14, Page IV-1. PART I Item 1. Business General Development of Business The Company was started by Charles Russell Bard in 1907. One of its first medical products was the silk urethral catheter imported from France. In 1923, the Company was incorporated as C. R. Bard, Inc. and distributed an assortment of urological and surgical products. Bard became a publicly-traded company in 1963 and five years later was traded on the New York Stock Exchange. In 1966, Bard acquired its supplier of urological and cardiovascular specialty products - the United States Catheter & Instrument Co. In 1980 Bard acquired its major source of the Foley catheter - Davol Inc. Numerous other acquisitions were made over the last thirty-five years broadening Bard's product lines. Today, C. R. Bard, Inc. is a leading multinational developer, manufacturer and marketer of health care products. 1995 sales of $1.138 billion increased 7% from 1994. 1994 sales of $1.065 billion increased 6% from 1993. Net income for 1995 totaled $86.8 million or $1.53 per share, and increased 15% and 14% respectively against 1994. Net income for 1994 totaled $75.6 million or $1.34 per share, an increase of 31% against 1993. Acquisitions In September 1995, the Company completed a merger with MedChem Products, Inc. (MedChem) issuing 3,192,345 shares of its common stock in exchange for all outstanding common stock of MedChem. In October 1995, the Company completed a merger with American Hydro- Surgical Instruments, Inc. (AHS) issuing 1,338,446 shares of its common stock in exchange for all outstanding common stock of AHS. These mergers have been accounted for as poolings of interests, and accordingly, the Company's information contained in this Annual Report on Form 10-K has been restated to include the accounts and operations of MedChem and AHS for all periods presented. During 1994 the Company spent $118.2 million acquiring new businesses. Angiomed AG, a German company with products marketed in the areas of urology, radiology, vascular surgery and gastroenterology was purchased in October 1994. VasCath, Inc., a Canadian company with a strong position in specialty catheter products was acquired in December 1994. In 1993 acquisition spending totalled $70 million. Pilot Cardiovascular, Inc., a California company with deflectable tipped angioplasty guidewire technology, was purchased in September 1993. Bainbridge Sciences, Inc., a Washington company, was purchased in October 1993 while in its developmental stages. Bainbridge was renamed Bard Diagnostic Sciences early in 1995. Bard Diagnostic Sciences is an "in vitro" diagnostics company with products focused on cancer detection. I-1 Product Group Information Bard is engaged in the design, manufacture, packaging, distribution and sale of medical, surgical, diagnostic and patient care devices. Hospitals, physicians and nursing homes purchase approximately 90% of the Company's products, most of which are used once and discarded. The following table sets forth for the last three years ended December 31, 1995, the approximate percentage contribution by product line to Bard's consolidated net sales. The figures are on a worldwide basis. Years Ended December 31, 1995 1994 1993 Cardiovascular 33% 35% 38% Urological 28% 27% 25% Surgical 39% 38% 37% Total 100% 100% 100% Narrative Description of Business General Historically, Bard has been known for its products in the urological field, where its Foley catheter is the leading device for bladder drainage. Today, Bard's largest product group is in surgical devices, contributing approximately 39% of consolidated net sales. Bard continually expands its research toward the improvement of existing products and the development of new ones. It has pioneered in the development of disposable medical products for standardized procedures. Bard's domestic sales may be grouped into three principal product lines: cardiovascular, urological and surgical. International sales include most of the same products manufactured and sold by Bard's domestic operations. Domestic and international sales are combined for product group sales presentation. Cardiovascular - Bard's line of cardiovascular products includes balloon angioplasty catheters, steerable guidewires, guide catheters and inflation devices; angiography catheters and accessories; introducer sheaths; electrophysiology products including cardiac mapping and electrophysiology laboratory systems, and diagnostic and temporary pacing electrode catheters; cardiopulmonary support systems; and blood oxygenators and related products used in open-heart surgery. See the first paragraph of Item 3. Legal Proceedings on Page I-5 for additional information. Urological - Bard offers a complete line of urological products including Foley catheters, procedural kits and trays and related urine monitoring and collection systems; biopsy and other cancer detection products; ureteral stents; and specialty devices for incontinence, endoscopic procedures and stone removal. I-2 Surgical - Bard's surgical products include specialty access catheters and ports; implantable blood vessel replacements; fabrics and meshes for vessel and hernia repair; surgical suction and irrigation devices; wound and chest drainage systems; devices for endoscopic, orthopaedic and laparoscopic surgery; blood management devices; products for wound management and skin care; and percutaneous feeding devices. International - Bard markets cardiovascular, urological and surgical products throughout the world. Principal markets are Japan, Canada, the United Kingdom and continental Europe. Approximately two-thirds of the sales in this segment are of products manufactured by Bard in its facilities in Canada, France, Germany, Ireland, Malaysia and the United Kingdom. The balance of the sales are from products manufactured in the continental United States, Puerto Rico or Mexico for export. Bard's foreign operations are subject to the usual risks of doing business abroad, including restrictions on currency transfer, exchange fluctuations and possible adverse government regulations. See p. II-23 Note 10 in the Notes to Consolidated Financial Statements for additional information. Competition The Company knows of no published statistics permitting a general industry classification which would be meaningful as applied to the Company's variety of products. However, products sold by the Company are in substantial competition with those of many other firms, including a number of larger well-established companies. The Company depends more on its consistently reliable product quality, dependable service and its ability to develop products to meet market needs than on patent protection, although some of its products are patented or are the subject of patent applications. Marketing The Company's products are distributed domestically directly to hospitals and other institutions as well as through numerous hospital/surgical supply and other medical specialty distributors with whom the Company has distributor agreements. In international markets, products are distributed either directly or through distributors with the practice varying by country. Sales promotion is carried on by full-time representatives of the Company in domestic and international markets. Sales to a distributor, which supplies the Company's products to many end-users, accounted for approximately 9% of the Company's sales and the five largest distributors combined accounted for approximately 22% of such sales. Combined sales to federal agencies accounted for approximately 1% of sales in 1995 (See Item 3. Legal Proceedings). I-3 In order to service its customers, both in the U.S. and outside the U.S., the Company maintains inventories at distribution facilities in most of its principal marketing areas. Orders are normally shipped within a matter of days after receipt of customer orders, except for items temporarily out of stock, and backlog is normally not significant in the business of the Company. Most of the products sold by the Company, whether manufactured by it or by others, are sold under the BARD trade name or trademark or other trademarks owned by the Company. Such products manufactured for the Company by outside suppliers are produced according to the Company's specifications. Regulation The development, manufacture, sale and distribution of the Company's products are subject to comprehensive government regulation. Government regulation by various federal, state and local agencies, which includes detailed inspection of and controls over research and laboratory procedures, clinical investigations, manufacturing, marketing, sampling, distribution, recordkeeping, storage and disposal practices, substantially increases the time, difficulty, and costs incurred in obtaining and maintaining the approval to market newly developed and existing products. Government regulatory actions can result in the seizure or recall of products, suspension or revocation of the authority necessary for their production and sale, and other civil or criminal sanctions. Raw Materials The Company uses a wide variety of readily available plastic, textiles, alloys and rubbers for conversion into its devices. Two large, U.S.-based chemical suppliers have sought to restrict the sale of certain of their materials to the device industry for use in implantable products. Although one guiding principle in the adoption of this policy is the avoidance of negative economic effect on the health care industry, a small portion of our product lines may face a short-term threat to the continuity of their raw material supply. The companies have indicated that their action is based on product liability concerns. Bard and the medical device industry are working to resolve this problem in general and with these suppliers to assure a continuing supply of necessary raw materials. Bard is working to maintain a supply of qualified materials by developing new supplies and increasing inventories of important stocks. Environment The Company continues to address current and pending environmental regulations relating to its use of Ethylene Oxide and CFC's for the sterilization of some of its products. The Company is complying with regulations reducing permitted EtO emissions by installing scrubbing equipment and adjusting its processes. I-4 The Company recognizes the Montreal Protocol Treaty which plans for the reduction of CFC use worldwide, and the Company has reduced its own use of CFC's for sterilization more rapidly than is required by this treaty. Facilities, processes and equipment are required to achieve these goals and meet these regulations. The Company has eliminated over 95% of CFC use for sterilization. The Company intends to continue to reduce this use of CFC's. Capital expenditures required will not significantly adversely affect the Company's earnings or competitive position. Employees The Company employs approximately 9,400 persons. Seasonality The Company's business is not affected to any material extent by seasonal factors. Research and Development The Company's research and development expenditures amounted to approximately $75,600,000 in 1995, $71,600,000 in 1994 and $67,500,000 in 1993. Item 2. Properties The executive offices of the Company are located in Murray Hill, New Jersey in facilities which the Company owns. Domestic manufacturing and development units are located in California, Florida, Georgia, Kansas, Massachusetts, Michigan, New Jersey, New York, Ohio, Puerto Rico, Rhode Island, South Carolina, Texas, Utah and Washington. Sales offices and distribution points are in these locations as well as others. Outside the U.S., the Company has plants or offices in Australia, Austria, Belgium, Canada, France, Germany, Hong Kong, India, Ireland, Italy, Japan, Korea, Malaysia, Mexico, Netherlands, Portugal, Singapore, Spain and the United Kingdom. The Company owns approximately 2,530,000 square feet in 22 locations and leases approximately 1,408,000 square feet of space in 63 locations. All these facilities are well maintained and suitable for the operations conducted in them. Item 3. Legal Proceedings On October 14, 1993, the Company entered into a Plea Agreement with the Department of Justice in connection with charges stemming from violations, primarily during the 1980s by the Company's USCI division, of the Federal Food, Drug and Cosmetic Act and other statutes. In connection with such violations, the Defense Logistics Agency debarred the USCI division from entering into new contracts with the U.S. Government. Such debarment will expire on June 19, 1996. I-5 Item 3. Legal Proceedings (continued) On November 21, 1994 an action was commenced against the Company by Surgical Laser Technologies, Inc. (SLT) in the United States District Court for the Eastern District of Pennsylvania. The Amended Complaint alleged that the Company has repudiated, refused to perform and breached an alleged contract with SLT, and further alleges a breach of the duty of good faith and fair dealing in the conduct of contract negotiations between the parties and unfair competition. Damages of an unspecified amount are sought together with injunctive relief. The Company has answered the Amended Complaint, denying that there was ever agreement to the alleged contract, or that the Company otherwise breached any duty owed to SLT. Discovery has recently commenced and no trial date has yet been set. The Company believes it has meritorious defenses to this action. On October 6, 1995, Trimedyne, Inc. filed a complaint in State Court in California alleging breach of contract, fraud and negligent misrepresentation by the Company in connection with its performance under a Development, Supply and License Agreement dated June 28, 1991, concerning side-firing laser products (Urolase). In addition, the complaint alleges that the Company has failed to pay for product purchased, along with certain other charges. Trimedyne, Inc. seeks damages totalling $72 million plus punitive damages. The case has been removed to the Federal District Court and transferred to the District of New Jersey. The Company believes it has some liability to the plaintiff for certain goods ordered; however, the amount is in dispute. Except as to this claim, the Company believes that it has meritorious defenses to this action. On October 3, 1995, Oliver Lipman & Associates, a firm specializing in the medical device industry, filed a compliant in the State Court in New Jersey alleging that it was instrumental in facilitating the negotiations which led to the merger between Bard and MedChem Products, Inc. The plaintiff is demanding judgement against Bard and MedChem Products, Inc. for compensatory damages. An answer denying the allegations has been filed. The Company believes it has meritorious defenses to this action. During 1993, the United States Environmental Protection Agency (the "EPA") notified the Company's Urological division that it may be a potentially responsible party relative to clean-up of the Frontier Chemical site in Niagara Falls, New York. In September, 1993, the Company entered into a consent order concerning the first phase of the clean-up, which was a drum removal action. The Company's liability for the first phase was $119,000. A second phase of remedial action involves removal of waste in several large tanks. The Company's liability for this phase was assessed at less than I-6 Item 3. Legal Proceedings (continued) $14,000. The third phase of remedial action involves soil and groundwater contamination which may be significant in view of the age of this industrial site. The Company's responsibility for clean up of this phase is unknown at this time, but it is believed that the final resolution of this matter is not expected to have a material adverse financial impact on the Company. During 1992, the EPA notified the Company that it had been identified as a potentially responsible party in connection with an ongoing investigation of the Solvents Recovery Service of New England site in Southington, Connecticut. Although the full extent of liability in this case is unknown, the Company has been identified with less than one-half percent of the total gallonage of waste materials. In June of 1995, the Company accepted the EPA's invitation to enter into negotiations concerning the Group's undertaking the remedial investigation and feasibility study. Negotiations concerning a Consent Order to allow the Group to undertake the remedial investigation and feasibility study are ongoing. The final resolution of this matter is not expected to have a material adverse financial impact on the Company. The Company is also subject to other legal proceedings and claims which arise in the ordinary course of business. Item 4. Results of Votes of Security Holders Not applicable. I-7 Executive Officers of the Registrant Set forth below is the name, age, position, five year business history and other information with respect to each executive officer of the Company as of March 1, 1996. No family relationships exist among the officers of the Company. Name Age Position William H. Longfield 57 Chairman and Chief Executive Officer and Director Benson F. Smith 48 President and Chief Operating Officer and Director William C. Bopp 52 Executive Vice President and Chief Financial Officer Timothy M. Ring 38 Group Vice President William T. Tumber 61 Group Vice President John H. Weiland 40 Group Vice President E. Robert Ernest 55 Vice President - Planning and Development Richard A. Flink 61 Vice President, General Counsel and Secretary Christopher D. Ganser 43 Vice President - Quality Assurance Hope Greenfield 45 Vice President - Human Resources Charles P. Grom 48 Vice President and Controller Earle L. Parker 52 Vice President and Treasurer All officers of the Company are elected annually by the Board of Directors. I-8 Mr. Longfield joined the Company in 1989 and was elected executive vice president and chief operating officer. In 1991 he was elected president. In June 1994 he was elected president and chief executive officer. In September 1995 he was elected to his present position. Prior to joining the Company, he was chief executive officer since 1984 of the Cambridge Group, Inc., a provider of long term health services for the elderly. Prior to joining Cambridge, he was employed by Lifemark, Inc., a health care management company, and for over 20 years with American Hospital Supply Corporation. Mr. Smith joined Bard in 1980. In 1990, he was appointed to the position of group executive. In 1991, he was elected group vice president. In 1993, he was elected to the position of executive vice president with worldwide responsibility for operations. In 1994 he was elected to the additional post of chief operating officer. In October 1995 he was elected to his present position. Mr. Bopp joined the Company in 1980. In 1983 he was elected to the position of treasurer. He was named vice president and treasurer in 1989. In 1992 he was elected senior vice president and chief financial officer. In October 1995 he was elected to his present position. Mr. Ring joined the Company in 1992 and was elected vice president- human resources. Prior to joining the Company he had been with Abbott Laboratories Inc., a pharmaceutical company, since 1982 and his last position with their Hospital Products division had been director of personnel. In December 1993, he was elected to the position of group vice president. Mr. Tumber joined Bard in 1980. In 1988 he was promoted to vice president and general manager of Davol Inc. In 1990 he was promoted to president of Davol Inc. and subsequently appointed to the position of group executive. In September 1991, he was elected to his present position. Mr. Weiland joined the Company in February 1996 as group vice president. Prior to joining the Company, since 1991 he was senior vice president, North American Group, with Dentsply International, the nation's largest manufacturer of professional dental products. Prior to that he was president and chief executive officer of Pharmacia Diagnostics, Inc., a manufacturer of medical diagnostic supplies and in various positions with Baxter International, Inc., a manufacturer of health care products and services. Mr. Ernest joined the Company in 1977 and was elected to his present position in 1979. Mr. Flink joined the Company in 1970, was elected vice president and general counsel in 1973 and was elected to his present position in 1985. I-9 Mr. Ganser joined the Company in 1989 as Manager, Quality Assurance in the Moncks Corner facility. In April, 1994 he was elected to his present position. Ms. Greenfield joined the Company in October 1995 as corporate vice president, human resources. Prior to joining the Company she had been with Digital Equipment Corporation, a supplier of information systems and hardware, as vice president development and learning and in various human resource positions. Mr. Grom joined the Company in 1977. In 1989 he was promoted to assistant corporate controller and in 1994 was elected corporate controller. In April 1995 he was elected to his present position. Mr. Parker joined the Company in 1979. In December 1990 he was promoted to vice president-operations for the USCI division and, later that year, was promoted to vice president and general manager of the USCI Angiography division. In 1992 he was elected Treasurer and effective January 1, 1995 he was elected to his present position. I-10 PART II Item 5. Market for Registrant's Common Stock and Related Stockholder Matters Market and Market Prices of Common Stock The Company's common stock is traded on the New York Stock Exchange using the symbol: BCR. The following table illustrates the high and low sales prices as traded on the New York Stock Exchange for each quarter during the last two years. Quarters 1st 2nd 3rd 4th Year 1995 High 28-1/8 31-1/8 31-7/8 32-1/4 32-1/4 Low 25-1/2 27-1/4 29-1/4 27-7/8 25-1/2 Close 27-5/8 30 30-1/2 32-1/4 32-1/4 1994 High 30-1/2 26-1/4 28-1/4 27-1/2 30-1/2 Low 23-7/8 22-3/8 22-1/4 23-5/8 22-1/4 Close 24-1/4 23-7/8 25 27 27 Approximate Number of Equity Security Holders Approximate Number of Record Holders Title of Class as of February 29, 1996 Common Stock - $.25 par value 7,502* *Included in the number of shareholders of record are shares held in "nominee" name. Dividends The Company paid cash dividends of $33,100,000 or $.62 per share in 1995 and $30,100,000 or $.58 per share in 1994. The following table illustrates the quarterly rate of dividends paid per share. Quarters 1st 2nd 3rd 4th Year 1995 $ .15 $ .15 $ .16 $ .16 $ .62 1994 $ .14 $ .14 $ .15 $ .15 $ .58 In January 1996, the first quarter dividend of $.16 per share was declared, indicating an annual rate of $.64 per share. The first quarter dividend was paid on February 2, 1996 to shareholders of record on January 22. II-1 Item 6. Selected Financial Data (Thousands of dollars except per share amounts)
For the Years Ended December 31, 1995 1994 1993 1992 1991 INCOME STATEMENT DATA Net sales $1,137,800 $1,064,600 $1,008,800 $1,033,800 $903,500 Gross profit 587,800 551,100 519,700 510,000 429,600 Operating income 139,900 153,000 132,000 136,300 104,600 Net income 86,800 75,600 57,800 83,400 65,600 BALANCE SHEET DATA Total assets $1,091,000 $1,043,100 $ 881,400 $ 789,200 $736,600 Working capital 230,600 72,300 165,200 213,200 192,900 Long-term debt 198,400 93,400 82,100 84,000 80,000 Total debt 265,300 294,000 171,000 148,300 142,000 Shareholders' investment 564,600 495,400 439,900 444,900 424,300 COMMON STOCK DATA Net income per share $ 1.53 $ 1.34 $ 1.02 $ 1.45 $ 1.14 Cash dividends per share .62 .58 .54 .50 .46 Shareholders' investment per share $ 9.89 $ 8.77 $ 7.77 $ 7.75 $ 7.37 Average shares outstanding (000's) 56,731 56,461 56,692 57,422 57,609 SUPPLEMENTARY DATA Return on average shareholders' investment 16.4% 16.2% 13.1% 19.2% 16.1% Gross profit/ net sales 51.7% 51.8% 51.5% 49.3% 47.5% Operating income/ net sales 12.3% 14.4% 13.1% 13.2% 11.6% Net income/net sales 7.6% 7.1% 5.7% 8.1% 7.3% Days-accts rec. 66.7 62.3 60.7 63.1 63.5 Days-inventory 149.4 143.6 135.9 129.4 137.2 Total debt/total capitalization 32.0% 37.2% 28.0% 25.0% 25.1% Interest exp. $ 24,200 $ 16,300 $ 12,500 $ 13,400 $ 13,900 R&D expense $ 75,600 $ 71,600 $ 67,500 $ 62,300 $ 56,700 # of employees 9,400 8,900 8,650 9,000 9,250 Net sales per employee $ 121.0 $ 119.6 $ 116.6 $ 114.9 $ 97.7 Net income per employee $ 9.2 $ 8.5 $ 6.7 $ 9.3 $ 7.0
II-2 Item 7. Management's Discussion and Analysis of Results of Operations and of Financial Conditions General Bard is a leading multinational developer, manufacturer and marketer of products for the large and growing health care industry. Worldwide health care expenditures approximated $2.2 trillion in 1995 with about half that amount spent in the United States. Bard's segment of this industry, itself a multi-billion dollar market, is primarily specialized products used mainly in hospitals, in outpatient centers and in physician's offices to meet the needs of the medical profession in caring for their patients. We seek to focus and concentrate on selected markets with cost- effective, innovative products and specialized sales forces to maximize our opportunities in these markets. Operating Results Consolidated net sales increased 7% in 1995, restated for two acquisitions that were accounted for as poolings of interests. Good growth in many areas was partially offset by a lack of growth in the domestic cardiovascular product group. Net income and earnings per share increased 15% and 14%, respectively. Income for 1994 and 1995 was significantly affected by one-time charges, described on page II-6 in this financial review. Sales Net sales totaled $1.138 billion in 1995, an increase of 12% over the $1.018 billion originally reported for 1994. This 12% increase includes 5% from new sales as a result of the two acquisitions Bard made in 1995. Since they were accounted for as poolings of interests, Bard's restated sales for 1994 are $1.065 billion, resulting in a 7% increase to $1.138 billion in 1995. Worldwide revenue growth of 10% in 1995 in the urological and surgical product groups combined with a 1% increase in cardiovascular sales, resulted in the consolidated increase of 7%. All of the growth came from sales outside the U.S. as U.S. sales approximated the prior year's level. Price reductions totaled 2% on a worldwide basis in 1995 while higher foreign currency values increased total sales by 2%. Consolidated net sales (restated for the 1995 acquisitions) totaled $1.065 billion in 1994, a 6% increase over 1993. Significant factors in this growth were good increases in sales of Foley catheters and related procedure trays, vascular access catheters, vascular fabric and mesh products and gastroenterological specialty devices as well as a substantial increase in sales of the Bard Contigen implant. These areas, along with sales from our 1994 acquisitions and an increase of less than 1% from the effects of foreign currency translations, more than offset some continued weakness in certain cardiovascular product lines and price reductions which totaled 2.6% on a worldwide basis. II-3 Consolidated net sales (restated) totaled $1.009 billion in 1993, a decrease of $25 million or 2% for the year. Sales were lowered 3% as a result of the sale of the Bard MedSystems division in February 1993 and 1% by the negative impact of lower foreign currency values. Sales in 1993 were also negatively affected by a slowdown in U.S. procedural rates, consolidations of health care providers, limited FDA approvals, increasingly conservative medical practices fostered by the growth of managed care and weaker European economies. In the urological product group, worldwide sales increased 10% in 1995, all of it from outside the U.S., with a substantial portion the result of a full year's sales of Angiomed products in 1995 vs. two months of sales following the acquisition in 1994. Urological sales in 1994 increased 16% with a majority of the increase a result of sales of the Contigen implant. 1993 urological sales increased 1%. Good increases in several relatively new specialty devices were partially offset by declines in other areas. Surgical product group sales increased 10% in 1995, a majority of which was outside the U.S. A full year of sales of Angiomed and Vas-Cath products (acquired in 1994) benefited this area substantially, as did strong growth in sales of vascular access catheters and ports, fabrics and mesh products for hernia repair and gastroenterological devices. Sales in 1994 of surgical products increased 6% with the areas of vascular access, vascular fabrics and mesh and gastroenterology showing good gains. Adjusting for the sale of the MedSystems division in February 1993, sales in this group increased 7% in 1994. Sales of surgical products in 1993 decreased 1% but increased 8% after adjusting for the sale of the MedSystems division. Vascular access, endoscopic, laparoscopic and blood management products contributed significantly to this increase. Sales of cardiovascular products increased just 1% in 1995. A full year of Angiomed product sales benefited this area along with good increases in interventional radiology and the FemoStop device. U.S. sales continued to decline as the Company had delays obtaining clearance from the Food and Drug Administration (FDA) for new products from our USCI division. In 1994, continued weakness in certain cardiovascular product areas resulted in a 3% decline in sales in this group. Increased sales outside the U.S. were more than offset by declines in the U.S. which continued to be affected by the lack of approvals by the FDA of new products from our USCI division. Cardiovascular product sales decreased 5% worldwide in 1993 with most product areas in this group showing declines. Sales in the United States declined slightly in 1995 vs. 1994 and represented 66% of total sales. Total surgical product sales in the U.S. showed good growth with significant increases in sales of specialty access, gastroenterological, Marlex mesh fabric and new MedChem products. Urological product sales in the U.S. were level with 1994 while sales of cardiovascular products declined. Sales in the United States increased 4% in 1994 and represented 71% of total sales. Sales of the Contigen implant were the most important contributor to this growth. U.S. sales decreased 2% in 1993 and represented 71% of total sales. Urological product sales increased II-4 while sales of surgical products (due to the sale of MedSystems) and cardiovascular products decreased. Sales growth outside the U.S. continued to be strong with a 24% increase over 1994, a significant portion from a full year of sales of Angiomed and Vas- Cath products. Higher foreign currency values in 1995 contributed 7% of the increase. Numerous products in all three product groups showed significant gains in revenue in 1995. Sales outside the U.S. increased 9% in 1994 with a little more than 1% of that growth the result of higher foreign currency values. The growth was broad-based throughout our product areas and major geographic markets. Acquisitions accounted for 3% of this growth. In 1993 sales outside the U.S. declined 3%. Changes in foreign currency values in 1993 lowered these sales by nearly 5%. Growth in sales of surgical products were more than offset by decreases in urological and cardiovascular sales. The geographic breakdown of sales outside the U.S. for the last three years is: 1995 1994 1993 Europe, Middle East, Africa 62% 56% 56% Asia/Pacific area and Western hemisphere, excluding U.S. 38% 44% 44% 100% 100% 100% Operating Income The gross profit margin at 51.7% slipped 0.1% in 1995 as the rate of increase in cost of goods sold was slightly higher than the increase in sales. Cost reductions in many areas were not enough to offset overall price reductions. Gross profit margins had increased for four years prior to 1995 as a result of productivity gains, cost reductions and a favorable product mix. Bard uses the LIFO method of valuing substantially all U.S. inventories, which results in current costs (higher in a period of inflation) being charged to cost of goods sold. Bard generally has been able to recover these costs through its strong product position in its markets or by offsetting the effect of inflation through its cost reduction programs. Marketing, selling and administrative expenses increased by 8.6% as we invested in programs to boost future sales revenue. The synergies from our two mergers closed late in 1995 have yet to be fully realized as well as the effect of our fourth quarter divisional reorganization. In the two years prior to 1995, these expenses increased by less than 1% in total spending each year. As a percent to sales, these expenses represented 31.2% in 1995, 30.7% in 1994 and 31.7% in 1993. Research and development spending continues to increase as we work on new technologies and applications for the future. The level of spending as a percent of sales has been approximately 7% each of the last three years. II-5 Operating income was 12.3% of sales in 1995 and was affected substantially by $17.7 million in costs (primarily legal and investment banking) to combine the operations of MedChem Products and American Hydro-Surgical into Bard. Excluding the costs of combining, operating income as a percent of sales would have been 13.9% in 1995 vs. 14.4% in 1994 and 13.1% in 1993. Other Income(Expense), Net Please refer to Note 9, Other Income (Expense), Net, of the Notes to Consolidated Financial Statements on page II-22 of this report for a summary of items in this category in the last three years. In 1994 there was a fourth quarter charge of $28.2 million. This covered the settlement of a 1992 lawsuit by the inventor of an atherectomy device which Bard is developing and provided for the anticipated legal and other costs related to the USCI division. Other Income (Expense), Net in 1993 included a third quarter provision for the Justice Department settlement of $61 million, a fourth quarter gain of $32.7 million from the sale of shares of the common stock of Ventritex, Inc. and a first quarter gain of $10.9 million from the sale of the MedSystems division net of nonrecurring charges. Income Tax The effective income tax rate was 30% in 1995, 27% in 1994 and 37% in 1993. The lower tax rate in 1994 is primarily due to the fourth quarter charge which is tax effected at U.S. rates. The higher 1993 rate was primarily due to the $61 million Justice Department settlement, which was not fully deductible. The tax benefit from operations in Puerto Rico and Ireland favorably affected the tax rate in each year, even though the benefit from operations in Puerto Rico was reduced slightly in 1994 and 1995. Net Income Net income increased 15% in 1995 and 31% in 1994 after declining 31% in 1993. The effect on net income and earnings per share of the costs to combine operations in 1995, the unusual or nonrecurring items in 1994 and 1993 that are discussed above in Other Income (Expense), Net and the after-tax charge of $6.1 million in the first quarter of 1993 for postretirement benefits were (in millions except per share amounts): 1995 Costs to combine operations $(13.5) Equivalent per share $( .24) 1994 Legal fees and settlements $(16.9) Equivalent per share $ (.30) II-6 1993 Gain on sale of Ventritex stock $ 19.4 Gain on sale of MedSystems net of nonrecurring charges 6.0 Effect of accounting change for postretirement benefits (6.1) Justice Department settlement (45.4) Total 1993 $ (26.1) Equivalent per share $ (.46) After adjusting for the items shown above, net income and earnings per share (EPS) would have been: Net Income (millions) EPS 1995 $100.3 $1.77 1994 $ 92.5 $1.64 1993 $ 83.9 $1.48 Financial Condition Bard's financial condition remains strong. On a restated basis, total debt decreased by $29 million and the ratio of total debt to total capitalization decreased from 37% to 32%. Bard's equity base was increased with the issuance of common stock for the acquisitions of MedChem Products and American Hydro-Surgical. In June the Company completed the arrangement of a $350 million syndicated, committed credit agreement with a group of 15 banks. Based on this agreement and as described in Note 4 of the Notes to Consolidated Financial Statements on Page II-16 of this report, $120 million in borrowings under the Company's uncommitted lines of credit have been classified as long-term debt. This overall financial strength gives Bard sufficient financing flexibility. In addition to the $350 million committed credit agreement, Bard maintains uncommitted credit lines with banks for short-term cash needs and these lines were used as needed during the last three years. The current unused uncommitted lines of credit total $202 million. As now structured, the Company expects cash flow from operating activities to exceed capital expenditures and dividend payments. The Company believes it could borrow adequate funds at competitive terms and rates, should it be necessary, and is considering a public offering of long-term debt in 1996. Total cash outlays made for purchases of businesses, patents, trademarks and other related items were $19 million in 1995, $148 million in 1994 and $105 million in 1993 for a total over the last three years of $272 million. The majority of these investments were for intangible items. The $19 million in 1995 outlays was financed from cash from operations and exclude common stock valued at $135 million issued for the acquisitions of MedChem Products and American Hydro-Surgical. More than half of the 1994 and 1993 outlays was financed with additional debt ($146 million) with the balance coming from cash from operations and proceeds from sales of assets. Cash from operations contributed to an increase in short- term investments in 1993, a substantial portion of which was used in 1994, primarily for acquisitions. II-7 Over a period of time, the Company purchases at least enough of its common stock in the open market to replace shares issued under various employee stock plans. Net shares issued under the plans were 597,283 in 1995; 299,400 in 1994 and 259,443 in 1993. Total shares purchased were 75,000 in 1995; 350,000 in 1994, and 1,000,000 in 1993. In January 1993 the Board of Directors authorized the purchase from time to time of up to 2 million shares of which 1,425,000 had been purchased as of December 31, 1995. Foreign Currency Risk The Company periodically enters into foreign exchange contracts to reduce its exposure to fluctuations in currency values. Contracts have been exclusively for the forward purchase of currencies in which the Company has known or anticipated payments. These are primarily for intercompany transactions, resulting in a high degree of confidence that the anticipated transactions will take place. Monetary assets of the Company held in foreign currencies have relatively short maturities and are denominated in currencies that have not experienced wide short-term fluctuations in their equivalent U.S. dollar values. Please refer to Note 4 of the Notes to Consolidated Financial Statements starting on Page II-16 of this report for current details of the Company's foreign exchange contracts. Legal Proceedings For a discussion of pending legal proceedings and related matters, please see Note 5, Commitments and Contingencies, of the Notes to Consolidated Financial Statements on page II-18. Acquisitions For information on the Company's acquisitions of businesses, please see Note 2 of the Notes to Consolidated Financial Statements on page II-14. II-8 Report of Independent Public Accountants To the Shareholders and Board of Directors of C. R. Bard, Inc.: We have audited the accompanying consolidated balance sheets of C. R. Bard, Inc. (a New Jersey corporation) and subsidiaries as of December 31, 1995 and 1994 and the related consolidated statements of income, retained earnings and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of C. R. Bard, Inc. and subsidiaries as of December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles. As discussed in Note 8 to the consolidated financial statements, effective January 1, 1993 the Company changed its method for accounting for postretirement benefits other than pensions. ARTHUR ANDERSEN LLP Roseland, New Jersey January 24, 1996 II-9 C. R. BARD, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED INCOME
(Thousands of dollars except per share amounts) For the Years Ended December 31, 1995 1994 1993 Net sales $1,137,800 $1,064,600 $1,008,800 Costs and expenses: Cost of goods sold 550,000 513,500 489,100 Marketing, selling and administrative 354,600 326,500 320,200 Research and development 75,600 71,600 67,500 Costs to combine opera- tions 17,700 --- --- 997,900 911,600 876,800 Operating income 139,900 153,000 132,000 Interest expense 24,200 16,300 12,500 Other income(expense), net 7,800 (32,600) (18,100) Income before taxes and effect of accounting change 123,500 104,100 101,400 Provision for income taxes 36,700 28,500 37,500 Income before effect of accounting change 86,800 75,600 63,900 Effect of change in accounting principle, net of taxes --- --- (6,100) Net income $ 86,800 $ 75,600 $ 57,800 Income per share before effect of accounting change $ 1.53 $ 1.34 $ 1.13 Net income per share $ 1.53 $ 1.34 $ 1.02
C. R. BARD, INC. AND SUBSIDIARIES STATEMENTS OF CONSOLIDATED RETAINED EARNINGS
(Thousands of dollars except per share amounts) For the Years Ended December 31, 1995 1994 1993 Balance, beginning of year $ 427,300 $ 392,800 $ 387,400 Net income 86,800 75,600 57,800 Cash dividends (per share 1995, $.62; 1994, $.58; 1993, $.54) (33,100) (30,100) (28,200) Excess of cost over par value of treasury stock retired (1995-75,000 shares, 1994-350,000 shares and 1993-1,000,000 shares) (2,100) (8,900) (24,200) Adjustment to give effect to change in report- ing period for MedChem --- (2,100) --- Balance, end of year $ 478,900 $ 427,300 $ 392,800
The accompanying notes to consolidated financial statements are an integral part of these statements. II-10 C. R. BARD, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(Thousands of dollars) December 31, 1995 1994 Assets Current assets: Cash $ 9,300 $ 7,700 Short-term investments 42,000 26,800 Accounts receivable, less reserve of $9,700 and $8,700 215,700 194,100 Inventories 228,200 212,400 Other current assets 8,700 9,200 Total current assets 503,900 450,200 Property, plant and equipment, at cost Land 11,200 11,200 Buildings and improvements 147,500 145,000 Machinery and equipment 179,200 169,900 337,900 326,100 Less - Accumulated depreciation and amortization 123,700 116,100 Net property, plant and equipment 214,200 210,000 Intangible assets, net of amortization 315,500 319,500 Other assets 57,400 63,400 $1,091,000 $1,043,100 Liabilities and shareholders'investment Current liabilities: Short-term borrowings and current maturities of long-term debt $ 66,900 $ 200,600 Accounts payable 62,700 43,100 Accrued compensation and benefits 39,800 31,900 Accrued expenses 91,600 94,800 Federal and foreign income taxes 12,300 7,500 Total current liabilities 273,300 377,900 Long-term debt 198,400 93,400 Other long-term liabilities 54,700 76,400 Commitments and contingencies Shareholders' investment: Preferred stock, $1 par value, authorized 5,000,000 shares; none issued --- --- Common stock, $.25 par value, authorized 300,000,000 shares; issued and outstanding 57,100,598 shares in 1995, 56,526,655 shares in 1994 14,300 14,100 Capital in excess of par value 63,300 51,000 Retained earnings 478,900 427,300 Other 8,100 3,000 Total shareholders' investment 564,600 495,400 $1,091,000 $1,043,100
The accompanying notes to consolidated financial statements are an integral part of these balance sheets. II-11 C. R. BARD, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of dollars) For the Years Ended December 31, 1995 1994 1993 Cash flows from operating activities: Net income $ 86,800 $ 75,600 $ 57,800 Adjustments to reconcile net income to net cash provided from operating activities: Depreciation and amortization 50,600 43,400 39,100 Deferred income taxes (1,600) (4,400) (7,300) Expenses under stock plans 2,000 1,400 1,200 Gain on disposal of assets, net --- --- (50,400) Changes in assets and liabilities net of acquired businesses: Accounts receivable (21,600) (7,600) 12,700 Inventories (15,800) (16,300) (1,200) Other assets 8,900 9,400 1,100 Current liabilities, excluding debt 29,100 (23,100) 27,500 Other long-term liabilities (21,700) (7,200) 45,900 Net cash provided from operating activities 116,700 71,200 126,400 Cash flows from investing activities: Capital expenditures (39,600) (37,100) (33,400) Proceeds from sale of assets --- --- 65,000 Payments made for purchases of businesses (300) (122,200) (74,000) Patents, trademarks and other (18,600) (25,500) (31,400) Net cash used in investing activities (58,500) (184,800) (73,800) Cash flows from financing activities: Common stock issued for options and benefit plans 9,500 2,900 3,000 Purchase of common stock (2,100) (9,000) (24,400) Proceeds from long-term borrowings 126,300 3,300 700 Principal payments of long-term borrowings (22,000) (1,100) (1,000) Proceeds from (repayments of) short-term borrowings, net (133,700) 102,000 22,800 Dividends paid (33,100) (30,100) (28,200) Net cash provided by (used in) financing activities (55,100) 68,000 (27,100) Translation adjustment (200) 4,300 (1,300) Cash and cash equivalents: Increase(decrease) during the year 2,900 (41,300) 24,200 Balance at January 1, 34,500 75,800 51,600 Balance at December 31, $ 37,400 $ 34,500 $ 75,800
The accompanying notes to consolidated financial statements are an integral part of these statements. II-12 C. R. BARD, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS C. R. Bard, Inc. is a leading multinational developer, manufacturer and marketer of health care products. The Company markets its products worldwide to hospitals, individual health care professionals, extended care facilities and alternate site facilities. The Company holds strong positions in cardiovascular, urological and surgical products. 1. Significant Accounting Policies Consolidation The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. The consolidated financial statements have been prepared in accordance with generally accepted accounting principles and necessarily include amounts based on judgments and estimates made by management. Income Per Share The computations of income per share are based on the weighted average number of shares outstanding: 56,730,542 in 1995, 56,460,762 in 1994 and 56,692,267 in 1993. The effect of outstanding stock options and stock awards is not material and has been excluded from the computations. Inventories Inventories are stated at the lower of cost or market. Substantially all domestic inventories are accounted for using the LIFO method of determining costs. All other inventories are accounted for using the FIFO method. Inventories valued under the LIFO method were $140,000,000 in 1995, $138,000,000 in 1994 and $127,000,000 in 1993; under the FIFO method such inventories would have been higher by $15,700,000, $13,300,000 and $15,800,000, respectively. The following is a summary of inventories at December 31: (Thousands of dollars) 1995 1994 Finished goods $130,700 $116,000 Work in process 72,600 60,100 Raw materials 24,900 36,300 $228,200 $212,400 Depreciation Property, plant and equipment are depreciated on a straight-line basis over the useful lives of the various classes of assets. Short-term Investments Short-term investments which have a maturity of ninety days or less are considered cash equivalents and amounted to $28,100,000 and $26,800,000 as of December 31, 1995 and 1994. Short-term investments are stated at cost which approximates their fair value. II-13 C. R. BARD, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Significant Accounting Policies (continued) Intangible Assets Goodwill is amortized using the straight-line method over periods of 15-40 years as appropriate and other intangible assets are amortized over their useful lives. The Company evaluates whether changes have occurred that would require revision of the remaining estimated useful life assigned to the intangible or render the intangible not recoverable. As of December 31, 1995 and 1994, intangible assets include the following: (Thousands of dollars) 1995 1994 Goodwill $231,900 $230,400 Other intangibles (primarily 173,500 157,300 patents) Less accumulated amortization (89,900) (68,200) Intangible assets, net $315,500 $319,500 Federal Income Taxes The Company has not provided for federal income taxes on the undistributed earnings of its foreign operations (primarily in Ireland) as it is the Company's intention to permanently reinvest undistributed earnings (approximately $229,000,000 as of December 31, 1995). Research and Development Research and development costs are charged to operations as incurred. New Accounting Pronouncements Effective January 1, 1996, the Company is required to adopt SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" and SFAS No. 123 "Accounting for Stock-Based Compensation". The effect of adopting these standards is not expected to be significant. 2. Acquisitions In September 1995, the Company completed a merger with MedChem Products, Inc. (MedChem) issuing 3,192,345 shares of its common stock in exchange for all outstanding common stock of MedChem. In October 1995, the Company completed a merger with American Hydro- Surgical Instruments, Inc. (AHS) issuing 1,338,446 shares of its common stock in exchange for all outstanding common stock of AHS. II-14 C. R. BARD, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2. Acquisitions (continued) These mergers have been accounted for as poolings of interests and, accordingly, the Company's consolidated financial statements and related notes thereto have been restated to include the accounts and operations of MedChem and AHS for all periods presented. The premerger results of MedChem and AHS for 1994 were net sales $46,400,000 and net income $800,000; and for 1993 were net sales $38,000,000 and net income $1,800,000. In connection with the mergers, $17,700,000 of merger related costs and expenses ($13,500,000 after-tax or $.24 per share) were incurred and have been charged to expense in 1995. These one-time charges include expenses primarily related to investment bankers and professional fees, and key personnel and severance related costs. During 1994 the Company acquired several companies which are primarily located outside the United States. These acquisitions, along with the acquisitions made in 1993 have been accounted for under the purchase method of accounting and enhance or expand the Company's existing product lines and further develop international markets. The cost of these acquisitions amounted to $118,200,000 in 1994 and $70,000,000 in 1993 and were financed through internally generated cash and available credit lines. These acquisitions did not have a significant effect on the Company's results of operations. 3. Income Tax Expense Income tax expense consists of the following: (Thousands of dollars) 1995 1994 1993 Currently payable: Federal $ 23,600 $ 22,300 $ 32,600 Foreign 8,900 8,100 8,200 State 5,800 2,500 4,000 38,300 32,900 44,800 Deferred: Federal (1,700) (3,300) (6,800) Foreign 100 (1,100) (500) (1,600) (4,400) (7,300) $ 36,700 $ 28,500 $ 37,500 II-15 C. R. BARD, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. Income Tax Expense (continued) Deferred income taxes are recognized for the tax consequences of "temporary differences" by applying enacted statutory tax rates, applicable to future years, to differences between the financial reporting and the tax basis of assets and liabilities. At December 31, 1995, the Company's net deferred tax asset amounted to approximately $15,000,000 which is recorded in other assets. This amount principally comprises the tax effects of the differences between tax and financial accounting treatment of employee benefits of $16,000,000 and other temporary differences offset by the effect of accelerated depreciation ($7,000,000). The following is a reconciliation between the effective tax rates and the statutory rates: 1995 1994 1993 U.S. federal statutory rate 35% 35% 35% State income taxes net of federal income tax benefits 3 2 3 Operations taxed at less than statutory rate, primarily Ireland and Puerto Rico (11) (10) (11) Legal settlement --- --- 7 Other, net 3 --- 3 Effective tax rate 30% 27% 37% Cash payments for income taxes were $34,100,000, $47,400,000 and $32,800,000 in 1995, 1994 and 1993, respectively. 4. Short-Term Borrowings and Long-Term Debt Short-term bank borrowings amounted to $66,800,000 and $197,500,000 at December 31, 1995 and 1994 respectively. The maximum amount outstanding during 1995 was approximately $215,200,000 with an average outstanding balance of $141,700,000 and an effective rate of 6.17%. Unused uncommitted lines of credit available to the Company amounted to $202,100,000 at December 31, 1995. The following is a summary of long-term debt: (Thousands of dollars) 1995 1994 8.69% Unsecured notes due 1999 $ 60,000 $ 60,000 7.8% Mortgage loan 9,100 8,400 Term loan payable to bank, interest at the bank's prime rate plus one- half of one percent, secured by tangible and intangible property --- 9,000 Borrowings under lines of credit 120,000 --- Other 9,400 19,100 198,500 96,500 Less: amounts classified as current 100 3,100 $198,400 $ 93,400 II-16 C. R. BARD, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. Short-Term Borrowings and Long-Term Debt (continued) In 1995, the Company entered into a Credit Agreement (The Credit Agreement) with 15 banks which provides a committed line of credit of up to $350,000,000 through June 2000 at rates slightly above LIBOR. The Company had no borrowings under The Credit Agreement at December 31, 1995. Borrowings of $120,000,000 under the Company's uncommitted lines of credit have been classified as long-term debt since the Company has both the intention and the ability, through The Credit Agreement to refinance these amounts on a long-term basis. The Company's long-term debt agreements contain restrictions which, among other things, require the maintenance of minimum net worth and operating cash flow levels and limitations on the amounts of debt. Under three deposit loan agreements with a bank, $55,000,000 has been borrowed at floating rates (6.52% at December 31, 1995) with maturity dates of September 1996, December 1999 and December 2002. At maturity, the loans are to be repaid through matured certificates of deposit held by the Company at the same bank. Since the Company has the right of offset under these agreements and it is the Company's intention to present certain certificates of deposit for repayment of these loans at their maturity, these borrowings have been offset against these certificates of deposit in the accompanying consolidated balance sheets at December 31, 1995 and 1994. The related interest income has been offset against the interest expense. The Company enters into foreign exchange contracts to help reduce the exposure to fluctuations between certain currencies. As of December 31, 1995 the contracts relate to the anticipated normal purchases by a subsidiary in Japan from a subsidiary in Ireland. At December 31, 1995, there were Irish pound contracts outstanding payable in Japanese yen equivalent to $5,800,000. Early in 1996 the Company entered into similar contracts equivalent to $15,700,000. Gains and losses which are required to be reflected on a mark-to-market basis are not significant. As of December 31, 1995, the aggregate maturities of long-term debt were as follows: 1996-$100,000; 1997-$2,000,000; 1998-$1,200,000; 1999-$61,200,000; 2000-$121,200,000; 2001 and thereafter- $12,700,000. The fair value of the Company's long-term debt is not significantly different from its recorded value. Interest expense in 1995, 1994 and 1993 approximated the cash outlay in each year. II-17 C. R. BARD, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5. Commitments and Contingencies On October 14, 1993, the Company entered into a Plea Agreement with the Department of Justice related to charges stemming from violations, primarily during the 1980's by the Company's USCI division, of the Federal Food, Drug and Cosmetic Act and other statutes. On April 5, 1994, the U.S. District Court in Boston approved the Plea Agreement. In accordance with the terms of the Agreement, a provision of $61 million was recorded in 1993. During 1994 the Company recorded a $28.2 million pretax charge ($16.9 million charge after taxes). This charge related to the settlement of a 1992 lawsuit by the inventor of an atherectomy device and includes a provision for legal costs, and other costs related to the USCI division. The Company is involved in two lawsuits which allege breaches of agreements where substantial amounts have been claimed. In addition, judgments have been rendered against the Company potentially aggregating as much as $9 million. The Company is presently appealing these judgments. The Company is also subject to other legal proceedings and claims involving product liability and disputes on agreements which arise in the ordinary course of business. The Company believes that these legal matters will likely be disposed of over an extended period of time and should not have a material adverse impact on the Company's financial position or results of operations. The Company is committed under noncancelable operating leases involving certain facilities and equipment. The minimum annual rentals under the terms of these leases are as follows: 1996 - $19,500,000; 1997 - $14,000,000; 1998 - $10,000,000; 1999 - $4,900,000; 2000 -$3,700,000; and thereafter - $3,400,000. Total rental expense for all leases amounted to $31,600,000 in 1995, $29,300,000 in 1994 and $27,100,000 in 1993. 6. Stock Rights In October 1995 the Company's Board of Directors declared a dividend distribution of one Common Share Purchase Right for each outstanding share of Bard common stock. These Rights, which replace similar rights that expired in 1995, will expire in October 2005 and trade with the common stock. Such Rights are not presently exercisable and have no voting power. In the event a person acquires 20% or more, or makes a tender or exchange offer for 30% or more of Bard's common stock, the Rights detach from the common stock and become exercisable and entitle a holder to buy one share of common stock at $120.00 (adjustable to prevent dilution). II-18 C. R. BARD, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6. Stock Rights (continued) If, after the Rights become exercisable, Bard is acquired or merged, each Right will entitle its holder to purchase $240 market value of the surviving Company's stock for $120, based upon the current exercise price of the Rights. The Company may redeem the Rights, at its option, at $.05 per Right, prior to a public announcement that any person has acquired beneficial ownership of at least 20% of the common stock. These Rights are designed primarily to encourage anyone interested in acquiring Bard to negotiate with the Board of Directors. There are 60 million shares of common stock reserved for the rights. 7. Shareholders' Investment The Company has stock option, stock award and restricted stock plans under which certain directors, officers and employees are participants. At December 31, 1995, 324,726 shares were reserved for future issuance under these plans. Under the Company's stock option plans, options have been granted to certain directors, officers and employees at prices equal to the market value of the shares at the date of grant, become exercisable in four annual installments and expire not more than 10 years after the date of grant. A summary of all option transactions follows: Number Option Of Price Range Shares Per Share Options outstanding, December 31, 1992 2,694,635 $ 5.63-50.01 Granted 673,953 22.71-36.91 Exercised (194,880) 5.63-26.88 Cancelled (111,388) --- --- Options outstanding, December 31, 1993 3,062,320 5.63-44.20 Granted 1,065,885 16.63-29.44 Exercised (225,855) 5.63-26.88 Cancelled (261,088) --- --- Options outstanding, December 31, 1994 3,641,262 7.89-44.20 Granted 852,795 17.03-30.44 Exercised (563,444) 8.92-27.56 Cancelled (175,269) --- --- Options outstanding, December 31, 1995 3,755,344 $ 7.89-44.20 (2,038,844 exercisable) II-19 C. R. BARD, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7. Shareholder's Investment (continued) These option transactions have been restated to include the equivalent options (at prices ranging from $7.89 to $50.01) held by officers, directors and employees of MedChem prior to the merger. Under the Company's stock award plans for key employees and directors, shares are granted at no cost to the recipients and distributed in three separate installments. During 1995 awards for 25,992 shares (net of cancellations) were granted and 31,730 shares were issued. Awards are charged to income over the vesting period. At December 31, 1995, 30,249 awarded shares (aggregate market price at date of grant $827,000) have not been issued. Under the Company's restricted stock plan, which was established in 1993, common stock may be granted at no cost to certain officers and key employees. Shares are issued to the participants at the date of grant entitling the participants to cash dividends and the right to vote their respective shares. Restrictions limit the sale or transfer of these shares during a five year period from the grant date. Upon issuance of stock under the plan, unearned compensation ($4,300,000 at December 31, 1995) equivalent to the market value of the stock at the date of grant is reflected in Shareholders' Investment and subsequently amortized to expense over the five year restriction period. During 1995, 92,690 restricted shares were granted, net of forfeitures. Additions to capital in excess of par value of $12,300,000 in 1995 and $5,500,000 in 1994 relates to shares issued under these plans in excess of the related par value of the shares. For shares purchased by the Company, common stock is charged for the par value of the shares retired and retained earnings is charged for the excess of the cost over the par value of shares retired. Cumulative foreign currency translation included in Other Shareholders' Investment amounted to $12,400,000 at December 31, 1995, and increased by $6,600,000 during the year. 8. Postretirement Benefits The Company has defined benefit pension plans which cover substantially all domestic and certain foreign employees and its policy is to fund accrued pension expense for these plans up to the full funding limitations. These plans provide for benefits based upon individual participants' compensation and years of service. II-20 C. R. BARD, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8. Postretirement Benefits (continued) The Company also has a supplemental defined contribution plan for certain officers and key employees and a savings plan for substantially all domestic employees. Individual participant accounts under the supplemental plan are credited annually based upon a percentage of compensation. The amounts charged to income for these plans amounted to $12,800,000 in 1995, $13,600,000 in 1994 and $11,400,000 in 1993. The following table sets forth the funded status of the defined benefit pension plans as of September 30, 1995 and 1994 and amounts recognized in the Company's consolidated balance sheets at December 31, 1995 and 1994: (Thousands of dollars) 1995 1994 Actuarial present value of accumulated benefit obligation, including vested benefits of $68,000 in 1995 and $66,800 in 1994 $ 76,400 $ 74,700 Plan assets at fair value, primarily investment securities $ 77,300 $ 73,400 Less: Actuarial present value of projected benefit obligation for service rendered to date 92,500 91,200 Projected benefit obligation in excess of plan assets (15,200) (17,800) Unrecognized loss 6,400 8,300 Unrecognized prior service cost 7,600 7,000 Unrecognized net asset at transition amortized over 12 years (3,400) (5,300) Accrued pension cost included in other liabilities $ (4,600) $ (7,800) Pension costs related to the defined benefit pension plans for the years ended December 31, 1995, 1994 and 1993 are as follows: (Thousands of dollars) 1995 1994 1993 Net pension cost includes: Service cost $ 6,800 $ 8,000 $ 6,300 Interest cost 6,700 6,700 5,800 Actual return on plan assets (12,800) (2,600) (8,200) Net amortization and deferral 6,000 (3,500) 2,100 Net pension cost $ 6,700 $ 8,600 $ 6,000 II-21 C. R. BARD, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8. Postretirement Benefits (continued) The range of assumed discount rates used was 6% to 8.5% with the rate on domestic plans at 7.75% in 1995. The rate of increase in future salary levels ranged from 4% to 6.5% in determining the projected benefit obligation. The expected long-term rate of return on assets used in determining net pension cost ranged from 8.5% to 9.0%. The Company also provides postretirement health care benefits and life insurance coverage to a limited number of employees at a subsidiary. The health care benefits include cost-sharing features based on years of service for future retirees. Effective January 1, 1993, the Company adopted the provisions of SFAS No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions." SFAS 106 requires the Company to recognize expense as employees earn postretirement benefits, rather than on the cash basis as paid. The Company elected to recognize the accumulated postretirement benefit obligation as a cumulative catch-up adjustment in the first quarter of 1993. This resulted in a one-time charge of approximately $10,000,000 pretax or $6,100,000 net of taxes. The amounts charged to income for this plan were approximately $800,000 in 1995 and 1994 ($100,000 of service cost and $700,000 of interest cost) and $850,000 in 1993. Actuarial assumptions included a discount rate of 7.75%. Health care cost trends have been projected at annual rates beginning at 12% for 1995 decreasing gradually down to 6% in 2001 and later years. The effect of a 1% annual increase in these assumed cost trend rates would increase the accumulated postretirement benefit obligation at December 31, 1995, by $800,000 and postretirement benefit cost by $100,000. 9. Other Income(Expense), Net Other income(expense), net in the Statements of Consolidated Income is summarized as follows: (Thousands of dollars) 1995 1994 1993 Interest income $ 3,400 $ 4,600 $ 4,600 Foreign exchange gains 3,300 400 1,700 Legal fees and settlements (Note 5) --- (28,200) (61,000) Gain on sale of assets --- --- 48,600 Other, net 1,100 (9,400) (12,000) Total $ 7,800 $(32,600) $(18,100) II-22 C. R. BARD, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10. Segment Information The Company is engaged in the design, manufacture, packaging, distribution and sale of medical, surgical, diagnostic and patient care devices. Hospitals, physicians and nursing homes purchase approximately 90% of the Company's products, most of which are used once and discarded. Information pertaining to domestic and foreign operations as of December 31, 1995, 1994 and 1993 and for the years then ended is given below.
United Elimi- Consoli- (000's of dollars) States Foreign nations dated 1995 Sales: Trade $749,000 $353,500 $ --- $1,102,500 Export 35,300 --- --- 35,300 Intersegment 95,800 10,400 (106,200) --- Total $880,100 $363,900 $(106,200) $1,137,800 Operating income $102,800 $ 66,600 $ (29,500)(a) $ 139,900 Identifiable assets: December 31, 1995 $747,000 $344,000 $ --- $1,091,000 (a) Includes nonrecurring acquisition costs of $17,700 1994 Sales: Trade $751,500 $283,500 $ --- $1,035,000 Export 29,600 --- --- 29,600 Intersegment 97,700 4,400 (102,100) --- Total $878,800 $287,900 $(102,100) $1,064,600 Operating income $106,700 $ 59,000 $ (12,700) $ 153,000 Identifiable assets: December 31, 1994 $734,000 $309,100 $ --- $1,043,100 1993 Sales: Trade $720,900 $259,900 $ --- $ 980,800 Export 28,000 --- --- 28,000 Intersegment 75,700 1,600 (77,300) --- Total $824,600 $261,500 $ (77,300) $1,008,800 Operating income $ 86,900 $ 55,200 $ (10,100) $ 132,000 Identifiable assets: December 31, 1993 $683,000 $198,400 $ --- $ 881,400 II-23
C. R. BARD, INC. AND SUBSIDIARIES Supplementary Financial Data QUARTERLY FINANCIAL DATA
(Thousands of dollars except per share amounts) 1995 1st 2nd 3rd 4th Year Net sales $278,100 $291,100 $277,600 $291,000 $1,137,800 Cost of goods sold 134,200 140,600 134,200 141,000 550,000 Operating Income 39,700 40,900 24,800 34,500 139,900 Income before taxes 35,400 35,900 21,200 31,000 123,500 Net income 24,900 25,000 14,100 22,800 86,800 Per share information: Net income $ .44 $ .44 $ .25 $ .40 $ 1.53 Dividends $ .15 $ .15 $ .16 $ .16 $ .62
Note: The third quarter results include a $12,500 charge ($9,900 after-tax charge or 18 cents per share) for costs associated with the merger of MedChem Products, Inc. The fourth quarter results include a $5,200 charge ($3,600 after-tax charge or 6 cents per share) for costs associated with the merger of American Hydro-Surgical Instruments, Inc.
1994 1st 2nd 3rd 4th Year Net sales $258,000 $267,800 $263,900 $274,900 $1,064,600 Cost of goods sold 125,000 128,300 127,100 133,100 513,500 Operating income 37,400 39,300 37,900 38,400 153,000 Income before taxes 33,500 34,600 33,200 2,800 104,100 Net income 22,900 24,000 23,300 5,400 75,600 Per share information: Net income $ .41 $ .42 $ .41 $ .10 $ 1.34 Dividends $ .14 $ .14 $ .15 $ .15 $ .58
Note: Reflected in the fourth quarter of 1994 is a pretax charge of $28,200 ($16,900 or 30 cents per share charge after taxes) for the settlement of a lawsuit and for other costs related to the USCI division which affected the fourth quarter tax provision. II-24 C. R. BARD, INC. AND SUBSIDIARIES Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Not applicable. II-25 C. R. BARD, INC. AND SUBSIDIARIES PART III Item 10. Directors and Executive Officers of the Registrant Directors of the Registrant Information with respect to Directors of the Company is incorporated herein by reference to the material contained under the heading "Proposal No. 1 - Election of Directors" appearing on pages 1 through 4 of the Company's definitive Proxy Statement dated March 8, 1996. Executive Officers of the Registrant Information with respect to Executive Officers of the Registrant are on pages I-8 through I-10 of this filing. Item 11. Executive Compensation The information contained under the caption "Executive Compensation" appearing on Pages 6 through 15 of the Company's definitive Proxy Statement dated March 8, 1996 is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management The information contained under the captions "Securities Ownership of Certain Beneficial Owners" and "Securities Ownership of Management" on pages 4 and 5 of the Company's definitive Proxy Statement dated March 8, 1996 is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions The information contained under the caption "Compensation of Outside Directors - Related Transactions" on page 12 of the Company's definitive Proxy Statement dated March 8, 1996 is incorporated herein by reference. III-1 C. R. BARD, INC. AND SUBSIDIARIES PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a) l. Financial Statements and Supplementary Data Included in Part II Item 8 of this report: Page II- 9 Report of Independent Public Accountants. II-10 Statements of Consolidated Income and Statements of Consolidated Retained Earnings for the three years ended December 31, 1995. II-11 Consolidated Balance Sheets at December 31, 1995 and 1994. II-12 Consolidated Statements of Cash Flows for the three years ended December 31, 1995. II-13 Notes to Consolidated Financial Statements. II-24 Quarterly Financial Data. 2. Financial Statement Schedules Schedules are omitted because they are not applicable, are not required or the information required is included in the financial statements or notes thereto. 3. Exhibits, No. 3a Registrant's Restated Certificate of Incorporation, as amended, as of April 19, 1989, filed as Exhibit 3a to the Company's 1993 Annual Report on Form 10-K is incorporated herein by reference. 3b Registrant's Bylaws revised as of April 18, 1990, filed as Exhibit 3b to the Company's 1993 Annual Report on Form 10-K is incorporated herein by reference. 4 Rights Agreement dated as of October 11, 1995 between C. R. Bard, Inc. and First Chicago Trust Company of New York as Rights Agent, filed as Exhibit 1 on Form 8-A is incorporated herein by reference. IV-1 C. R. BARD, INC. AND SUBSIDIARIES 3. Exhibits, No. (Continued) 10 Plea Agreement with attachments and Civil Settlement Agreement between United States of America and C. R. Bard, Inc. dated October 14, 1993, filed as Exhibit 10 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1993, File No. 1-6926 is incorporated herein by reference. 10a* Benson F. Smith Severance Agreement dated as of June 29, 1994 filed as Exhibit 10a to the 1994 Annual Report on Form 10-K is incorporated herein by reference. 10b* William H. Longfield Severance Agreement as amended dated as of July 13, 1994 filed as Exhibit 10b to the 1994 Annual Report on Form 10-K is incorporated herein by reference. 10c* William C. Bopp Severance Agreement as amended dated as of August 31, 1994 filed as Exhibit 10c to the 1994 Annual Report on Form 10-K is incorporated herein by reference. 10d* Hope Greenfield Severance Agreement dated as of March 6, 1996. (p.IV-7). 10e* Richard A. Flink Severance Agreement as amended dated as of July 22, 1994 filed as Exhibit 10a to the 1994 Annual Report on Form 10-K is incorporated herein by reference. 10f* E. Robert Ernest Severance Agreement as amended dated as of July 19, 1994 filed as Exhibit 10f to the 1994 Annual Report on Form 10-K is incorporated herein by reference. 10g* William H. Longfield Supplemental Executive Retirement Agreement dated as of January 12, 1994, filed as Exhibit 10g to the Company's 1993 Annual Report on Form 10-K is incorporated herein by reference. 10h* 1990 Stock Option Plan, filed as Exhibit 10h to the Company's 1993 Annual Report on Form 10-K is incorporated herein by reference. 10i* 1989 Employee Stock Appreciation Rights Plan, filed as Exhibit 10i to the Company's 1993 Annual Report on Form 10-K is incorporated herein by reference. 10j* C. R. Bard, Inc. Agreement and Plans Trust, filed as Exhibit 10j to the Company's 1993 Annual Report on Form 10-K is incorporated herein by reference. IV-2 C. R. BARD, INC. AND SUBSIDIARIES 3. Exhibits, No. (Continued) 10k* Supplemental Insurance/Retirement Plan, Plan I - For new corporate officer when previous agreement as non- officer exists, Plan II - For new corporate officer when no previous agreement exists, filed as Exhibit 10k to the Company's 1993 Annual Report on Form 10-K is incorporated herein by reference. 10l* Retirement Plan for Outside Directors of C. R. Bard, Inc., filed as Exhibit 10l to the Company's 1993 Annual Report on Form 10-K is incorporated herein by reference. 10m* Deferred Compensation Contract Deferral of Directors' Fees, as amended entered into with directors William T. Butler, M.D., Regina E. Herzlinger, and Robert P. Luciano, filed as Exhibit 10m to the Company's 1993 Annual Report on Form 10-K is incorporated herein by reference. 10n* 1988 Directors Stock Award Plan, as amended in October 1991, filed as Exhibit 10n to the Company's 1993 Annual Report on Form 10-K is incorporated herein by reference. 10o* Excess Benefit Plan, filed as Exhibit 10o to the Company's 1993 Annual Report on Form 10-K is incorporated herein by reference. 10p* Supplemental Executive Retirement Plan, filed as Exhibit 10p to the Company's 1993 Annual Report on Form 10-K is incorporated herein by reference. 10q* 1994 Executive Bonus Plan, filed as Exhibit 10 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994, File No. 1-6926 is incorporated herein by reference. 10r* Long Term Performance Incentive Plan, filed as Exhibit 10r to the Company's 1993 Annual Report on Form 10-K is incorporated herein by reference. 10s* Deferred Compensation Contract Deferral of Discretionary Bonus, filed as Exhibit 10s to the Company's 1993 Annual Report on Form 10-K is incorporated herein by reference. 10t* Deferred Compensation Contract Deferral of Salary, filed as Exhibit 10t to the Company's 1993 Annual Report on Form 10-K is incorporated herein by reference. IV-3 C. R. BARD, INC. AND SUBSIDIARIES 3. Exhibits, No. (Continued) 10u* 1993 Long Term Incentive Plan, filed as Exhibit 10u to the Company's 1993 Annual Report on Form 10-K is incorporated herein by reference. 10v* Earle L. Parker Severance Agreement dated as of June 29, 1994 filed as Exhibit 10v to the Company's 1994 Annual Report on Form 10-K is incorporated herein by reference. 10w* John H. Weiland Severance Agreement dated as of March 11, 1996. (p.IV-21). 10x* William T. Tumber Severance Agreement dated as of March 13, 1996. (p.IV-35). 10y* Timothy M. Ring Severance Agreement dated as of March 12, 1996. (p.IV-49). 21 Parents and subsidiaries of registrant. (p. IV-63). 23 Arthur Andersen LLP consent to the incorporation by reference of their report on Form 10-K into previously filed Forms S-8. (P.IV-65). 27 Financial data schedule 99 Indemnity agreement between the Company and each of its directors and officers, filed as Exhibit 99 to the Company's 1993 Annual Report on Form 10-K is incorporated herein by reference. * Each of these exhibits listed under the number 10 constitutes a management contract or a compensatory plan or arrangement. All other exhibits are not applicable. (b) Reports on Form 8-K The Registrant filed a Current Report on Form 8-K dated October 12, 1995 announcing that on October 11, 1995, the Board of Directors declared a dividend of one common share purchase right on each outstanding share of Company common stock. The Registrant filed a Current Report on Form 8-K dated October 17, 1995 announcing a complaint filed by a medical device manufacturer in state court in California alleging breach of contract, fraud and misrepresentation by the Company in connection with its performance under a development, supply and license agreement. The Registrant filed a Current Report on Form 8-K dated December 15, 1995 announcing the completion of a stock-for-stock merger with American Hydro-Surgical Instruments, Inc. and certain post-merger financial results. IV-4 C. R. BARD, INC. AND SUBSIDIARIES Signatures Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. C. R. BARD, INC. (Registrant) By: William C. Bopp /s/ William C. Bopp Executive Vice President and Chief Financial Officer Date: March 14, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signatures Title Date William H. Longfield /s/ Chairman and March 14,1996 William H. Longfield Chief Executive Officer and Director (Principal Executive Officer) William C. Bopp /s/ Executive Vice President March 14, 1996 William C. Bopp and Chief Financial Officer and Director (Principal Financial Officer) Charles P. Grom /s/ Vice President and March 14, 1996 Charles P. Grom Controller (Principal Accounting Officer) Benson F. Smith /s/ President and March 14, 1996 Benson F. Smith Chief Operating Officer and Director IV-5 C. R. BARD, INC. AND SUBSIDIARIES Signatures Title Date Joseph F. Abely, Jr. /s/ Director March 15, 1996 Joseph F. Abely, Jr. William T. Butler, M.D. /s/ Director March 15, 1996 William T. Butler, M.D. Raymond B. Carey, Jr. /s/ Director March 15, 1996 Raymond B. Carey, Jr. Daniel A. Cronin, Jr. /s/ Director March 22, 1996 Daniel A. Cronin, Jr. T. Kevin Dunnigan /s/ Director March 15, 1996 T. Kevin Dunnigan Regina E. Herzlinger /s/ Director March 15, 1996 Regina E. Herzlinger Robert P. Luciano /s/ Director March 15, 1996 Robert P. Luciano Robert H. McCaffrey /s/ Director March 14, 1996 Robert H. McCaffrey IV-6 EX-10 2 EXHIBIT 10d AGREEMENT AGREEMENT by and between C. R. BARD, INC., a New Jersey corporation (the "Corporation"), and Hope Greenfield (the "Executive"), dated as of the 6th day of March, 1996. WHEREAS, the Corporation, on behalf of itself and its shareholders, wishes to assure that the Corporation will have the continued dedication of the Executive, notwithstanding the possibility, threat, or occurrence of a Change of Control (as defined below) of the Corporation. The Board of Directors of the Corporation (the "Board") believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control, to encourage his attention and dedication to his assigned duties currently and in the event of any threatened or pending Change of Control, and to provide the Executive with competitive compensation arrangements; therefore, the Board has caused the Corporation to enter into this Agreement (i) to ensure the Executive of individual financial security in the event of a Change of Control, and (ii) to provide such protection in a manner which is competitive with that of other corporations. NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 1. Certain Definitions. (a) The "Effective Date" shall be the first date during the "Change of Control Period" (as defined in Section l(b)) on which a Change of Control occurs. Anything in this Agreement to the contrary notwithstanding, if the Executive's employment with the Corporation is terminated prior to the date on which a Change of Control occurs, and the Executive can reasonably demonstrate that such termination (1) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (2) otherwise arose in connection with or anticipation of a Change of Control, then for all purposes of this Agreement the "Effective Date" shall mean the date immediately prior to the date of such termination. (b) The "Change of Control Period" is the period commencing on the date hereof and ending on the earlier to occur of (i) the third anniversary of such date or (ii) the first day of the month next following the Executive's normal retirement date ("Normal Retirement Date") under the Corporation's retirement plan; provided, however, that commencing on the date one year after the date hereof, and on each annual anniversary of such date (such date and each annual anniversary thereof is hereinafter referred to as the "Renewal Date"), the Change of Control Period shall be automatically extended so as to terminate on the earlier of (x) two years from such Renewal Date or (y) the first day of the month coinciding with or next following the Executive's Normal Retirement Date, unless at least 60 days prior to the Renewal Date the Corporation shall give notice that the Change of Control Period shall not be so extended. IV-7 2. Change of Control. (a) For purposes of this Agreement, a "Change of Control" shall be deemed to have occurred if a change of control of the nature that would be required to be reported in response to Item 1(a) of the Current Report on Form 8-K as in effect on the date hereof pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") occurs, provided that, without limitation, a "Change of Control" shall be deemed to have occurred if (i) the beneficial ownership at any time hereafter by any person, as defined herein, of capital stock of the Corporation, constitutes 20 percent or more of the general voting power of all of the Corporation's outstanding capital or (ii) individuals who, as of the date hereof, constitute the Board (as of the date hereof, the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a Director subsequent to the date hereof whose election, or nomination for election by the Corporation's shareholders, was approved by a vote of at least three-quarters of the Directors comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Corporation, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board. No sale to underwriters or private placement of its capital stock by the Corporation, nor any acquisition initiated by the Corporation, through merger, purchase of assets or otherwise, effected in whole or in part by issuance or reissuance of shares of its capital stock, shall constitute a Change of Control. (b) For purposes of the definition of "Change of Control", the following definitions shall be applicable: (i) The term "person" shall mean any individual, corporation or other entity and any group as such term is used in Section 13(d)(3) or 14(d)(2) of the Exchange Act. (ii) Any person shall be deemed to be the beneficial owner of any shares of capital stock of the Corporation: A. which that person owns directly, whether or not of record, or B. which that person has the right to acquire pursuant to any agreement or understanding or upon exercise of conversion rights, warrants, or options, or otherwise, or C. which are beneficially owned, directly or indirectly (including shares deemed owned through application of clause (B) above), by an "affiliate" or "associate" (as defined in the rules of the Securities and Exchange Commission under the Securities Act of 1933, as amended) of that person, or IV-8 D. which are beneficially owned, directly or indirectly (including shares deemed owned through application of clause (B) above), by any other person with which that person or his "affiliate" or "associate" (defined as aforesaid) has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of capital stock of the Corporation. (iii) The outstanding shares of capital stock of the Corporation shall include shares deemed owned through application of clauses (ii) (B), (C) and (D), above, but shall not include any other shares which may be issuable pursuant to any agreement or upon exercise of conversion rights, warrants or options, or otherwise, but which are not actually outstanding. (iv) Shares of capital stock, if any, held by The Chase Manhattan Bank N.A. under the Indenture and the Escrow Agreement dated as of November 1, 1971 between International Paper Corporation and said bank shall not be deemed owned by International Paper Corporation or by said bank for purposes of this definition, so long as they are held by said bank under said Escrow Agreement, but said shares shall be deemed outstanding for the purpose of determining the aggregate number of outstanding shares of capital stock of the Corporation. 3. Employment Period. The Corporation hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Corporation, for the period commencing on the Effective Date and ending on the earlier to occur of (a) the third anniversary of such date or (b) the first day of the month coinciding with or next following the Executive's Normal Retirement Date (the "Employment Period"). 4. Terms of Employment. (a) Position and Duties. (i) During the Employment Period, (A) the Executive's position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 90-day period immediately preceding the Effective Date and (B) the Executive's services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or any office or location less than thirty-five (35) miles from such location. (ii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Corporation and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the IV-9 Executive's reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Corporation in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive's responsibilities to the Corporation. (b) Compensation. (i) Base Salary. During the Employment Period, the Executive shall receive a base salary ("Base Salary") at a monthly rate at least equal to the highest monthly base salary paid to the Executive by the Corporation during the twelve-month period immediately preceding the month in which the Effective Date occurs. During the Employment Period, the Base Salary shall be reviewed at least annually and shall be increased at any time and from time to time as shall be consistent with increases in base salary awarded in the ordinary course of business to other key executives of the Corporation. Any increase in Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Base Salary shall not be reduced after any such increase. (ii) Annual Bonus. In addition to Ease Salary, the Executive shall be awarded, for each fiscal year during the Employment Period, an annual bonus (an "Annual Bonus") in cash at least equal to the average bonus received by the Executive from the Corporation in respect of the three fiscal years immediately preceding the fiscal year in which the Effective Date occurs. (iii) Incentive, Savings and Retirement Plans. In addition to Base Salary and Annual Bonus payable as hereinabove provided, the Executive shall be entitled to participate during the Employment Period in all incentive, savings and retirement plans and programs, whether qualified or non-qualified, then applicable to other key executives of the Corporation and its affiliates (including the Corporation's 1981 Stock Option Plan, the Long-Term Performance Incentive Plan, the 1986 Stock Award Plan, the 1981 Employee Stock Appreciation Rights Plan, the Employees' Stock Ownership Plan and the Employees' Retirement Savings Plan, in each case to the extent then in effect or as subsequently amended); provided, however, that such plans and programs, in the aggregate, shall provide the Executive with compensation, benefits and reward opportunities at least as favorable as the most favorable such compensation benefits and reward opportunities provided by the Corporation for the Executive under such plans and programs as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as provided at any time thereafter with respect to other key executives. IV-10 (iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans provided by the Corporation (including, without limitation, medical, prescription, dental, disability, salary continuance, executive life, group life, accidental death and travel accident insurance plans and programs), at least comparable to those in effect at any time during the 90-day period immediately preceding the Effective Date which would be most favorable to the Executive or, if more favorable to the Executive, as in effect at any time thereafter with respect to other key executives. (v) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable policies and procedures of the Corporation and its affiliates in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect at any time thereafter with respect to other key executives. (vi) Fringe Benefits. During the Employment Period, the Executive shall be entitled to fringe benefits, in accordance with the most favorable policies of the Corporation and its affiliates in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect at any time thereafter with respect to other key executives. (vii) Office and Support Staff. During the Employment Period, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to secretarial and other assistance, at least equal to those provided to the Executive at any time during the 90-day period immediately preceding the Effective Date which would be most favorable to the Executive or, if more favorable to the Executive, as provided at any time thereafter with respect to other key executives. (viii) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable policies of the Corporation and its affiliates as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect at any time thereafter with respect to other key executives. 5. Termination. (a) Death or Disability. This Agreement shall terminate automatically upon the Executive's death. The Corporation may terminate this Agreement, after having established the Executive's Disability (pursuant to the definition of "Disability" set forth below), by giving to the Executive written notice of its intention to terminate the Executive's employment. In such a case, the Executive's employment with the Corporation shall terminate effective on the 180th day after receipt of such notice (the "Disability Effective Date"), provided that, within 180 days after such receipt, the IV-11 Executive shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" means disability which, at least 26 weeks after its commencement, is determined to be total and permanent by a physician selected by the Corporation or its insurers and acceptable to the Executive or the Executive's legal representative (such agreement as to acceptability not to be withheld unreasonably). (b) Cause. The Corporation may terminate the Executive's employment for "Cause." For purposes of this Agreement, "Cause" means (i) an act or acts of dishonesty taken by the Executive and intended to result in substantial personal enrichment of the Executive at the expense of the Corporation, (ii) repeated violations by the Executive of the Executive's obligations under Section 4(a) of this Agreement which are demonstrably willful and deliberate on the Executive's part and which are not remedied after the receipt of notice from the Corporation or (iii) the conviction of the Executive of a felony. (c) Termination by Executive for Good Reason. The Executive's employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, "Good Reason" means (i) (A) the assignment to the Executive of any duties inconsistent in any respect with the Executive's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 4(a) of this Agreement, or (B) any other action by the Corporation which results in a diminution in such position, authority, duties or responsibilities, other than an insubstantial and inadvertent action which is remedied by the Corporation promptly after receipt of notice thereof given by the Executive; (ii) any failure by the Corporation to comply with any of the provisions of Section 4(b) of this Agreement, other than an insubstantial and inadvertent failure which is remedied by the Corporation promptly after receipt of notice thereof given by the Executive; (iii) the Corporation's requiring the Executive to be based at any office or location other than that described in Section 4(a)(i)(B) hereof, except for travel reasonably required in the performance of the Executive's responsibilities; (iv) any purported termination by the Corporation of the Executive's employment otherwise than as permitted by this Agreement; or (v) any failure by the Corporation to comply with and satisfy Section 11(c) of this Agreement. IV-12 Anything in this Agreement to the contrary notwithstanding, any termination by the Executive for any reason whatsoever during the six month period immediately following the first anniversary of the date of a Change of Control shall be a termination for "Good Reason". For purposes of this Section 5(c), any good faith determination of "Good Reason" made by the Executive shall be conclusive. (d) Notice of Termination. Any termination by the Corporation for Cause or by the Executive for Good Reason shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than fifteen (15) days after the giving of such notice). (e) Date of Termination. "Date of Termination" means the date of receipt of the Notice of Termination or any later date specified therein, as the case may be. If the Executive's employment is terminated by the Corporation other than for Cause or Disability, the Date of Termination shall be the date on which the Corporation notifies the Executive of such termination. 6. Obligations of the Corporation upon Termination. (a) Death. If the Executive's employment is terminated by reason of the Executive's death, this Agreement shall terminate without further obligations to the Executive's legal representatives under this Agreement, other than those obligations accrued or earned by the Executive hereunder at the date of the Executive's death. Anything in this Agreement to the contrary notwithstanding, the Executive's family shall be entitled to receive benefits at least equal to the most favorable benefits provided by the Corporation to surviving families of executives of the Corporation under such plans, programs and policies relating to family death benefits, if any, as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive's family, as in effect on the date of the Executive's death with respect to other key executives and their families. (b) Disability. If the Executive's employment is terminated by reason of the Executive's Disability, this Agreement shall terminate without further obligations to the Executive, other than those obligations accrued or earned by the Executive hereunder as of the Disability Effective Date. Anything in this Agreement to the contrary notwithstanding, the Executive shall be entitled after the Disability Effective Date to receive disability and other benefits at least equal to the most favorable of those provided by the Corporation to disabled employees and/or their families in accordance with such plans, IV-13 programs and policies relating to disability, if any, as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive's family, as in effect at any time thereafter with respect to other key executives and their families. (c) Cause; Other than for Good Reason. If the Executive's employment shall be terminated for Cause or the Executive terminates his employment other than for Good Reason, the Corporation shall pay the Executive his full Base Salary through the Date of Termination at the rate in effect at the time Notice of Termination is given and shall have no further obligations to the Executive under this Agreement. (d) Termination by Executive for Good Reason; Termination by Corporation Other Than for Cause or Disability. If, during the Employment Period, the Corporation shall terminate the Executive's employment other than for Cause or Disability, or the employment of the Executive shall be terminated by the Executive for Good Reason: (i) the Corporation shall pay to the Executive in a lump sum in cash within 10 days after the Date of Termination (the "Payment Date") the aggregate of the following amounts: A. to the extent not theretofore paid, the Executive's Base Salary through the Date of Termination at the rate in effect on the Date of Termination or, if higher, at the highest rate in effect at any time within the three year period preceding the Effective Date (the "Highest Base Salary"); and B. the product of (x) the average of the annual bonuses paid, or payable to the extent deferred, to the Executive for the three full fiscal years prior to the Effective Date (the "Recent Bonus") and (y) the fraction obtained by dividing (i) the number of days between the Date of Termination and the last day of the last full fiscal year and (ii) 365; and C. the product of (x) three and (y) the sum of the Highest Base Salary and (ii) the Recent Bonus; and D. in the case of compensation previously deferred by the Executive, all amounts previously deferred and not yet paid by the Corporation; and (ii) for one year after the Date of Termination, the Corporation shall continue benefits to the Executive and/or the Executive's family at least equal to those which would have been provided to them in accordance with the plans, programs and policies described in Section 4(b)(iv) of this Agreement if the Executive's employment had not been terminated, including health insurance and life insurance, if and as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more IV-14 favorable to the Executive, as in effect at any time thereafter with respect to other key executives and their families and for purposes of eligibility for retiree benefits pursuant to such plans, programs and policies, the Executive shall be considered to have remained employed until the end of the Employment Period and to have retired on the last day of such period. Anything herein to the contrary notwithstanding, the Executive may elect in his Notice of Termination to receive the payment provided for pursuant to Section 6(d)(i)(C) hereof (the "Severance Payment") in installments. If the Executive elects the installment method, one-quarter of the Severance Payment shall be paid to the Executive on the Payment Date and one-quarter of the severance payment shall be paid to the Executive on each of the next three anniversaries thereof and, in the case of the latter three payments, the amounts to be paid shall include interests from the Payment Date on the remaining unpaid balance of the Severance Payment calculated at the Morgan Guaranty Trust Company prime rate as in effect from time to time. 7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Corporation or any of its affiliated companies and for which the Executive may qualify, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any stock option or other agreements with the Corporation or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Corporation or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan or program. 8. Full Settlement. The Corporation's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Corporation may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement. The Corporation agrees to pay, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Corporation or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof or as a result of any contest by the Executive about the amount of any payment pursuant to Section 9 of this Agreement, plus in each case interest at the Federal Rate (as defined below). IV-15 9. Gross-up. (a) In the event it shall be determined that any payment, benefit or distribution (or combination thereof) by the Corporation to or for the benefit of Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, or otherwise) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, hereinafter collectively referred to as the "Excise Tax"), Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by Executive of the Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 9(c), all determinations required to be made under this Section 9, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by Arthur Andersen & Co. (the "Accounting Firm") which shall provide detailed supporting calculations both to the Corporation and Executive within fifteen (15) business days of the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Corporation. In the event that the Accounting Firm is serving as accountant or auditor for an individual, entity or group effecting the change in ownership or effective control (within the meaning of Section 280G of the Code), Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Corporation. Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by the Corporation to Executive within five (5) days after the receipt of the Accounting Firm's determination. If the Accounting Firm determines that no Excise Tax is payable by Executive, it shall so indicate to Executive in writing. Any determination by the Accounting Firm shall be binding upon the Corporation and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Corporation should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Corporation exhausts its remedies pursuant to Section 9(c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Corporation to or for the benefit of Executive. (c) Executive shall notify the Corporation in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Corporation of the Gross-Up IV-16 Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after Executive is informed in writing of such claim and shall apprise the Corporation of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the thirty (30) day period following the date on which it gives such notice to the Corporation (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Corporation notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall: (i) give the Corporation any information reasonably requested by the Corporation relating to such claim; (ii) take such action in connection with contesting such claim as the Corporation shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Corporation; (iii) cooperate with the Corporation in good faith in order to effectively contest such claim; and (iv) permit the Corporation to participate in any proceedings relating to such claim; provided, however, that the Corporation shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 9(c), the Corporation shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Corporation shall determine; provided, however, that if the Corporation directs Executive to pay such claim and sue for a refund, the Corporation shall advance the amount of such payment to Executive, on an interest-free basis, and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and provided, further, that if Executive is required to extend the statute of limitations to enable the Corporation to contest such claim, Executive may limit this extension solely to such contested amount. IV-17 (d) If, after the receipt by Executive of an amount advanced by the Corporation pursuant to Section 9(c), Executive becomes entitled to receive any refund with respect to such claim, Executive shall (subject to the Corporation's complying with the requirements of Section 9(c)) promptly pay to the Corporation the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the Corporation pursuant to Section 9(c), a determination is made that Executive shall not be entitled to any refund with respect to such claim and the Corporation does not notify Executive in writing of its intent to contest such denial of refund prior to the expiration of thirty (30) days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 10. Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of the Corporation all secret or confidential information, knowledge or data relating to the Corporation or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive's employment by the Corporation or any of its affiliated companies and which shall not be public knowledge (other than by acts by the Executive or his representatives in violation of this Agreement). After termination of the Executive's employment with the Corporation, the Executive shall not, without the prior written consent of the Corporation, communicate or divulge any such information, knowledge or data to anyone other than the Corporation and those designated by it. In no event shall an asserted violation of the provisions of this Section 10 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement. 11. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Corporation shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Corporation and its successors. (c) The Corporation will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Corporation to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no such succession had taken place. As used in this Agreement, "Corporation" shall mean the Corporation as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. IV-18 12. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: Hope Greenfield 124 South Great Road Lincoln, MA 01773 If to the Corporation: C. R. BARD, INC. 730 Central Avenue Murray Hill, New Jersey 07974 Attention: General Counsel or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. (d) The Corporation may withhold from any amounts payable under this Agreement such Federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) The Executive's failure to insist upon strict compliance with any provision hereof shall not be deemed to be a waiver of such provision or any other provision thereof. (f) This Agreement contains the entire understanding of the Corporation and the Executive with respect to the subject matter hereof. (g) The Executive and the Corporation acknowledge that the employment of the Executive by the Corporation is "at will", and, prior to the Effective Date, may be terminated by either the Executive or the Corporation at any time. Upon a termination of the Executive's employment or upon the Executive's ceasing to be an officer of the Corporation, in each case, prior to the Effective Date, there shall be no further rights under this Agreement. IV-19 IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant to the authorization from its Board of Directors, the Corporation has caused these presents to be executed in its name on its behalf, all as of the day and year first above written. /s/ Hope Greenfield Hope Greenfield C. R. BARD, INC. By:/s/ William H. Longfield Name: William H. Longfield Title: Chairman and Chief Executive Officer Attest:/s/ Jean F. Miller Assistant Secretary IV-20 EX-10 3 EXHIBIT 10w AGREEMENT AGREEMENT by and between C. R. BARD, INC., a New Jersey corporation (the "Corporation"), and John H. Weiland (the "Executive"), dated as of the 11th day of March, 1996. WHEREAS, the Corporation, on behalf of itself and its shareholders, wishes to assure that the Corporation will have the continued dedication of the Executive, notwithstanding the possibility, threat, or occurrence of a Change of Control (as defined below) of the Corporation. The Board of Directors of the Corporation (the "Board") believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control, to encourage his attention and dedication to his assigned duties currently and in the event of any threatened or pending Change of Control, and to provide the Executive with competitive compensation arrangements; therefore, the Board has caused the Corporation to enter into this Agreement (i) to ensure the Executive of individual financial security in the event of a Change of Control, and (ii) to provide such protection in a manner which is competitive with that of other corporations. NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 1. Certain Definitions. (a) The "Effective Date" shall be the first date during the "Change of Control Period" (as defined in Section l(b)) on which a Change of Control occurs. Anything in this Agreement to the contrary notwithstanding, if the Executive's employment with the Corporation is terminated prior to the date on which a Change of Control occurs, and the Executive can reasonably demonstrate that such termination (1) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (2) otherwise arose in connection with or anticipation of a Change of Control, then for all purposes of this Agreement the "Effective Date" shall mean the date immediately prior to the date of such termination. (b) The "Change of Control Period" is the period commencing on the date hereof and ending on the earlier to occur of (i) the third anniversary of such date or (ii) the first day of the month next following the Executive's normal retirement date ("Normal Retirement Date") under the Corporation's retirement plan; provided, however, that commencing on the date one year after the date hereof, and on each annual anniversary of such date (such date and each annual anniversary thereof is hereinafter referred to as the "Renewal Date"), the Change of Control Period shall be automatically extended so as to terminate on the earlier of (x) two years from such Renewal Date or (y) the first day of the month coinciding with or next following the Executive's Normal Retirement Date, unless at least 60 days prior to the Renewal Date the Corporation shall give notice that the Change of Control Period shall not be so extended. IV-21 2. Change of Control. (a) For purposes of this Agreement, a "Change of Control" shall be deemed to have occurred if a change of control of the nature that would be required to be reported in response to Item 1(a) of the Current Report on Form 8-K as in effect on the date hereof pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") occurs, provided that, without limitation, a "Change of Control" shall be deemed to have occurred if (i) the beneficial ownership at any time hereafter by any person, as defined herein, of capital stock of the Corporation, constitutes 20 percent or more of the general voting power of all of the Corporation's outstanding capital or (ii) individuals who, as of the date hereof, constitute the Board (as of the date hereof, the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a Director subsequent to the date hereof whose election, or nomination for election by the Corporation's shareholders, was approved by a vote of at least three-quarters of the Directors comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Corporation, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board. No sale to underwriters or private placement of its capital stock by the Corporation, nor any acquisition initiated by the Corporation, through merger, purchase of assets or otherwise, effected in whole or in part by issuance or reissuance of shares of its capital stock, shall constitute a Change of Control. (b) For purposes of the definition of "Change of Control", the following definitions shall be applicable: (i) The term "person" shall mean any individual, corporation or other entity and any group as such term is used in Section 13(d)(3) or 14(d)(2) of the Exchange Act. (ii) Any person shall be deemed to be the beneficial owner of any shares of capital stock of the Corporation: A. which that person owns directly, whether or not of record, or B. which that person has the right to acquire pursuant to any agreement or understanding or upon exercise of conversion rights, warrants, or options, or otherwise, or C. which are beneficially owned, directly or indirectly (including shares deemed owned through application of clause (B) above), by an "affiliate" or "associate" (as defined in the rules of the Securities and Exchange Commission under the Securities Act of 1933, as amended) of that person, or IV-22 D. which are beneficially owned, directly or indirectly (including shares deemed owned through application of clause (B) above), by any other person with which that person or his "affiliate" or "associate" (defined as aforesaid) has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of capital stock of the Corporation. (iii) The outstanding shares of capital stock of the Corporation shall include shares deemed owned through application of clauses (ii) (B), (C) and (D), above, but shall not include any other shares which may be issuable pursuant to any agreement or upon exercise of conversion rights, warrants or options, or otherwise, but which are not actually outstanding. (iv) Shares of capital stock, if any, held by The Chase Manhattan Bank N.A. under the Indenture and the Escrow Agreement dated as of November 1, 1971 between International Paper Corporation and said bank shall not be deemed owned by International Paper Corporation or by said bank for purposes of this definition, so long as they are held by said bank under said Escrow Agreement, but said shares shall be deemed outstanding for the purpose of determining the aggregate number of outstanding shares of capital stock of the Corporation. 3. Employment Period. The Corporation hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Corporation, for the period commencing on the Effective Date and ending on the earlier to occur of (a) the third anniversary of such date or (b) the first day of the month coinciding with or next following the Executive's Normal Retirement Date (the "Employment Period"). 4. Terms of Employment. (a) Position and Duties. (i) During the Employment Period, (A) the Executive's position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 90-day period immediately preceding the Effective Date and (B) the Executive's services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or any office or location less than thirty-five (35) miles from such location. (ii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and IV-23 time during normal business hours to the business and affairs of the Corporation and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive's reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Corporation in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive's responsibilities to the Corporation. (b) Compensation. (i) Base Salary. During the Employment Period, the Executive shall receive a base salary ("Base Salary") at a monthly rate at least equal to the highest monthly base salary paid to the Executive by the Corporation during the twelve-month period immediately preceding the month in which the Effective Date occurs. During the Employment Period, the Base Salary shall be reviewed at least annually and shall be increased at any time and from time to time as shall be consistent with increases in base salary awarded in the ordinary course of business to other key executives of the Corporation. Any increase in Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Base Salary shall not be reduced after any such increase. (ii) Annual Bonus. In addition to Ease Salary, the Executive shall be awarded, for each fiscal year during the Employment Period, an annual bonus (an "Annual Bonus") in cash at least equal to the average bonus received by the Executive from the Corporation in respect of the three fiscal years immediately preceding the fiscal year in which the Effective Date occurs. (iii) Incentive, Savings and Retirement Plans. In addition to Base Salary and Annual Bonus payable as hereinabove provided, the Executive shall be entitled to participate during the Employment Period in all incentive, savings and retirement plans and programs, whether qualified or non-qualified, then applicable to other key executives of the Corporation and its affiliates (including the Corporation's 1981 Stock Option Plan, the Long-Term Performance Incentive Plan, the 1986 Stock Award Plan, the 1981 Employee Stock Appreciation Rights Plan, the Employees' Stock Ownership Plan and the Employees' Retirement Savings Plan, in each case to the extent then in effect or as subsequently amended); provided, however, that such plans and programs, in the aggregate, shall provide the Executive with compensation, benefits and reward opportunities at least as favorable as the most favorable such compensation benefits and reward opportunities provided by the Corporation for IV-24 the Executive under such plans and programs as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as provided at any time thereafter with respect to other key executives. (iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans provided by the Corporation (including, without limitation, medical, prescription, dental, disability, salary continuance, executive life, group life, accidental death and travel accident insurance plans and programs), at least comparable to those in effect at any time during the 90-day period immediately preceding the Effective Date which would be most favorable to the Executive or, if more favorable to the Executive, as in effect at any time thereafter with respect to other key executives. (v) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable policies and procedures of the Corporation and its affiliates in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect at any time thereafter with respect to other key executives. (vi) Fringe Benefits. During the Employment Period, the Executive shall be entitled to fringe benefits, in accordance with the most favorable policies of the Corporation and its affiliates in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect at any time thereafter with respect to other key executives. (vii) Office and Support Staff. During the Employment Period, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to secretarial and other assistance, at least equal to those provided to the Executive at any time during the 90-day period immediately preceding the Effective Date which would be most favorable to the Executive or, if more favorable to the Executive, as provided at any time thereafter with respect to other key executives. (viii) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable policies of the Corporation and its affiliates as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect at any time thereafter with respect to other key executives. 5. Termination. (a) Death or Disability. This Agreement shall terminate automatically upon the Executive's death. The Corporation may terminate this Agreement, after having established the Executive's Disability (pursuant to the definition of "Disability" set forth below), by giving to the IV-25 Executive written notice of its intention to terminate the Executive's employment. In such a case, the Executive's employment with the Corporation shall terminate effective on the 180th day after receipt of such notice (the "Disability Effective Date"), provided that, within 180 days after such receipt, the Executive shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" means disability which, at least 26 weeks after its commencement, is determined to be total and permanent by a physician selected by the Corporation or its insurers and acceptable to the Executive or the Executive's legal representative (such agreement as to acceptability not to be withheld unreasonably). (b) Cause. The Corporation may terminate the Executive's employment for "Cause." For purposes of this Agreement, "Cause" means (i) an act or acts of dishonesty taken by the Executive and intended to result in substantial personal enrichment of the Executive at the expense of the Corporation, (ii) repeated violations by the Executive of the Executive's obligations under Section 4(a) of this Agreement which are demonstrably willful and deliberate on the Executive's part and which are not remedied after the receipt of notice from the Corporation or (iii) the conviction of the Executive of a felony. (c) Termination by Executive for Good Reason. The Executive's employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, "Good Reason" means (i) (A) the assignment to the Executive of any duties inconsistent in any respect with the Executive's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 4(a) of this Agreement, or (B) any other action by the Corporation which results in a diminution in such position, authority, duties or responsibilities, other than an insubstantial and inadvertent action which is remedied by the Corporation promptly after receipt of notice thereof given by the Executive; (ii) any failure by the Corporation to comply with any of the provisions of Section 4(b) of this Agreement, other than an insubstantial and inadvertent failure which is remedied by the Corporation promptly after receipt of notice thereof given by the Executive; (iii) the Corporation's requiring the Executive to be based at any office or location other than that described in Section 4(a)(i)(B) hereof, except for travel reasonably required in the performance of the Executive's responsibilities; (iv) any purported termination by the Corporation of the Executive's employment otherwise than as permitted by this Agreement; or IV-26 (v) any failure by the Corporation to comply with and satisfy Section 11(c) of this Agreement. Anything in this Agreement to the contrary notwithstanding, any termination by the Executive for any reason whatsoever during the six month period immediately following the first anniversary of the date of a Change of Control shall be a termination for "Good Reason". For purposes of this Section 5(c), any good faith determination of "Good Reason" made by the Executive shall be conclusive. (d) Notice of Termination. Any termination by the Corporation for Cause or by the Executive for Good Reason shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than fifteen (15) days after the giving of such notice). (e) Date of Termination. "Date of Termination" means the date of receipt of the Notice of Termination or any later date specified therein, as the case may be. If the Executive's employment is terminated by the Corporation other than for Cause or Disability, the Date of Termination shall be the date on which the Corporation notifies the Executive of such termination. 6. Obligations of the Corporation upon Termination. (a) Death. If the Executive's employment is terminated by reason of the Executive's death, this Agreement shall terminate without further obligations to the Executive's legal representatives under this Agreement, other than those obligations accrued or earned by the Executive hereunder at the date of the Executive's death. Anything in this Agreement to the contrary notwithstanding, the Executive's family shall be entitled to receive benefits at least equal to the most favorable benefits provided by the Corporation to surviving families of executives of the Corporation under such plans, programs and policies relating to family death benefits, if any, as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive's family, as in effect on the date of the Executive's death with respect to other key executives and their families. (b) Disability. If the Executive's employment is terminated by reason of the Executive's Disability, this Agreement shall terminate without further obligations to the Executive, other than those obligations accrued or earned by the Executive hereunder as of the Disability Effective Date. Anything in this Agreement to the contrary notwithstanding, the Executive shall be entitled after the Disability Effective Date to receive disability and other benefits at least equal to the most favorable of those provided by the Corporation to disabled IV-27 employees and/or their families in accordance with such plans, programs and policies relating to disability, if any, as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive's family, as in effect at any time thereafter with respect to other key executives and their families. (c) Cause; Other than for Good Reason. If the Executive's employment shall be terminated for Cause or the Executive terminates his employment other than for Good Reason, the Corporation shall pay the Executive his full Base Salary through the Date of Termination at the rate in effect at the time Notice of Termination is given and shall have no further obligations to the Executive under this Agreement. (d) Termination by Executive for Good Reason; Termination by Corporation Other Than for Cause or Disability. If, during the Employment Period, the Corporation shall terminate the Executive's employment other than for Cause or Disability, or the employment of the Executive shall be terminated by the Executive for Good Reason: (i) the Corporation shall pay to the Executive in a lump sum in cash within 10 days after the Date of Termination (the "Payment Date") the aggregate of the following amounts: A. to the extent not theretofore paid, the Executive's Base Salary through the Date of Termination at the rate in effect on the Date of Termination or, if higher, at the highest rate in effect at any time within the three year period preceding the Effective Date (the "Highest Base Salary"); and B. the product of (x) the average of the annual bonuses paid, or payable to the extent deferred, to the Executive for the three full fiscal years prior to the Effective Date (the "Recent Bonus") and (y) the fraction obtained by dividing (i) the number of days between the Date of Termination and the last day of the last full fiscal year and (ii) 365; and C. the product of (x) three and (y) the sum of the Highest Base Salary and (ii) the Recent Bonus; and D. in the case of compensation previously deferred by the Executive, all amounts previously deferred and not yet paid by the Corporation; and (ii) for one year after the Date of Termination, the Corporation shall continue benefits to the Executive and/or the Executive's family at least equal to those which would have been provided to them in accordance with the plans, programs and policies described in Section 4(b)(iv) of this Agreement if the Executive's employment had not been terminated, including health insurance and life insurance, if and as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more IV-28 favorable to the Executive, as in effect at any time thereafter with respect to other key executives and their families and for purposes of eligibility for retiree benefits pursuant to such plans, programs and policies, the Executive shall be considered to have remained employed until the end of the Employment Period and to have retired on the last day of such period. Anything herein to the contrary notwithstanding, the Executive may elect in his Notice of Termination to receive the payment provided for pursuant to Section 6(d)(i)(C) hereof (the "Severance Payment") in installments. If the Executive elects the installment method, one-quarter of the Severance Payment shall be paid to the Executive on the Payment Date and one-quarter of the severance payment shall be paid to the Executive on each of the next three anniversaries thereof and, in the case of the latter three payments, the amounts to be paid shall include interests from the Payment Date on the remaining unpaid balance of the Severance Payment calculated at the Morgan Guaranty Trust Company prime rate as in effect from time to time. 7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Corporation or any of its affiliated companies and for which the Executive may qualify, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any stock option or other agreements with the Corporation or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Corporation or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan or program. 8. Full Settlement. The Corporation's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Corporation may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement. The Corporation agrees to pay, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Corporation or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof or as a result of any contest by the Executive about the amount of any payment pursuant to Section 9 of this Agreement, plus in each case interest at the Federal Rate (as defined below). IV-29 9. Gross-up. (a) In the event it shall be determined that any payment, benefit or distribution (or combination thereof) by the Corporation to or for the benefit of Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, or otherwise) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, hereinafter collectively referred to as the "Excise Tax"), Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by Executive of the Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 9(c), all determinations required to be made under this Section 9, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by Arthur Andersen & Co. (the "Accounting Firm") which shall provide detailed supporting calculations both to the Corporation and Executive within fifteen (15) business days of the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Corporation. In the event that the Accounting Firm is serving as accountant or auditor for an individual, entity or group effecting the change in ownership or effective control (within the meaning of Section 280G of the Code), Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Corporation. Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by the Corporation to Executive within five (5) days after the receipt of the Accounting Firm's determination. If the Accounting Firm determines that no Excise Tax is payable by Executive, it shall so indicate to Executive in writing. Any determination by the Accounting Firm shall be binding upon the Corporation and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Corporation should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Corporation exhausts its remedies pursuant to Section 9(c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Corporation to or for the benefit of Executive. IV-30 (c) Executive shall notify the Corporation in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Corporation of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after Executive is informed in writing of such claim and shall apprise the Corporation of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the thirty (30) day period following the date on which it gives such notice to the Corporation (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Corporation notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall: (i) give the Corporation any information reasonably requested by the Corporation relating to such claim; (ii) take such action in connection with contesting such claim as the Corporation shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Corporation; (iii) cooperate with the Corporation in good faith in order to effectively contest such claim; and (iv) permit the Corporation to participate in any proceedings relating to such claim; provided, however, that the Corporation shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 9(c), the Corporation shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Corporation shall determine; provided, however, that if the Corporation directs Executive to pay such claim and sue for a refund, the Corporation shall advance the amount of such payment to Executive, on an interest-free basis, and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and provided, further, that if Executive is required to extend the statute of limitations to enable the Corporation to contest such claim, IV-31 Executive may limit this extension solely to such contested amount. (d) If, after the receipt by Executive of an amount advanced by the Corporation pursuant to Section 9(c), Executive becomes entitled to receive any refund with respect to such claim, Executive shall (subject to the Corporation's complying with the requirements of Section 9(c)) promptly pay to the Corporation the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the Corporation pursuant to Section 9(c), a determination is made that Executive shall not be entitled to any refund with respect to such claim and the Corporation does not notify Executive in writing of its intent to contest such denial of refund prior to the expiration of thirty (30) days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 10. Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of the Corporation all secret or confidential information, knowledge or data relating to the Corporation or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive's employment by the Corporation or any of its affiliated companies and which shall not be public knowledge (other than by acts by the Executive or his representatives in violation of this Agreement). After termination of the Executive's employment with the Corporation, the Executive shall not, without the prior written consent of the Corporation, communicate or divulge any such information, knowledge or data to anyone other than the Corporation and those designated by it. In no event shall an asserted violation of the provisions of this Section 10 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement. 11. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Corporation shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Corporation and its successors. (c) The Corporation will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Corporation to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no such succession had taken place. As used in this Agreement, "Corporation" shall mean the Corporation as hereinbefore defined IV-32 and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. 12. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: John H. Weiland 3657 Cimmeron Road York, PA 17402 If to the Corporation: C. R. BARD, INC. 730 Central Avenue Murray Hill, New Jersey 07974 Attention: General Counsel or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. (d) The Corporation may withhold from any amounts payable under this Agreement such Federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) The Executive's failure to insist upon strict compliance with any provision hereof shall not be deemed to be a waiver of such provision or any other provision thereof. (f) This Agreement contains the entire understanding of the Corporation and the Executive with respect to the subject matter hereof. IV-33 (g) The Executive and the Corporation acknowledge that the employment of the Executive by the Corporation is "at will", and, prior to the Effective Date, may be terminated by either the Executive or the Corporation at any time. Upon a termination of the Executive's employment or upon the Executive's ceasing to be an officer of the Corporation, in each case, prior to the Effective Date, there shall be no further rights under this Agreement. IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant to the authorization from its Board of Directors, the Corporation has caused these presents to be executed in its name on its behalf, all as of the day and year first above written. /s/ John H. Weiland John H. Weiland C. R. BARD, INC. By: /s/ William H. Longfield Name: William H. Longfield Title: Chairman and Chief Executive Officer Attest:/s/ Jean F. Miller Assistant Secretary IV-34 EX-10 4 EXHIBIT 10x AGREEMENT AGREEMENT by and between C. R. BARD, INC., a New Jersey corporation (the "Corporation"), and William T. Tumber (the "Executive"), dated as of the 13th day of March, 1996. WHEREAS, the Corporation, on behalf of itself and its shareholders, wishes to assure that the Corporation will have the continued dedication of the Executive, notwithstanding the possibility, threat, or occurrence of a Change of Control (as defined below) of the Corporation. The Board of Directors of the Corporation (the "Board") believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control, to encourage his attention and dedication to his assigned duties currently and in the event of any threatened or pending Change of Control, and to provide the Executive with competitive compensation arrangements; therefore, the Board has caused the Corporation to enter into this Agreement (i) to ensure the Executive of individual financial security in the event of a Change of Control, and (ii) to provide such protection in a manner which is competitive with that of other corporations. NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 1. Certain Definitions. (a) The "Effective Date" shall be the first date during the "Change of Control Period" (as defined in Section l(b)) on which a Change of Control occurs. Anything in this Agreement to the contrary notwithstanding, if the Executive's employment with the Corporation is terminated prior to the date on which a Change of Control occurs, and the Executive can reasonably demonstrate that such termination (1) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (2) otherwise arose in connection with or anticipation of a Change of Control, then for all purposes of this Agreement the "Effective Date" shall mean the date immediately prior to the date of such termination. (b) The "Change of Control Period" is the period commencing on the date hereof and ending on the earlier to occur of (i) the third anniversary of such date or (ii) the first day of the month next following the Executive's normal retirement date ("Normal Retirement Date") under the Corporation's retirement plan; provided, however, that commencing on the date one year after the date hereof, and on each annual anniversary of such date (such date and each annual anniversary thereof is hereinafter referred to as the "Renewal Date"), the Change of Control Period shall be automatically extended so as to terminate on the earlier of (x) two years from such Renewal Date or (y) the first day of the month coinciding with or next following the Executive's Normal Retirement Date, unless at least 60 days prior to the Renewal Date the Corporation shall give notice that the Change of Control Period shall not be so extended. IV-35 2. Change of Control. (a) For purposes of this Agreement, a "Change of Control" shall be deemed to have occurred if a change of control of the nature that would be required to be reported in response to Item 1(a) of the Current Report on Form 8-K as in effect on the date hereof pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") occurs, provided that, without limitation, a "Change of Control" shall be deemed to have occurred if (i) the beneficial ownership at any time hereafter by any person, as defined herein, of capital stock of the Corporation, constitutes 20 percent or more of the general voting power of all of the Corporation's outstanding capital or (ii) individuals who, as of the date hereof, constitute the Board (as of the date hereof, the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a Director subsequent to the date hereof whose election, or nomination for election by the Corporation's shareholders, was approved by a vote of at least three-quarters of the Directors comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Corporation, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board. No sale to underwriters or private placement of its capital stock by the Corporation, nor any acquisition initiated by the Corporation, through merger, purchase of assets or otherwise, effected in whole or in part by issuance or reissuance of shares of its capital stock, shall constitute a Change of Control. (b) For purposes of the definition of "Change of Control", the following definitions shall be applicable: (i) The term "person" shall mean any individual, corporation or other entity and any group as such term is used in Section 13(d)(3) or 14(d)(2) of the Exchange Act. (ii) Any person shall be deemed to be the beneficial owner of any shares of capital stock of the Corporation: A. which that person owns directly, whether or not of record, or B. which that person has the right to acquire pursuant to any agreement or understanding or upon exercise of conversion rights, warrants, or options, or otherwise, or C. which are beneficially owned, directly or indirectly (including shares deemed owned through application of clause (B) above), by an "affiliate" or "associate" (as defined in the rules of the Securities and Exchange Commission under the Securities Act of 1933, as amended) of that person, or IV-36 D. which are beneficially owned, directly or indirectly (including shares deemed owned through application of clause (B) above), by any other person with which that person or his "affiliate" or "associate" (defined as aforesaid) has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of capital stock of the Corporation. (iii) The outstanding shares of capital stock of the Corporation shall include shares deemed owned through application of clauses (ii) (B), (C) and (D), above, but shall not include any other shares which may be issuable pursuant to any agreement or upon exercise of conversion rights, warrants or options, or otherwise, but which are not actually outstanding. (iv) Shares of capital stock, if any, held by The Chase Manhattan Bank N.A. under the Indenture and the Escrow Agreement dated as of November 1, 1971 between International Paper Corporation and said bank shall not be deemed owned by International Paper Corporation or by said bank for purposes of this definition, so long as they are held by said bank under said Escrow Agreement, but said shares shall be deemed outstanding for the purpose of determining the aggregate number of outstanding shares of capital stock of the Corporation. 3. Employment Period. The Corporation hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Corporation, for the period commencing on the Effective Date and ending on the earlier to occur of (a) the third anniversary of such date or (b) the first day of the month coinciding with or next following the Executive's Normal Retirement Date (the "Employment Period"). 4. Terms of Employment. (a) Position and Duties. (i) During the Employment Period, (A) the Executive's position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 90-day period immediately preceding the Effective Date and (B) the Executive's services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or any office or location less than thirty-five (35) miles from such location. (ii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Corporation and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the IV-37 Executive's reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Corporation in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive's responsibilities to the Corporation. (b) Compensation. (i) Base Salary. During the Employment Period, the Executive shall receive a base salary ("Base Salary") at a monthly rate at least equal to the highest monthly base salary paid to the Executive by the Corporation during the twelve-month period immediately preceding the month in which the Effective Date occurs. During the Employment Period, the Base Salary shall be reviewed at least annually and shall be increased at any time and from time to time as shall be consistent with increases in base salary awarded in the ordinary course of business to other key executives of the Corporation. Any increase in Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Base Salary shall not be reduced after any such increase. (ii) Annual Bonus. In addition to Ease Salary, the Executive shall be awarded, for each fiscal year during the Employment Period, an annual bonus (an "Annual Bonus") in cash at least equal to the average bonus received by the Executive from the Corporation in respect of the three fiscal years immediately preceding the fiscal year in which the Effective Date occurs. (iii) Incentive, Savings and Retirement Plans. In addition to Base Salary and Annual Bonus payable as hereinabove provided, the Executive shall be entitled to participate during the Employment Period in all incentive, savings and retirement plans and programs, whether qualified or non-qualified, then applicable to other key executives of the Corporation and its affiliates (including the Corporation's 1981 Stock Option Plan, the Long-Term Performance Incentive Plan, the 1986 Stock Award Plan, the 1981 Employee Stock Appreciation Rights Plan, the Employees' Stock Ownership Plan and the Employees' Retirement Savings Plan, in each case to the extent then in effect or as subsequently amended); provided, however, that such plans and programs, in the aggregate, shall provide the Executive with compensation, benefits and reward opportunities at least as favorable as the most favorable such compensation benefits and reward opportunities provided by the Corporation for the Executive under such plans and programs as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as provided at any time thereafter with respect to other key executives. IV-38 (iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans provided by the Corporation (including, without limitation, medical, prescription, dental, disability, salary continuance, executive life, group life, accidental death and travel accident insurance plans and programs), at least comparable to those in effect at any time during the 90-day period immediately preceding the Effective Date which would be most favorable to the Executive or, if more favorable to the Executive, as in effect at any time thereafter with respect to other key executives. (v) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable policies and procedures of the Corporation and its affiliates in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect at any time thereafter with respect to other key executives. (vi) Fringe Benefits. During the Employment Period, the Executive shall be entitled to fringe benefits, in accordance with the most favorable policies of the Corporation and its affiliates in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect at any time thereafter with respect to other key executives. (vii) Office and Support Staff. During the Employment Period, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to secretarial and other assistance, at least equal to those provided to the Executive at any time during the 90-day period immediately preceding the Effective Date which would be most favorable to the Executive or, if more favorable to the Executive, as provided at any time thereafter with respect to other key executives. (viii) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable policies of the Corporation and its affiliates as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect at any time thereafter with respect to other key executives. 5. Termination. (a) Death or Disability. This Agreement shall terminate automatically upon the Executive's death. The Corporation may terminate this Agreement, after having established the Executive's Disability (pursuant to the definition of "Disability" set forth below), by giving to the Executive written notice of its intention to terminate the Executive's employment. In such a case, the Executive's employment with the Corporation shall terminate effective on the 180th day after receipt of such notice (the "Disability Effective Date"), provided that, within 180 days after such receipt, the IV-39 Executive shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" means disability which, at least 26 weeks after its commencement, is determined to be total and permanent by a physician selected by the Corporation or its insurers and acceptable to the Executive or the Executive's legal representative (such agreement as to acceptability not to be withheld unreasonably). (b) Cause. The Corporation may terminate the Executive's employment for "Cause." For purposes of this Agreement, "Cause" means (i) an act or acts of dishonesty taken by the Executive and intended to result in substantial personal enrichment of the Executive at the expense of the Corporation, (ii) repeated violations by the Executive of the Executive's obligations under Section 4(a) of this Agreement which are demonstrably willful and deliberate on the Executive's part and which are not remedied after the receipt of notice from the Corporation or (iii) the conviction of the Executive of a felony. (c) Termination by Executive for Good Reason. The Executive's employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, "Good Reason" means (i) (A) the assignment to the Executive of any duties inconsistent in any respect with the Executive's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 4(a) of this Agreement, or (B) any other action by the Corporation which results in a diminution in such position, authority, duties or responsibilities, other than an insubstantial and inadvertent action which is remedied by the Corporation promptly after receipt of notice thereof given by the Executive; (ii) any failure by the Corporation to comply with any of the provisions of Section 4(b) of this Agreement, other than an insubstantial and inadvertent failure which is remedied by the Corporation promptly after receipt of notice thereof given by the Executive; (iii) the Corporation's requiring the Executive to be based at any office or location other than that described in Section 4(a)(i)(B) hereof, except for travel reasonably required in the performance of the Executive's responsibilities; (iv) any purported termination by the Corporation of the Executive's employment otherwise than as permitted by this Agreement; or (v) any failure by the Corporation to comply with and satisfy Section 11(c) of this Agreement. IV-40 Anything in this Agreement to the contrary notwithstanding, any termination by the Executive for any reason whatsoever during the six month period immediately following the first anniversary of the date of a Change of Control shall be a termination for "Good Reason". For purposes of this Section 5(c), any good faith determination of "Good Reason" made by the Executive shall be conclusive. (d) Notice of Termination. Any termination by the Corporation for Cause or by the Executive for Good Reason shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than fifteen (15) days after the giving of such notice). (e) Date of Termination. "Date of Termination" means the date of receipt of the Notice of Termination or any later date specified therein, as the case may be. If the Executive's employment is terminated by the Corporation other than for Cause or Disability, the Date of Termination shall be the date on which the Corporation notifies the Executive of such termination. 6. Obligations of the Corporation upon Termination. (a) Death. If the Executive's employment is terminated by reason of the Executive's death, this Agreement shall terminate without further obligations to the Executive's legal representatives under this Agreement, other than those obligations accrued or earned by the Executive hereunder at the date of the Executive's death. Anything in this Agreement to the contrary notwithstanding, the Executive's family shall be entitled to receive benefits at least equal to the most favorable benefits provided by the Corporation to surviving families of executives of the Corporation under such plans, programs and policies relating to family death benefits, if any, as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive's family, as in effect on the date of the Executive's death with respect to other key executives and their families. (b) Disability. If the Executive's employment is terminated by reason of the Executive's Disability, this Agreement shall terminate without further obligations to the Executive, other than those obligations accrued or earned by the Executive hereunder as of the Disability Effective Date. Anything in this Agreement to the contrary notwithstanding, the Executive shall be entitled after the Disability Effective Date to receive disability and other benefits at least equal to the most favorable of those provided by the Corporation to disabled employees and/or their families in accordance with such plans, programs and policies relating to disability, if any, as in IV-41 effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive's family, as in effect at any time thereafter with respect to other key executives and their families. (c) Cause; Other than for Good Reason. If the Executive's employment shall be terminated for Cause or the Executive terminates his employment other than for Good Reason, the Corporation shall pay the Executive his full Base Salary through the Date of Termination at the rate in effect at the time Notice of Termination is given and shall have no further obligations to the Executive under this Agreement. (d) Termination by Executive for Good Reason; Termination by Corporation Other Than for Cause or Disability. If, during the Employment Period, the Corporation shall terminate the Executive's employment other than for Cause or Disability, or the employment of the Executive shall be terminated by the Executive for Good Reason: (i) the Corporation shall pay to the Executive in a lump sum in cash within 10 days after the Date of Termination (the "Payment Date") the aggregate of the following amounts: A. to the extent not theretofore paid, the Executive's Base Salary through the Date of Termination at the rate in effect on the Date of Termination or, if higher, at the highest rate in effect at any time within the three year period preceding the Effective Date (the "Highest Base Salary"); and B. the product of (x) the average of the annual bonuses paid, or payable to the extent deferred, to the Executive for the three full fiscal years prior to the Effective Date (the "Recent Bonus") and (y) the fraction obtained by dividing (i) the number of days between the Date of Termination and the last day of the last full fiscal year and (ii) 365; and C. the product of (x) three and (y) the sum of the Highest Base Salary and (ii) the Recent Bonus; and D. in the case of compensation previously deferred by the Executive, all amounts previously deferred and not yet paid by the Corporation; and (ii) for one year after the Date of Termination, the Corporation shall continue benefits to the Executive and/or the Executive's family at least equal to those which would have been provided to them in accordance with the plans, programs and policies described in Section 4(b)(iv) of this Agreement if the Executive's employment had not been terminated, including health insurance and life insurance, if and as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more IV-42 favorable to the Executive, as in effect at any time thereafter with respect to other key executives and their families and for purposes of eligibility for retiree benefits pursuant to such plans, programs and policies, the Executive shall be considered to have remained employed until the end of the Employment Period and to have retired on the last day of such period. Anything herein to the contrary notwithstanding, the Executive may elect in his Notice of Termination to receive the payment provided for pursuant to Section 6(d)(i)(C) hereof (the "Severance Payment") in installments. If the Executive elects the installment method, one-quarter of the Severance Payment shall be paid to the Executive on the Payment Date and one-quarter of the severance payment shall be paid to the Executive on each of the next three anniversaries thereof and, in the case of the latter three payments, the amounts to be paid shall include interests from the Payment Date on the remaining unpaid balance of the Severance Payment calculated at the Morgan Guaranty Trust Company prime rate as in effect from time to time. 7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Corporation or any of its affiliated companies and for which the Executive may qualify, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any stock option or other agreements with the Corporation or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Corporation or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan or program. 8. Full Settlement. The Corporation's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Corporation may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement. The Corporation agrees to pay, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Corporation or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof or as a result of any contest by the Executive about the amount of any payment pursuant to Section 9 of this Agreement, plus in each case interest at the Federal Rate (as defined below). IV-43 9. Gross-up. (a) In the event it shall be determined that any payment, benefit or distribution (or combination thereof) by the Corporation to or for the benefit of Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, or otherwise) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, hereinafter collectively referred to as the "Excise Tax"), Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by Executive of the Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 9(c), all determinations required to be made under this Section 9, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by Arthur Andersen & Co. (the "Accounting Firm") which shall provide detailed supporting calculations both to the Corporation and Executive within fifteen (15) business days of the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Corporation. In the event that the Accounting Firm is serving as accountant or auditor for an individual, entity or group effecting the change in ownership or effective control (within the meaning of Section 280G of the Code), Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Corporation. Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by the Corporation to Executive within five (5) days after the receipt of the Accounting Firm's determination. If the Accounting Firm determines that no Excise Tax is payable by Executive, it shall so indicate to Executive in writing. Any determination by the Accounting Firm shall be binding upon the Corporation and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Corporation should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Corporation exhausts its remedies pursuant to Section 9(c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Corporation to or for the benefit of Executive. IV-44 (c) Executive shall notify the Corporation in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Corporation of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after Executive is informed in writing of such claim and shall apprise the Corporation of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the thirty (30) day period following the date on which it gives such notice to the Corporation (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Corporation notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall: (i) give the Corporation any information reasonably requested by the Corporation relating to such claim; (ii) take such action in connection with contesting such claim as the Corporation shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Corporation; (iii) cooperate with the Corporation in good faith in order to effectively contest such claim; and (iv) permit the Corporation to participate in any proceedings relating to such claim; provided, however, that the Corporation shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 9(c), the Corporation shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Corporation shall determine; provided, however, that if the Corporation directs Executive to pay such claim and sue for a refund, the Corporation shall advance the amount of such payment to Executive, on an interest-free basis, and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and provided, IV-45 further, that if Executive is required to extend the statute of limitations to enable the Corporation to contest such claim, Executive may limit this extension solely to such contested amount. (d) If, after the receipt by Executive of an amount advanced by the Corporation pursuant to Section 9(c), Executive becomes entitled to receive any refund with respect to such claim, Executive shall (subject to the Corporation's complying with the requirements of Section 9(c)) promptly pay to the Corporation the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the Corporation pursuant to Section 9(c), a determination is made that Executive shall not be entitled to any refund with respect to such claim and the Corporation does not notify Executive in writing of its intent to contest such denial of refund prior to the expiration of thirty (30) days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 10. Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of the Corporation all secret or confidential information, knowledge or data relating to the Corporation or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive's employment by the Corporation or any of its affiliated companies and which shall not be public knowledge (other than by acts by the Executive or his representatives in violation of this Agreement). After termination of the Executive's employment with the Corporation, the Executive shall not, without the prior written consent of the Corporation, communicate or divulge any such information, knowledge or data to anyone other than the Corporation and those designated by it. In no event shall an asserted violation of the provisions of this Section 10 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement. 11. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Corporation shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Corporation and its successors. (c) The Corporation will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Corporation to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no such IV-46 succession had taken place. As used in this Agreement, "Corporation" shall mean the Corporation as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. 12. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: William T. Tumber 45 Hawthorne Avenue Barrington, RI 02806 If to the Corporation: C. R. BARD, INC. 730 Central Avenue Murray Hill, New Jersey 07974 Attention: General Counsel or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. (d) The Corporation may withhold from any amounts payable under this Agreement such Federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) The Executive's failure to insist upon strict compliance with any provision hereof shall not be deemed to be a waiver of such provision or any other provision thereof. (f) This Agreement contains the entire understanding of the Corporation and the Executive with respect to the subject matter hereof. IV-47 (g) The Executive and the Corporation acknowledge that the employment of the Executive by the Corporation is "at will", and, prior to the Effective Date, may be terminated by either the Executive or the Corporation at any time. Upon a termination of the Executive's employment or upon the Executive's ceasing to be an officer of the Corporation, in each case, prior to the Effective Date, there shall be no further rights under this Agreement. IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant to the authorization from its Board of Directors, the Corporation has caused these presents to be executed in its name on its behalf, all as of the day and year first above written. /s/ William T. Tumber William T. Tumber C. R. BARD, INC. By:/s/ William H. Longfield Name: William H. Longfield Title: Chairman and Chief Executive Officer Attest:/s/ Jean F. Miller Assistant Secretary IV-48 EX-10 5 EXHIBIT 10y AGREEMENT AGREEMENT by and between C. R. BARD, INC., a New Jersey corporation (the "Corporation"), and Timothy M. Ring (the "Executive"), dated as of the 12th day of March, 1996. WHEREAS, the Corporation, on behalf of itself and its shareholders, wishes to assure that the Corporation will have the continued dedication of the Executive, notwithstanding the possibility, threat, or occurrence of a Change of Control (as defined below) of the Corporation. The Board of Directors of the Corporation (the "Board") believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control, to encourage his attention and dedication to his assigned duties currently and in the event of any threatened or pending Change of Control, and to provide the Executive with competitive compensation arrangements; therefore, the Board has caused the Corporation to enter into this Agreement (i) to ensure the Executive of individual financial security in the event of a Change of Control, and (ii) to provide such protection in a manner which is competitive with that of other corporations. NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 1. Certain Definitions. (a) The "Effective Date" shall be the first date during the "Change of Control Period" (as defined in Section l(b)) on which a Change of Control occurs. Anything in this Agreement to the contrary notwithstanding, if the Executive's employment with the Corporation is terminated prior to the date on which a Change of Control occurs, and the Executive can reasonably demonstrate that such termination (1) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (2) otherwise arose in connection with or anticipation of a Change of Control, then for all purposes of this Agreement the "Effective Date" shall mean the date immediately prior to the date of such termination. (b) The "Change of Control Period" is the period commencing on the date hereof and ending on the earlier to occur of (i) the third anniversary of such date or (ii) the first day of the month next following the Executive's normal retirement date ("Normal Retirement Date") under the Corporation's retirement plan; provided, however, that commencing on the date one year after the date hereof, and on each annual anniversary of such date (such date and each annual anniversary thereof is hereinafter referred to as the "Renewal Date"), the Change of Control Period shall be automatically extended so as to terminate on the earlier of (x) two years from such Renewal Date or (y) the first day of the month coinciding with or next following the Executive's Normal Retirement Date, unless at least 60 days prior to the Renewal Date the Corporation shall give notice that the Change of Control Period shall not be so extended. IV-49 2. Change of Control. (a) For purposes of this Agreement, a "Change of Control" shall be deemed to have occurred if a change of control of the nature that would be required to be reported in response to Item 1(a) of the Current Report on Form 8-K as in effect on the date hereof pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") occurs, provided that, without limitation, a "Change of Control" shall be deemed to have occurred if (i) the beneficial ownership at any time hereafter by any person, as defined herein, of capital stock of the Corporation, constitutes 20 percent or more of the general voting power of all of the Corporation's outstanding capital or (ii) individuals who, as of the date hereof, constitute the Board (as of the date hereof, the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a Director subsequent to the date hereof whose election, or nomination for election by the Corporation's shareholders, was approved by a vote of at least three-quarters of the Directors comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the Directors of the Corporation, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board. No sale to underwriters or private placement of its capital stock by the Corporation, nor any acquisition initiated by the Corporation, through merger, purchase of assets or otherwise, effected in whole or in part by issuance or reissuance of shares of its capital stock, shall constitute a Change of Control. (b) For purposes of the definition of "Change of Control", the following definitions shall be applicable: (i) The term "person" shall mean any individual, corporation or other entity and any group as such term is used in Section 13(d)(3) or 14(d)(2) of the Exchange Act. (ii) Any person shall be deemed to be the beneficial owner of any shares of capital stock of the Corporation: A. which that person owns directly, whether or not of record, or B. which that person has the right to acquire pursuant to any agreement or understanding or upon exercise of conversion rights, warrants, or options, or otherwise, or C. which are beneficially owned, directly or indirectly (including shares deemed owned through application of clause (B) above), by an "affiliate" or "associate" (as defined in the rules of the Securities and Exchange Commission under the Securities Act of 1933, as amended) of that person, or IV-50 D. which are beneficially owned, directly or indirectly (including shares deemed owned through application of clause (B) above), by any other person with which that person or his "affiliate" or "associate" (defined as aforesaid) has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of capital stock of the Corporation. (iii) The outstanding shares of capital stock of the Corporation shall include shares deemed owned through application of clauses (ii) (B), (C) and (D), above, but shall not include any other shares which may be issuable pursuant to any agreement or upon exercise of conversion rights, warrants or options, or otherwise, but which are not actually outstanding. (iv) Shares of capital stock, if any, held by The Chase Manhattan Bank N.A. under the Indenture and the Escrow Agreement dated as of November 1, 1971 between International Paper Corporation and said bank shall not be deemed owned by International Paper Corporation or by said bank for purposes of this definition, so long as they are held by said bank under said Escrow Agreement, but said shares shall be deemed outstanding for the purpose of determining the aggregate number of outstanding shares of capital stock of the Corporation. 3. Employment Period. The Corporation hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Corporation, for the period commencing on the Effective Date and ending on the earlier to occur of (a) the third anniversary of such date or (b) the first day of the month coinciding with or next following the Executive's Normal Retirement Date (the "Employment Period"). 4. Terms of Employment. (a) Position and Duties. (i) During the Employment Period, (A) the Executive's position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 90-day period immediately preceding the Effective Date and (B) the Executive's services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or any office or location less than thirty-five (35) miles from such location. (ii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Corporation and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the IV-51 Executive's reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Corporation in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive's responsibilities to the Corporation. (b) Compensation. (i) Base Salary. During the Employment Period, the Executive shall receive a base salary ("Base Salary") at a monthly rate at least equal to the highest monthly base salary paid to the Executive by the Corporation during the twelve-month period immediately preceding the month in which the Effective Date occurs. During the Employment Period, the Base Salary shall be reviewed at least annually and shall be increased at any time and from time to time as shall be consistent with increases in base salary awarded in the ordinary course of business to other key executives of the Corporation. Any increase in Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Base Salary shall not be reduced after any such increase. (ii) Annual Bonus. In addition to Ease Salary, the Executive shall be awarded, for each fiscal year during the Employment Period, an annual bonus (an "Annual Bonus") in cash at least equal to the average bonus received by the Executive from the Corporation in respect of the three fiscal years immediately preceding the fiscal year in which the Effective Date occurs. (iii) Incentive, Savings and Retirement Plans. In addition to Base Salary and Annual Bonus payable as hereinabove provided, the Executive shall be entitled to participate during the Employment Period in all incentive, savings and retirement plans and programs, whether qualified or non-qualified, then applicable to other key executives of the Corporation and its affiliates (including the Corporation's 1981 Stock Option Plan, the Long-Term Performance Incentive Plan, the 1986 Stock Award Plan, the 1981 Employee Stock Appreciation Rights Plan, the Employees' Stock Ownership Plan and the Employees' Retirement Savings Plan, in each case to the extent then in effect or as subsequently amended); provided, however, that such plans and programs, in the aggregate, shall provide the Executive with compensation, benefits and reward opportunities at least as favorable as the most favorable such compensation benefits and reward opportunities provided by the Corporation for the Executive under such plans and programs as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as provided at any time thereafter with respect to other key executives. IV-52 (iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans provided by the Corporation (including, without limitation, medical, prescription, dental, disability, salary continuance, executive life, group life, accidental death and travel accident insurance plans and programs), at least comparable to those in effect at any time during the 90-day period immediately preceding the Effective Date which would be most favorable to the Executive or, if more favorable to the Executive, as in effect at any time thereafter with respect to other key executives. (v) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable policies and procedures of the Corporation and its affiliates in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect at any time thereafter with respect to other key executives. (vi) Fringe Benefits. During the Employment Period, the Executive shall be entitled to fringe benefits, in accordance with the most favorable policies of the Corporation and its affiliates in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect at any time thereafter with respect to other key executives. (vii) Office and Support Staff. During the Employment Period, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to secretarial and other assistance, at least equal to those provided to the Executive at any time during the 90-day period immediately preceding the Effective Date which would be most favorable to the Executive or, if more favorable to the Executive, as provided at any time thereafter with respect to other key executives. (viii) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable policies of the Corporation and its affiliates as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect at any time thereafter with respect to other key executives. 5. Termination. (a) Death or Disability. This Agreement shall terminate automatically upon the Executive's death. The Corporation may terminate this Agreement, after having established the Executive's Disability (pursuant to the definition of "Disability" set forth below), by giving to the Executive written notice of its intention to terminate the Executive's employment. In such a case, the Executive's employment with the Corporation shall terminate effective on the 180th day after receipt of such notice (the "Disability Effective Date"), provided that, within 180 days after such receipt, the IV-53 Executive shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" means disability which, at least 26 weeks after its commencement, is determined to be total and permanent by a physician selected by the Corporation or its insurers and acceptable to the Executive or the Executive's legal representative (such agreement as to acceptability not to be withheld unreasonably). (b) Cause. The Corporation may terminate the Executive's employment for "Cause." For purposes of this Agreement, "Cause" means (i) an act or acts of dishonesty taken by the Executive and intended to result in substantial personal enrichment of the Executive at the expense of the Corporation, (ii) repeated violations by the Executive of the Executive's obligations under Section 4(a) of this Agreement which are demonstrably willful and deliberate on the Executive's part and which are not remedied after the receipt of notice from the Corporation or (iii) the conviction of the Executive of a felony. (c) Termination by Executive for Good Reason. The Executive's employment may be terminated by the Executive for Good Reason. For purposes of this Agreement, "Good Reason" means (i) (A) the assignment to the Executive of any duties inconsistent in any respect with the Executive's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 4(a) of this Agreement, or (B) any other action by the Corporation which results in a diminution in such position, authority, duties or responsibilities, other than an insubstantial and inadvertent action which is remedied by the Corporation promptly after receipt of notice thereof given by the Executive; (ii) any failure by the Corporation to comply with any of the provisions of Section 4(b) of this Agreement, other than an insubstantial and inadvertent failure which is remedied by the Corporation promptly after receipt of notice thereof given by the Executive; (iii) the Corporation's requiring the Executive to be based at any office or location other than that described in Section 4(a)(i)(B) hereof, except for travel reasonably required in the performance of the Executive's responsibilities; (iv) any purported termination by the Corporation of the Executive's employment otherwise than as permitted by this Agreement; or (v) any failure by the Corporation to comply with and satisfy Section 11(c) of this Agreement. IV-54 Anything in this Agreement to the contrary notwithstanding, any termination by the Executive for any reason whatsoever during the six month period immediately following the first anniversary of the date of a Change of Control shall be a termination for "Good Reason". For purposes of this Section 5(c), any good faith determination of "Good Reason" made by the Executive shall be conclusive. (d) Notice of Termination. Any termination by the Corporation for Cause or by the Executive for Good Reason shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than fifteen (15) days after the giving of such notice). (e) Date of Termination. "Date of Termination" means the date of receipt of the Notice of Termination or any later date specified therein, as the case may be. If the Executive's employment is terminated by the Corporation other than for Cause or Disability, the Date of Termination shall be the date on which the Corporation notifies the Executive of such termination. 6. Obligations of the Corporation upon Termination. (a) Death. If the Executive's employment is terminated by reason of the Executive's death, this Agreement shall terminate without further obligations to the Executive's legal representatives under this Agreement, other than those obligations accrued or earned by the Executive hereunder at the date of the Executive's death. Anything in this Agreement to the contrary notwithstanding, the Executive's family shall be entitled to receive benefits at least equal to the most favorable benefits provided by the Corporation to surviving families of executives of the Corporation under such plans, programs and policies relating to family death benefits, if any, as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive's family, as in effect on the date of the Executive's death with respect to other key executives and their families. (b) Disability. If the Executive's employment is terminated by reason of the Executive's Disability, this Agreement shall terminate without further obligations to the Executive, other than those obligations accrued or earned by the Executive hereunder as of the Disability Effective Date. Anything in this Agreement to the contrary notwithstanding, the Executive shall be entitled after the Disability Effective Date to receive disability and other benefits at least equal to the most favorable of those provided by the Corporation to disabled employees and/or their families in accordance with such plans, IV-55 programs and policies relating to disability, if any, as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive's family, as in effect at any time thereafter with respect to other key executives and their families. (c) Cause; Other than for Good Reason. If the Executive's employment shall be terminated for Cause or the Executive terminates his employment other than for Good Reason, the Corporation shall pay the Executive his full Base Salary through the Date of Termination at the rate in effect at the time Notice of Termination is given and shall have no further obligations to the Executive under this Agreement. (d) Termination by Executive for Good Reason; Termination by Corporation Other Than for Cause or Disability. If, during the Employment Period, the Corporation shall terminate the Executive's employment other than for Cause or Disability, or the employment of the Executive shall be terminated by the Executive for Good Reason: (i) the Corporation shall pay to the Executive in a lump sum in cash within 10 days after the Date of Termination (the "Payment Date") the aggregate of the following amounts: A. to the extent not theretofore paid, the Executive's Base Salary through the Date of Termination at the rate in effect on the Date of Termination or, if higher, at the highest rate in effect at any time within the three year period preceding the Effective Date (the "Highest Base Salary"); and B. the product of (x) the average of the annual bonuses paid, or payable to the extent deferred, to the Executive for the three full fiscal years prior to the Effective Date (the "Recent Bonus") and (y) the fraction obtained by dividing (i) the number of days between the Date of Termination and the last day of the last full fiscal year and (ii) 365; and C. the product of (x) three and (y) the sum of the Highest Base Salary and (ii) the Recent Bonus; and D. in the case of compensation previously deferred by the Executive, all amounts previously deferred and not yet paid by the Corporation; and (ii) for one year after the Date of Termination, the Corporation shall continue benefits to the Executive and/or the Executive's family at least equal to those which would have been provided to them in accordance with the plans, programs and policies described in Section 4(b)(iv) of this Agreement if the Executive's employment had not been terminated, including health insurance and life insurance, if and as in effect at any time during the 90-day period immediately preceding the Effective Date or, if more IV-56 favorable to the Executive, as in effect at any time thereafter with respect to other key executives and their families and for purposes of eligibility for retiree benefits pursuant to such plans, programs and policies, the Executive shall be considered to have remained employed until the end of the Employment Period and to have retired on the last day of such period. Anything herein to the contrary notwithstanding, the Executive may elect in his Notice of Termination to receive the payment provided for pursuant to Section 6(d)(i)(C) hereof (the "Severance Payment") in installments. If the Executive elects the installment method, one-quarter of the Severance Payment shall be paid to the Executive on the Payment Date and one-quarter of the severance payment shall be paid to the Executive on each of the next three anniversaries thereof and, in the case of the latter three payments, the amounts to be paid shall include interests from the Payment Date on the remaining unpaid balance of the Severance Payment calculated at the Morgan Guaranty Trust Company prime rate as in effect from time to time. 7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Corporation or any of its affiliated companies and for which the Executive may qualify, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any stock option or other agreements with the Corporation or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Corporation or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan or program. 8. Full Settlement. The Corporation's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Corporation may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement. The Corporation agrees to pay, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Corporation or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof or as a result of any contest by the Executive about the amount of any payment pursuant to Section 9 of this Agreement, plus in each case interest at the Federal Rate (as defined below). IV-57 9. Gross-up. (a) In the event it shall be determined that any payment, benefit or distribution (or combination thereof) by the Corporation to or for the benefit of Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, or otherwise) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, hereinafter collectively referred to as the "Excise Tax"), Executive shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by Executive of the Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 9(c), all determinations required to be made under this Section 9, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by Arthur Andersen & Co. (the "Accounting Firm") which shall provide detailed supporting calculations both to the Corporation and Executive within fifteen (15) business days of the receipt of notice from Executive that there has been a Payment, or such earlier time as is requested by the Corporation. In the event that the Accounting Firm is serving as accountant or auditor for an individual, entity or group effecting the change in ownership or effective control (within the meaning of Section 280G of the Code), Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Corporation. Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by the Corporation to Executive within five (5) days after the receipt of the Accounting Firm's determination. If the Accounting Firm determines that no Excise Tax is payable by Executive, it shall so indicate to Executive in writing. Any determination by the Accounting Firm shall be binding upon the Corporation and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Corporation should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Corporation exhausts its remedies pursuant to Section 9(c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Corporation to or for the benefit of Executive. IV-58 (c) Executive shall notify the Corporation in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Corporation of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after Executive is informed in writing of such claim and shall apprise the Corporation of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the thirty (30) day period following the date on which it gives such notice to the Corporation (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Corporation notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall: (i) give the Corporation any information reasonably requested by the Corporation relating to such claim; (ii) take such action in connection with contesting such claim as the Corporation shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Corporation; (iii) cooperate with the Corporation in good faith in order to effectively contest such claim; and (iv) permit the Corporation to participate in any proceedings relating to such claim; provided, however, that the Corporation shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 9(c), the Corporation shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Corporation shall determine; provided, however, that if the Corporation directs Executive to pay such claim and sue for a refund, the Corporation shall advance the amount of such payment to Executive, on an interest-free basis, and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and provided, IV-59 further, that if Executive is required to extend the statute of limitations to enable the Corporation to contest such claim, Executive may limit this extension solely to such contested amount. (d) If, after the receipt by Executive of an amount advanced by the Corporation pursuant to Section 9(c), Executive becomes entitled to receive any refund with respect to such claim, Executive shall (subject to the Corporation's complying with the requirements of Section 9(c)) promptly pay to the Corporation the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the Corporation pursuant to Section 9(c), a determination is made that Executive shall not be entitled to any refund with respect to such claim and the Corporation does not notify Executive in writing of its intent to contest such denial of refund prior to the expiration of thirty (30) days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 10. Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of the Corporation all secret or confidential information, knowledge or data relating to the Corporation or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive's employment by the Corporation or any of its affiliated companies and which shall not be public knowledge (other than by acts by the Executive or his representatives in violation of this Agreement). After termination of the Executive's employment with the Corporation, the Executive shall not, without the prior written consent of the Corporation, communicate or divulge any such information, knowledge or data to anyone other than the Corporation and those designated by it. In no event shall an asserted violation of the provisions of this Section 10 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement. 11. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Corporation shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Corporation and its successors. (c) The Corporation will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Corporation to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Corporation would be required to perform it if no such IV-60 succession had taken place. As used in this Agreement, "Corporation" shall mean the Corporation as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. 12. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: Timothy M. Ring 6 Conifer Drive Mendham, NJ 07945 If to the Corporation: C. R. BARD, INC. 730 Central Avenue Murray Hill, New Jersey 07974 Attention: General Counsel or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. (d) The Corporation may withhold from any amounts payable under this Agreement such Federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation. (e) The Executive's failure to insist upon strict compliance with any provision hereof shall not be deemed to be a waiver of such provision or any other provision thereof. (f) This Agreement contains the entire understanding of the Corporation and the Executive with respect to the subject matter hereof. IV-61 (g) The Executive and the Corporation acknowledge that the employment of the Executive by the Corporation is "at will", and, prior to the Effective Date, may be terminated by either the Executive or the Corporation at any time. Upon a termination of the Executive's employment or upon the Executive's ceasing to be an officer of the Corporation, in each case, prior to the Effective Date, there shall be no further rights under this Agreement. IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant to the authorization from its Board of Directors, the Corporation has caused these presents to be executed in its name on its behalf, all as of the day and year first above written. /s/ Timothy M. Ring Timothy M. Ring C. R. BARD, INC. By:/s/ William H. Longfield Name: William H. Longfield Title: Chairman and Chief Executive Officer Attest:/s/ Jean F. Miller Assistant Secretary IV-62 EX-21 6 C. R. BARD, INC. AND SUBSIDIARIES EXHIBIT 21 Parents and Subsidiaries of Registrant The following table lists, as of December 31, 1995, the Company and its significant subsidiaries and indicates the jurisdiction of organization of each subsidiary and the percentage of voting securities owned by the immediate parent of each subsidiary. Where % of Incorporated Voting Stock C. R. Bard, Inc. New Jersey (Registrant) American Hydro-Surgical Instruments, Inc. Maryland 100 Bard Access Systems, Inc. Utah 100 Bard Canada Inc. Canada 100 Purchaseco Inc. Canada 100 Vas-Cath Holdings Ltd. Canada 100 Vas-Cath, Inc. Canada 100 Med-Pro Design Inc. Canada 100 Bard Cardiopulmonary, Inc. Delaware 100 Bard Devices, Inc. Delaware 100 Davol Inc. Delaware 100 Bard Diagnostic Sciences, Inc. Washington 100 Bard Fiberoptics Technologies, Inc. Michigan 100 Bard Holdings Limited England 100 Bard Limited England 100 Bard Sendirian Berhad Malaysia 85 Angiomed UK Limited England 100 Bard Implants, Inc. Delaware 100 Bard International, Inc. Delaware 100 Bard Japan Limited Japan 100 Productos Bard de Mexico S.A. de C.V. Mexico 100 Bard Shannon Limited Ireland 100 Angiomed GmbH Germany 100 Angiomed Netherlands Netherlands 100 Bard Benelux N.V. Belgium 100 Bard Dublin Ireland 100 Bard de Espana, S.A. Spain 100 Bard Portugal LDA Portugal 100 Bard Galway Limited Ireland 100 Bard Connaught Limited Ireland 100 Bard S.P.A. Italy 100 Angiomed Italy S.P.A. Italy 100 C. R. Bard GmbH Germany 100 Angiomed KG Germany 100 IV-63 C. R. BARD, INC. AND SUBSIDIARIES EXHIBIT 21 Parents and Subsidiaries of Registrant (continued) Where % of Incorporated Voting Stock C. R. Bard Ireland Limited Ireland 100 Laboratories Bard S.A. France 100 Cardial S.A. France 100 BCP Puerto Rico, Inc. Delaware 100 Catalina Acquisition Corp. Delaware 100 CRB Delaware, Inc. Delaware 100 Laboratoires Bard, Inc. Delaware 100 Bard Nice S.N.C. France 100 Laparoscopic Devices Acquisition Corp. Delaware 100 MedChem Products, Inc. Massachusetts 100 Gesco Internationa, Inc. Massachusetts 100 MedChem (P.R.) Inc. Massachusetts 100 Pilot Cardiovascular Systems, Inc. Delaware 100 Roberts Laboratories, Inc. Arizona 100 The Consolidated Financial Statements include the accounts of the Registrant and all its wholly-owned subsidiaries. IV-64 EX-23 7 EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS To C. R. Bard, Inc.: As independent public accountants, we hereby consent to the incorporation by reference of our report dated January 24, 1996, included in this Form 10-K, into C. R. Bard, Inc.'s previously filed Registration Statements on Form S-8 for its Employees' Retirement Savings Plan of C. R. Bard, Inc., Registration No. 2-86291, the 1990 Employee Stock Option Plan, as amended, Registration No. 33-35544 and the C. R. Bard, Inc. 1988 Directors Stock Award Plan, as amended, and the 1993 Long Term Incentive Plan of C. R. Bard, Inc., Registration No. 33-64874 and the MedChem Products, Inc. 1994 Stock Option Plan, MedChem Products, Inc. 1993 Stock Option Plan, MedChem Products, Inc. 1993 Spin-off Stock Option Plan, MedChem Products, Inc. 1993 Director Stock Option Plan, MedChem Products, Inc. Amended and Restated Stock Option Plan all formerly maintained by MedChem Products, Inc., Registration No. 33-63147. Arthur Andersen LLP Roseland, New Jersey March 25, 1996 IV-65 EX-27 8
5 1,000 YEAR DEC-31-1995 DEC-31-1995 9,300 42,000 215,700 9,700 228,200 503,900 337,900 123,700 1,091,000 273,300 198,400 0 0 14,300 550,300 1,091,000 1,137,800 1,137,800 550,000 997,900 0 0 24,200 123,500 36,700 86,800 0 0 0 86,800 1.53 1.53
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