Exhibit No. 10(ab)
MEMORANDUM OF UNDERSTANDING
This MEMORANDUM OF UNDERSTANDING (this "Memorandum") dated as of June 21,
1995, sets forth the mutual and binding understanding of the undersigned
regarding the material terms of employment of Xxxxxxx X. Xxxxxxxxx ("MRG") by
Playtex Products, Inc. (the Company").
* POSITION:
MRG shall be employed as Chief Executive Officer of the Company and will
become a member of the Company's Board of Directors (the "Board").
* TERM:
The term of MRG's employment agreement (the "Term") shall be from the date
hereof to June 30, 2000, unless earlier terminated or extended in
accordance with this Memorandum or otherwise by agreement of the parties.
* BASE SALARY:
The base salary shall be payable at the rate of $650,000 per annum through
December 31, 1996, subject to upward adjustment thereafter at the
discretion of the Board.
* INCENTIVE BONUSES:
MRG shall be afforded the opportunity to earn an Incentive Bonus with
respect to each calendar year occurring during the term of his employment
as Chief Executive Officer with the Company based upon the attainment of
financial objectives established by the Compensation and Stock Option
Committee of the Board following consideration of the recommendation of
senior management of the Company; provided that with respect to calendar
years 1995 and any other partial year at the conclusion of MRG's
employment, the amount of the Incentive Bonus otherwise payable shall be
prorated to reflect the portion of each of such years during which MRG is
employed by the Company.
The target Incentive Bonus for each calendar year shall equal 100% of
MRG's base salary as in effect as of the first day of such calendar year.
The maximum Incentive Bonus for each calendar year shall equal 150% of
MRG's base salary as in effect as of the first day of such calendar year.
* SPECIAL BONUSES:
In addition to the Incentive Bonuses described above, MRG shall be
entitled to receive a special bonus ("Special Bonus") as of the last day
of each of the calendar years 1995, 1996, and 1997 (in the amounts of
$650,000, $300,000 and $300,000, respectively) subject to his continued
employment as Chief Executive Officer of the Company as of the last day of
each such calendar year.
* STOCK OPTIONS:
Effective as of the date hereof, MRG shall be granted options to acquire
an aggregate of 800,000 shares of common stock of the company under the
Company's 1994 Stock Option Plan For Directors and Executive Officers
and Key Employees of the Company.
The options shall have an exercise price equal to the greater of $9.00 per
share and the fair market value per share as of the date of grant. The
options shall vest and become exercisable annually in ratable portions of
200,000 shares each commencing with the first anniversary of the date of
grant and ending with the fourth anniversary of the date of grant, subject
to MRG's continued employment with the Company on such vesting dates.
It is not the intention of the parties that MRG shall be excluded from
consideration for additional options during the term of his employment,
and, as circumstances warrant, the Company shall give consideration to
such further grants in its discretion.
* SPECIAL PRICE-BASED INCENTIVE ARRANGEMENT
As additional incentive, MRG shall be eligible to receive Special
Price-Based Incentive Compensation based upon the trading price of the
Company's common stock in accordance with the following criteria.
For 30 consecutive trading days, closing price equals or exceeds, at
any time prior to 6/30/00 Cash Bonus
$15.00 $1,000,000
$20.00 $1,000,000
$25.00 $1,000,000
$30.00 $1,000,000
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MRG will be entitled to the cash bonus when and if the respective 30
consecutive trading day price targets are achieved, provided that MRG is
employed as Chief Executive Officer of the Company at such time.
* TERMINATION OF EMPLOYMENT PRIOR TO THE EXPIRATION OF
TERM:
-MRG resignation or termination by Company for "cause":
MRG entitled to payment of base salary through date of termination.
No entitlement to any other cash compensation from the Company.
-Termination by the Company without "cause":
MRG entitled to (i) continued payment of base salary for 12 months;
(ii) payment of Incentive Bonus when otherwise due in respect of year
of termination, prorated through date of termination; and (iii)
lump-sum cash payment equal to 75% of the aggregate amount of unpaid
Special Bonuses in respect of calendar years 1995, 1996 and 1997. No
entitlement to any other cash compensation from the Company.
-Death/Disability:
MRG entitled to (i) continued payment of base salary for 12 months;
(ii) payment of Incentive Bonus when otherwise due in respect of year
of termination, prorated through date of termination; and (iii)
lump-sum cash payment equal to 75% of the aggregate amount of unpaid
special Bonuses in respect of calendar years 1995, 1996 and 1997. No
entitlement to any other cash compensation from the Company.
* SHAREHOLDER APPROVAL:
In order that certain payments described in this Memorandum qualify as
performance based compensation under Section 162(m) of the Internal
Revenue Code of 1986, as amended, arrangements providing for the Incentive
Bonus and the special Price-Based Incentive Compensation will be subject
to the approval of the shareholders of the Company. Xxxx Wheat & Xxxxxxxx
Incorporated ("HWH") has agreed with MRG to vote the shares of common
stock of the Company controlled by HWH (approximately 40% of the
outstanding shares of such stock) to approve such arrangements.
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* FRINGE BENEFITS:
MRG shall be eligible to receive fringe benefits customary for a position
of this nature.
* ADDITIONAL DOCUMENTATION:
The parties intend to augment this Memorandum with more extensive
documentation, but such intention does not affect the binding nature of
this Memorandum.
PLAYTEX PRODUCTS, INC.
By /s/ Xxxxxx X. Xxxx
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Its Chairman
XXXXXXX X. XXXXXXXXX
/s/ Xxxxxxx X. Xxxxxxxxx
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