[LOGO] Stanhome, Inc. EXHIBIT 10(h)
PERSONAL AND CONFIDENTIAL
July 9, 1997
Xx. Xxxx X. Xxx
Stanhome Worldwide Direct Selling Group, Inc.
Tour Cofonca
0, xxx Xxxx Xxxxxx
00000 Xxxxxxx, Xxxxxx
Dear Xxxx:
This letter constitutes the entire agreement between you and Stanhome Inc.
(the "Company") and its affiliates with respect to the wind-up of your
assignment in Paris as President and CEO of Worldwide Direct Selling, and
your efforts on behalf of the Company for the sale of this Business Group
("WWDSGroup"). It covers all regular plus incentive compensation pertain-
ing to your employment plus the ongoing effort to sell the business,
including the possibility of a management led buyout ("MBO"), and including
your eventual repatriation to the USA on or about December 31, 1997.
The payments to you described in this letter are made in recognition of
your efforts on behalf of the Company up to the earlier of closing or
December 31, 1997 and shall not be reduced in the event you are paid any
compensation by a purchaser.
This letter supersedes all other agreements, discussions and
representations, whether oral or written, regarding any payments and
benefits on separation and/or upon sale of the business to any party,
including those benefits set out in our July 3, 1996 and December 9, 1996
letters.
Please read this agreement carefully and seek appropriate advice of an
attorney.
1. Employment
You will continue as an employee until December 31, 1997 (the "Termination
Date"). If you voluntarily resign from your employment without our
agreement or are earlier terminated for cause, you will not participate in
the special severance program and special 200% Management Incentive Plan
("MIP") outlined following. Cause is defined as fraud, gross negligence or
gross willful misconduct. If, however, a sale of the business or MBO led
by you or others is completed and closed prior to December 31, 1997, your
WWDSGroup position would cease with the sale closing. As of the
Termination Date, your salary will cease and any entitlement you may have
under any Stanhome-provided benefit programs will terminate except as
required by applicable law and regulation or as set forth below. Should a
Stanhome Inc. change in control situation occur before your Termination
Date, you would be entitled to applicable benefits under your Stanhome Inc.
Change in Control Agreement dated April 30, 1996 to the extent that they
are greater than those outlined in this letter.
2. Consideration
Even if the sale closing is earlier, we will pay you your base salary and
applicable allowances and benefits through December 31, 1997. During the
twenty-four (24) month period immediately following December 31, 1997, you
or your estate will receive by direct deposit into your designated bank
account(s) 24 severance payments from the Company of $26,033.33 per month,
less standard deductions. Such severance payments are in addition to
anything of value to which you are already entitled (other than any
severance payments mandated under any and all applicable laws or payable
under the Company's Severance Policy), including, without limitation,
additional consideration as set forth in Paragraphs A through G below, and
are not intended to replace any accrued but unpaid compensation under any
plan which the Company or any of its affiliates has and to which you might
be otherwise entitled. The Company also agrees to provide to you, if
required, within twelve months from the Termination Date and at its cost
the services of an outplacement consultant firm appropriate to your
position that is selected by the Company. In addition, after the
Termination Date, the Company will promptly deliver to you an appropriate
amendment to your Certificate of Grant relating to the Company's 1991 Stock
Option Plan which will effect a three-year extension of the vesting period
for any stock options granted to you thereunder. Any unused vacation for
1997 will be paid out at the time of your termination. Because your
severance benefits are being made on a repatriated basis, all payments made
to you or your estate following your termination will not be tax equalized
in accordance with the Company's Expatriate Policy and the above referenced
July 3, 1996 and December 9, 1996 letters and Paragraph B) below.
A) Special MIP
For 1997, the special MIP will be at 200% of target (in your case it is
2 x 50% or 100% of base pay) earned upon completion of a Board approved
sale of the business, even if the actual closing occurs at a later date.
If Board approval of a sale is not achieved in 1997, your regular MIP
target at 50% of base pay will be based solely on achievement of 1997
financial targets for the WWDSGroup outlined in my March 28, 1997
letter, which are:
Sales $177,000,000 @ 15%
Operating Income $13,000,000 @ 70%
Cash Component $40,709,000 @ 15%
Because the special MIP is being offered to you as incentive in
conjunction with the anticipated sale, and if the sale is approved by
the Board in 1997 and subsequently closes, the MIP bonus will be fully
credited toward the calculation of your pension benefits as if earned
and payment received in 1997 and shall be paid by March 31, 1998. And
regardless of the exact payment date, if the 1997 MIP is considered part
of 1997 compensation for French tax purposes, such French taxes will be
covered by the Company's Expatriate Policy.
B) Tax Related Matters and Equalization
All Expatriate tax issues, originating while employed, will be the
responsibility of the Company in accordance with the Company's
Expatriate Policy. The Company will pay for your tax preparation and
advice for calendar 1997 and 1998.
Tax equalization, with no avoidance of obligations to U.S. or French
authorities, will continue to be our policy. The Company will be
responsible for dealing with the applicable taxing authorities regarding
all tax equalization questions. You will be entitled to any foreign tax
credits that remain unused after the final tax equalization payment is
made.
C) MBO Advice
You are authorized to spend up to $50,000 for professional and expert
advice surrounding your MBO initiative. These funds can be used as you
see fit with professionals of your choosing. As a matter of
administration, these funds should be processed and paid by Stanhome
Worldwide Direct Selling Group, Inc., with the understanding that they
will be added back to the above figures for WWDSGroup MIP calculation
purposes should the sale not occur in 1997. You are also authorized
reasonable travel and entertainment expenses directly associated with
your pursuit of an MBO. You will track all expenses in connection with
this activity in a separate, easily auditable account.
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D) MBO Bonus
In addition, to assist your MBO bid, and in consideration of the special
circumstances surrounding the Company's sale of this Business via your
MBO initiative, an "MBO bonus" of $100,000 after tax is offered should
your MBO proposal be the winning bid, the Board accepts the offer, and
the transaction closes with you in the buyout group. This $100,000
bonus is offered in lieu of and supersedes any prior express or implied
offer of help discussed in conjunction with any third party or other
potential financial bidder making an offer that might be or have been --
with or without your participation.
E) Repatriation
You will continue to be eligible for the Company Relocation Program for
up to eighteen months following December 31, 1997. Reimbursement will
be based on actual expenses incurred in returning to your origination
point from Paris or other move of equivalent costs.
F) Pension
Your pension will be calculated as of your Termination Date and will
include the additional five years of service and five years of age as
part of the previously announced Xxxxxxxx restructuring initiative. The
Final Average Earnings on which your pension will be determined will
include your 1997 MIP award, but it will not include the "MBO Bonus", if
paid. The incremental pension benefit generated by the inclusion of the
1997 MIP award will be made a part of your non-qualified pension.
G) Insurance Benefits
We will continue to make current employer contributions for your
continued medical and life insurance benefits during the period of the
severance payments. If, however, you should be re-employed before the
severance and medical benefits lapse, the medical and life insurance
benefits will terminate upon your becoming eligible for coverage under a
new employer's medical plan.
3. Releases
The attached Release Agreement will be required to be effective and
enforceable upon the actual termination of your employment.
STANHOME INC.
By: /s/X. Xxxxxxx Xxxxxxxxx /s/Xxxx X. Dur
G. Xxxxxxx Xxxxxxxxx Xxxx X. Xxx
President and Chief Executive
Officer
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