SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____ .
Commission File Number 0-1349
Enesco Group, Inc.
- -----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-1864170
- ------------------------------------ -----------------------
(State or other jurisdiction of (I.R.S. Employee
incorporation or organization) Identification No.)
333 Western Avenue, Westfield, Massachusetts 01085
- -----------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
413-562-3631
- -----------------------------------------------------------------------
(Registrant's telephone number, including area code)
Stanhome Inc.
_______________________________________________________________________
(Former name, address and fiscal year, if changed since last report)
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 [ ]
March 31,
1998 1997
---- ----
Shares Outstanding:
Common Stock with 16,343,251 17,910,333
Associated Rights Total number of pages
contained herein 69
Index to Exhibits is
on page 22
PART I. FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
ENESCO GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 1998 and DECEMBER 31, 1997
(Unaudited)
(In Thousands)
March 31, December 31,
1998 1997
---- ----
ASSETS
CURRENT ASSETS:
Cash and certificates of deposit $ 23,074 $ 35,724
Accounts receivable, net 97,216 101,731
Inventories 98,164 107,752
Prepaid expenses 3,047 2,482
-------- --------
Total current assets 221,501 247,689
-------- --------
PROPERTY, PLANT AND EQUIPMENT, at cost 83,098 82,414
Less - Accumulated depreciation and
amortization 48,131 46,836
-------- --------
34,967 35,578
-------- --------
OTHER ASSETS:
Goodwill and other intangibles, net 88,688 89,596
Other 34,265 27,539
-------- --------
122,953 117,135
-------- --------
$379,421 $400,402
======== ========
The accompanying notes are an integral part of these condensed financial
statements.
<TABLE>
ENESCO GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 1998 and DECEMBER 31, 1997
(Unaudited)
(In Thousands)
<CAPTION>
March 31, December 31,
1998 1997
---- ----
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes and loans payable $ 34,007 $ 8,388
Accounts payable 32,936 43,576
Federal, state and foreign taxes
on income 31,357 42,158
Accrued expenses--
Payroll and commissions 11,514 13,576
Royalties 8,510 6,767
Vacation, sick and postretirement benefits 5,008 4,853
Pensions and profit sharing 3,508 6,128
Other 26,504 24,958
-------- --------
Total current liabilities 153,344 150,404
-------- --------
LONG-TERM LIABILITIES:
Postretirement benefits 21,367 21,084
-------- --------
Total long-term liabilities 21,367 21,084
-------- --------
SHAREHOLDERS' EQUITY:
Common stock 3,154 3,154
Capital in excess of par value 47,173 46,858
Retained earnings 354,724 355,806
Accumulated other comprehensive income ( 1,417) ( 1,519)
-------- --------
403,634 404,299
Less - Shares held in treasury, at cost 198,924 175,385
-------- --------
Total shareholders' equity 204,710 228,914
-------- --------
$379,421 $400,402
======== ========
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
<TABLE>
ENESCO GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 and 1997 (Unaudited)
(In thousands, except per share amounts)
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
NET SALES $108,220 $102,060
COST OF SALES 57,452 52,633
-------- --------
GROSS PROFIT 50,768 49,427
SELLING, DISTRIBUTION, GENERAL
AND ADMINISTRATIVE EXPENSES 43,317 43,225
-------- --------
OPERATING PROFIT 7,451 6,202
Interest expense ( 756) ( 1,886)
Other expense, net ( 544) ( 399)
-------- --------
INCOME BEFORE INCOME TAXES
FROM CONTINUING OPERATIONS 6,151 3,917
Income taxes 2,645 1,724
-------- --------
INCOME OF CONTINUING OPERATIONS, NET OF TAXES 3,506 2,193
INCOME OF DISCONTINUED OPERATIONS, NET OF TAXES - 1,048
NET LOSS ON SALE OF DIRECT RESPONSE - ( 35,000)
-------- --------
NET INCOME (LOSS) 3,506 ( 31,759)
RETAINED EARNINGS, beginning of period 355,806 403,805
Cash dividends, $.28 per share in
1998 and 1997 ( 4,588) ( 5,014)
-------- --------
RETAINED EARNINGS, end of period $354,724 $367,032
======== ========
EARNINGS (LOSS) PER COMMON SHARE,
BASIC:
CONTINUING OPERATIONS $ .21 $ .12
DISCONTINUED OPERATIONS - .06
SALE OF DIRECT RESPONSE - ( 1.95)
----- -----
TOTAL $ .21 ($1.77)
===== =====
DILUTED:
CONTINUING OPERATIONS $ .21 $ .12
DISCONTINUED OPERATIONS - .06
SALE OF DIRECT RESPONSE - ( 1.95)
----- -----
TOTAL $ .21 ($1.77)
===== =====
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
<TABLE>
ENESCO GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 and 1997 (Unaudited)
(In Thousands)
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ 3,506 ($31,759)
Less- Net income discontinued operations - ( 1,048)
- Loss on sale of Direct Response - 35,000
Adjustments to reconcile continuing operations net
income to net cash provided by operating activities ( 13,349) ( 3,672)
Operating activities of discontinued operations - 2,291
------- -------
Net cash provided (used) by operating activities ( 9,843) 812
------- -------
INVESTING ACTIVITIES:
Purchase of property, plant and equipment ( 622) ( 1,221)
Proceeds from sales of property, plant and equipment 47 661
Payments for acquisition of businesses,
net of cash acquired ( 6) ( 51)
Investing activities of discontinued operations - ( 524)
------- -------
Net cash used by investing activities ( 581) ( 1,135)
------- -------
FINANCING ACTIVITIES:
Cash dividends ( 4,588) ( 5,014)
Exchanges and purchases of common stock ( 23,616) -
Notes and loans payable 25,668 9,085
Exercise of stock options 33 -
Other common stock issuance 360 173
Financing activities of discontinued operations - ( 76)
------- -------
Net cash provided (used) by financing activities ( 2,143) 4,168
------- -------
Effect of exchange rate changes on cash
and cash equivalents ( 83) ( 714)
------- -------
Increase/(decrease) in cash and cash equivalents ( 12,650) 3,131
Cash and cash equivalents,
beginning of year 35,722 10,306
------- -------
Cash and cash equivalents, end of quarter $23,072 $13,437
======= =======
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
ENESCO GROUP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The consolidated condensed financial statements and related notes
included herein have been prepared by the Company, without audit except for
the December 31, 1997 condensed balance sheet, which was derived from the
Company's Annual Report on Form 10-K for the year ended December 31, 1997,
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading. The information
furnished reflects all normal recurring adjustments which are, in the
opinion of management, necessary to a fair statement of the results for the
interim periods. It is suggested that these condensed financial statements
be read in conjunction with the financial statements and related notes to
consolidated financial statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1997.
At its annual meeting in April 1998, the Company's shareholders
approved a proposal to change its corporate name to "Enesco Group, Inc.",
to reflect the Company's transformation into a singularly focused designer
and marketer of branded gifts and collectibles. The Stanhome Inc. name was
sold as part of the December 1997 agreement to sell the majority of the
business of the Direct Selling discontinued operation.
1. ACCOUNTING POLICIES:
The Company's financial statements for the three months ended March
31, 1998 have been prepared in accordance with the accounting policies
described in Note 1 to the December 31, 1997 consolidated financial
statements included in the Company's 1997 Annual Report on Form 10-K. The
Company considers all highly liquid securities, including certificates of
deposit with maturities of three months or less, when purchased, to be cash
equivalents. Accounts receivable were net of reserves for uncollectible
accounts, returns and allowances of $13,738,000 at March 31, 1998 and
$11,146,000 at December 31, 1997.
The Company recognizes revenue as merchandise is turned over to the
shipper and a provision for anticipated merchandise returns and allowances
is recorded based upon historical experience. Amounts billed to customers
for shipping and handling orders and collector club subscriptions are
netted against the associated costs.
The Company paid cash for interest and taxes as follows (in
thousands):
Three Months Ended
March 31
------------------
1998 1997
---- ----
Interest $ 583 $ 1,512
Income taxes $11,077 $ 3,953
2. COMPREHENSIVE INCOME:
In June 1997, the Financial Accounting Standards Board adopted a
new standard on reporting comprehensive income, which established standards
for reporting and display of comprehensive income (net income (loss)
together with other non-owner changes in equity) and its components in a
full set of general purpose financial statements. The standard became
effective for the Company in 1998 and required reclassification of
comparative financial statements for prior years. The other comprehensive
income consists only of cumulative translation adjustments. Comprehensive
income (loss) for the three months ended March 31, 1998 and 1997 was as
follows (in thousands):
Three Months Ended
March 31
------------------
1998 1997
---- ----
NET INCOME (LOSS) $ 3,506 ($31,759)
------- -------
OTHER COMPREHENSIVE INCOME:
Cumulative translation adjustments 102 ( 5,576)
------- -------
TOTAL OTHER COMPREHENSIVE INCOME 102 ( 5,576)
------- -------
COMPREHENSIVE INCOME (LOSS) $ 3,608 ($37,335)
======= =======
3. DISCONTINUED OPERATIONS:
In 1997, the Company discontinued and sold the majority of the
Hamilton Direct Response and Worldwide Direct Selling operations. In
connection with the Hamilton sale, the Company recorded a $35 million after
tax charge in the first quarter of 1997. Accordingly, the applicable
financial statements and related notes present these two business segments
as discontinued operations. Therefore, the net assets and operating results
of these two business segments have been segregated and reported as
discontinued operations in the Consolidated Balance Sheets, Statements of
Income, and Statements of Cash Flow.
Included in other assets at March 31, 1998 is $6.7 million of the
original $11 million Direct Selling Sale escrow deposit that continues to
be held in escrow after March 31, 1998 due to claims filed by Laboratoires
de Biologie Vegetale Yves Rocher of France. The Company is in the process
of gathering information and detail to assess the merits of the claim.
4. INVENTORY CLASSES:
The major classes of inventories at March and December 3l were as
follows (in thousands):
March 31, December 31,
1998 1997
---- ----
Raw materials and supplies $ 1,247 $ 1,719
Work in process 805 930
Finished goods in transit 9,804 14,865
Finished goods 86,308 90,238
-------- --------
$ 98,164 $107,752
======== ========
5. OTHER EXPENSE, NET:
Other expense, net for the three months ended March 31, 1998 and
1997 consists of the following (in thousands):
1998 1997
---- ----
Interest income $ 343 $ 691
Amortization of other assets ( 873) ( 957)
Other, net ( 14) ( 133)
------ ------
($ 544) ($ 399)
====== ======
6. EARNINGS PER COMMON SHARE (BASIS OF CALCULATION):
In February 1997, the Financial Accounting Standards Board adopted
a new standard on accounting for earnings per share. The standard became
effective for the Company at December 31, 1997 and required restatement of
prior years' earnings per share. Basic earnings per common share are based
on the average number of common shares outstanding during the period
covered. Diluted earnings per common share assumes, in addition to the
above, a dilutive effect of common share equivalents during the period.
Common share equivalents represent dilutive stock options using the
treasury stock method.
For the first quarter basic computations, the average numbers of
outstanding shares utilized were 16,595,000 shares for 1998 and 17,905,000
shares for 1997. For the first quarter diluted computations, the average
numbers of shares utilized were 16,605,000 and 17,926,000 shares for 1998
and 1997, respectively, including common share equivalents of 10,000 in
1998 and 21,000 in 1997. The lower average number of shares for the first
quarter of 1998 primarily resulted from the repurchase of shares as part of
the Company's repurchase program.
7. FINANCIAL INSTRUMENTS:
The Company operates globally with various manufacturing and
distribution facilities and product sourcing locations around the world.
The Company may reduce its exposure to fluctuations in foreign interest
rates and exchange rates by creating offsetting positions through the use
of derivative financial instruments. The Company currently does not use
derivative financial instruments for trading or speculative purposes.
The notional amount of forward exchange contracts and options is
the amount of foreign currency bought or sold at maturity. The notional
amount of interest rate swaps is the underlying principal amount used in
determining the interest payments exchanged over the life of the swap. The
notional amounts are not a direct measure of the Company's exposure through
its use of derivatives.
The Company periodically uses interest rate swaps to hedge
portions of interest payable on debt. In addition, the Company may
periodically employ interest rate caps to reduce exposure, if any, to
increases in variable interest rates. In October 1996, the Company entered
into a three year interest rate swap with a notional amount of $50 million
to effectively convert variable interest on debt to a fixed rate of 6.12%.
The Company may periodically hedge foreign currency royalties, net
investments in foreign subsidiaries, firm purchase commitments, contractual
foreign currency cash flows or obligations, including third-party and
intercompany foreign currency transactions. The Company regularly monitors
its foreign currency exposures and ensures that hedge contract amounts do
not exceed the amounts of the underlying exposures.
The Company enters into various short-term foreign exchange
agreements during the year. The purpose of the Company's foreign currency
hedging activities is to protect the Company from risk that the eventual
settlement of foreign currency transactions will be adversely affected by
changes in exchange rates. The Company's various subsidiaries import
products in foreign currencies and from time to time will enter into
agreements or build foreign currency deposits as a partial hedge against
currency fluctuations on inventory purchases. Gains and losses on these
agreements are deferred and recorded as a component of cost of sales when
the related inventory is sold. At March 31, 1998, deferred amounts were not
material. The Company makes short-term foreign currency intercompany loans
to various international subsidiaries and utilizes agreements to fully
hedge these transactions against currency fluctuations. The cost of these
agreements is included in the interest charged to the subsidiaries and
expensed monthly as the interest is accrued. The intercompany interest
eliminates upon consolidation and any gains and losses on the agreements
are recorded as a component of other income. The Company receives
dividends, technical service fees, royalties and other payments from its
subsidiaries and licensees. From time to time, the Company will enter into
foreign currency forward agreements as a partial hedge against currency
fluctuations on these current receivables. Gains and losses are recognized
or the credit or debit offsets the foreign currency payables. As of March
31, 1998, net deferred amounts on outstanding agreements were not material.
The outstanding agreement amounts (notional value) at March 31, 1998, are
$6.5 million U.S. dollars.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
ENESCO GROUP, INC.
THREE MONTHS ENDED MARCH 31, 1998
The information set forth below should be read in conjunction with
the unaudited condensed consolidated financial statements and notes thereto
included in Part I - Item 1 of the Quarterly Report and the Company's
Annual Report on Form 10-K for the year ended December 31, 1997 which
contains the audited financial statements and notes thereto for the years
ended December 31, 1997, 1996 and 1995 and Management's Discussion and
Analysis of Financial Condition and Results of Operations for those
respective periods.
Forward-looking statements, in this Quarterly Report on Form 10-Q
as well as in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Stockholders are
cautioned that all forward-looking statements pertaining to the Company
involve risks and uncertainties, including, without limitation, risks
detailed from time to time in the Company's periodic reports and other
information filed with the Securities and Exchange Commission.
At the Company's Annual Meeting on April 23, 1998, the shareholders
approved a resolution authorizing the Company to change its name from
Stanhome Inc. to Enesco Group, Inc., to reflect the Company's
transformation into a singularly focused designer and marketer of branded
gifts and collectibles. Commencing on May 1, 1998, shares of the Company's
common stock traded on the New York Stock Exchange and the Pacific Exchange
under the symbol "ENC".
RESULTS OF OPERATIONS:
Net sales increased 6.0% in the first quarter of 1998, due
primarily to unit volume growth in the United States. International sales
increased slightly and represented 17.9% of total 1998 first quarter sales
compared to 18.9% in 1997. The Precious Moments line represented 39.4% of
the 1998 first quarter sales compared to 36.3% in 1997 and the Cherished
Teddies line represented 20.9% of 1998 first quarter sales compared to
23.7% in 1997. In the United States, the Company is in the process of
analyzing the total economic return for all of its product lines, with the
objective of phasing out those product lines that do not cover their total
cost of capital investment. As these lines are phased out during the next
year, the absence of sales from these lines will reduce sales volumes.
Gross profit increased 2.7% in the first quarter of 1998, due
primarily to the increase in sales volume. Gross profit as a percentage of
net sales was 46.9% in the first quarter of 1998, compared to 48.4% in
1997. The decrease in the gross profit percentage in 1998 was due primarily
to sales mix and a greater percentage of products sold at less than normal
margins in the United States.
Selling, distribution, general and administrative expenses
increased .2% in the first quarter of 1998 versus 1997 and represented
40.0% of first quarter 1998 sales, compared to 42.4% in 1997. The 1998
reduction in expenses as a percentage of sales was due primarily to lower
general and administrative expenses in the United States. The reductions
were from cost controls, the start of benefits from downsizing the
Company's Westfield, MA corporate headquarters, and a reduction of
compensation resulting from the expiration on December 31, 1997 of an
executive officer's employment agreement that had entitled a bonus in an
amount equal to five percent of Enesco's pre-tax income, with certain
adjustments, less a base salary. During the first quarter of 1998, there
was a net pre-tax expense of approximately one million dollars resulting
from a workforce reduction in the United States.
Operating profit increased 20% in the first quarter of 1998
compared to 1997 and represented 6.9% of sales in 1998 compared to 6.1% in
1997, due to the factors described above. Most of the operating profit
improvement was in the United States. International operating profit
increased slightly.
INTERNATIONAL ECONOMIES AND CURRENCY:
The value of the U.S. dollar versus international currencies where
the Company conducts business impacts the results of these businesses. In
addition to the currency risks, the Company's international operations,
including sources of imported products, are subject to other risks of doing
business abroad, including import or export restrictions and changes in
economic and political climates.
The fluctuations in net sales and operating profit margins from
quarter to quarter are partially due to the seasonal characteristics of the
Company's business.
INTEREST EXPENSE, net of investment income, decreased in the first
quarter of 1998 compared with 1997, from lower borrowing levels due to the
utilization of cash proceeds from the sale of discontinued operations in
1997. Other expense, net is principally the amortization of goodwill and
was less in the first quarter of 1998 compared to 1997 due to certain
categories being fully amortized.
THE PROVISION FOR INCOME TAXES of 43% in the first quarter of 1998
was lower than the 44% provision in 1997, due primarily to a higher
percentage of total before tax income from the United States, which has a
lower effective tax rate.
DISCONTINUED OPERATIONS:
In April 1997, the Company announced the sale of the majority of
its Hamilton Direct Response business and a plan to sell its Direct Selling
business. The majority of the Direct Selling business was sold in December
1997. The Company's Direct Selling Cosmhogar manufacturing subsidiary,
located in Spain, was not sold. The Cosmhogar facility and certain other
assets of the Direct Selling Group remain to be sold.
The applicable financial statements and related notes present these
two divested business segments as discontinued operations. Therefore, the
net assets and operating results of these two divested business segments
have been segregated and reported as discontinued operations in the
Consolidated Balance Sheets, Statements of Income, and Statements of Cash
Flows. Note 3, Discontinued Operations, to the Consolidated Condensed
Financial Statements provides additional information on the two
discontinued operations.
FINANCIAL CONDITION
The Company has historically satisfied its capital requirements
with internally generated funds and short-term loans. Working capital
requirements fluctuate during the year and are generally greatest during
the third quarter and lowest at the beginning of the first quarter.
The major sources of funds in the first quarter of 1998 from
operating activities for continuing operations were from net income,
depreciation, amortization and lower levels of accounts receivable and
inventories. Due to seasonal sales volume, accounts receivable were down
from year-end 1997. Accounts receivable in the first quarter of 1998
decreased 12% compared to the first quarter of 1997. The decrease occurred,
even though sales increased 6% in the first quarter 1998, due to the impact
of the implementation of tighter credit controls and improved collection
performance. Inventories decreased compared to year-end 1997 as progress
was made in alleviating the high levels of inventory. Other assets
increased at March 31, 1998 due primarily to $6.7 million of the $11
million Direct Selling sale escrow deposit continuing to be held in escrow
after March 31, 1998. Accounts payable and accrued expenses decreased from
year-end levels due to lower seasonal volumes. Taxes payable decreased due
to seasonal volumes and payments of taxes related to the sale of the Direct
Selling business. 1998 current liabilities, excluding loans payable, were
higher than 1997 first quarter levels due to timing of payments and to the
amounts remaining to be paid from the 1997 provision to downsize corporate
headquarters and for payments due relating to the 1997 sales of
discontinued operations.
The major use of cash in investing activities in the first quarter
of 1998 was for capital expenditures. Capital expenditure commitments for
$10 million are forecasted for 1998. The level of changes of marketable
securities from period to period principally represents investment
alternatives versus certificates of deposit, time deposits, and
intercompany loans.
The major uses of cash in financing activities in the first quarter
of 1998 were for dividends to shareholders and purchases of common stock,
which were primarily financed with increased borrowings. During the first
three months this year, the Company repurchased 872 thousand shares for
$23.6 million. The Company has an authorized program to purchase shares of
stock for the Company treasury from time to time in the open market or in
private transactions, depending on market and business conditions, and may
utilize funds for this purpose in the future. As of March 31, 1998, 1.3
million shares remained available for purchase under the program. The
Company's earnings, cash flow, and available debt capacity have made and
make stock repurchases, in the Company's view, one of its best investment
alternatives. The major source of funds from financing activities was from
higher seasonal borrowings. The aggregate exercise price of the total
number of stock options outstanding was $92 million at March 31, 1998, and
the Company could receive some or all of these funds in the future if the
options are exercised.
Fluctuations in the value of the U. S. dollar versus international
currencies affect the U. S. dollar translation value of international
currency denominated balance sheet items. The changes in the balance sheet
dollar values due to international currency translation fluctuations are
recorded as a component of accumulated comprehensive income in
shareholders' equity.
The Company currently believes that cash from operations and
available financing alternatives are adequate to meet anticipated
requirements for working capital, dividends, capital expenditures, the
stock repurchase program and other needs. No liquidity problems are
anticipated.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders was held on April 23, 1998.
(c) The first matter voted upon at the meeting was the election of
Directors. The members of Class III were standing for election to
a three-year term expiring at the Annual Meeting in 2001. Upon
motion duly made and seconded, it was voted to elect John F.
Cauley, Jeffrey A. Hutsell, Homer G. Perkins and Anne-Lee Verville
as Class III Directors for a three-year term expiring at the
Annual Meeting in 2001 and until their successors are elected and
qualified. The votes for each of the candidates were reported as
follows:
John F. Cauley For: 14,201,546
Withheld: 127,495
Jeffrey A. Hutsell For: 14,217,907
Withheld: 111,134
Homer G. Perkins For: 14,190,571
Withheld: 138,470
Anne-Lee Verville For: 14,206,465
Withheld: 122,576
The second matter voted upon at the meeting was the approval of
amendments to the Restated Articles of Organization, as amended,
of the Company. Upon motion duly made and seconded, it was voted
to change the name and purpose of the Company and to provide that
stockholders meetings may be held anywhere within the United
States. The votes for the amendments were reported as follows:
Amendments to Articles For: 13,067,133
Against: 80,331
Abstain: 149,325
Broker Non-Votes: 1,032,252
The third matter voted upon at the meeting was a stockholder
proposal recommending the sale of the Company and its
subsidiaries. Upon motion duly made and seconded, it was voted
that the stockholder proposal not be approved. The votes for the
above referenced stockholder proposal were reported as follows:
Stockholder Proposal For: 1,419,786
Against: 11,429,371
Abstain: 447,630
Broker Non-Votes: 1,032,254
The fourth matter voted upon at the meeting was the approval and
ratification of the Board's appointment of Arthur Andersen LLP as
independent accountants for 1998. Upon motion duly made and
seconded, it was voted that the appointment by the Board of
Directors at its March 4, 1998 meeting of Arthur Andersen LLP,
independent certified public accountants, as independent
accountants for the Company for its fiscal year ending December
31, 1998 be ratified and approved. The votes for the independent
accountants were reported as follows:
Arthur Andersen LLP For: 14,191,839
Against: 109,295
Abstain: 27,907
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
- Restated Articles of Organization as amended
- By-Laws as amended
- Fourth Amendment to Stanhome Inc. Supplemental Pension Plan
- Change in Control Agreement with Eugene Freedman
- John J. Dur Release Agreement
- Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
Quarter for which this report is filed.
All other items hereunder are omitted because either such item is
inapplicable or the response to it is negative.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STANHOME INC.
(Registrant)
Date: May 12, 1998 /s/ H. L. Tower
-----------------------------------------
H.L. Tower
Chairman and Chief Executive Officer
Date: May 12, 1998 /s/ Allan G. Keirstead
-----------------------------------------
Allan G. Keirstead
Chief Administrative and Financial
Officer
EXHIBIT INDEX
Reg. S-K
Item 601 Exhibit 10-Q Page No.
- --------- ------- -------------
3(a) Restated Articles of Organization 23
as amended
3(b) By-Laws as amended 32
10(a) Fourth Amendment to Stanhome Inc.
Supplemental Pension Plan 46
10(b) Change in Control Agreement with
Eugene Freedman 48
10(c) John J. Dur Release Agreement 58
27 Financial Data Schedule 69
EXHIBIT 3(a)
[NOTE: THE FOLLOWING RESTATED ARTICLES OF ORGANIZATION HAVE BEEN FURTHER
RESTATED, FOR PURPOSES OF FILING THE SAME WITH THE SECURITIES AND EXCHANGE
COMMISSION ONLY, TO GIVE EFFECT TO ALL AMENDMENTS OF AND ADDITIONS TO THE
RESTATED ARTICLES OF ORGANIZATION OF ENESCO GROUP, INC. FILED WITH THE
SECRETARY OF THE COMMONWEALTH OF THE COMMONWEALTH OF MASSACHUSETTS PRIOR TO
THE DATE THESE RESTATED ARTICLES OF ORGANIZATION ARE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. SIGNATURES FROM THE ORIGINAL HAVE BEEN
OMITTED.]
FEDERAL IDENTIFICATION
NO. 04-1864170
THE COMMONWEALTH OF MASSACHUSETTS
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
ONE ASHBURTON PLACE, BOSTON, MASSACHUSETTS 02108-1512
RESTATED ARTICLES OF ORGANIZATION
General Laws, Chapter 156B, Section 74
This certificate must be submitted to the Secretary of the
Commonwealth within sixty days after the date of the vote of stockholders
adopting the restated articles of organization. The fee for filing this
certificate is prescribed by General Laws, Chapter 156B, Section 114. Make
check payable to the Commonwealth of Massachusetts.
We, Jeffrey A. Hutsell , President
Peter R. Johnson , Clerk
of STANHOME INC.
(Exact name of corporation)
located at 333 Western Avenue, Westfield, Massachusetts 01085
(Street address of corporation in Massachusetts)
do hereby certify that the following amendments to the restatement of the
articles of organization of the corporation were duly adopted at a meeting
held on April 23, 1998, by vote of:
13,067,133 shares of common stock of 16,417,653 shares outstanding,
- ----------- --------------- -----------
(type, class & series, if any)
being at least a majority of each type, class or series outstanding and
entitled to vote thereon:
1. The name by which the corporation shall be known is:
Enesco Group, Inc.
2. The purposes for which the corporation is formed are as
follows: To manufacture, process, assemble, warehouse,
buy, sell, distribute and otherwise engage in and carry
on the business of marketing giftware and collectible
products and other items, materials, articles, goods and
merchandise and otherwise dealing in real, personal and
intellectual or industrial property of all kinds and
descriptions; to exercise all of the powers conferred
upon business corporations by, and from time to time
permitted to be exercised by business corporations under,
the laws of the Commonwealth of Massachusetts; and to
engage in and carry on any other lawful business or
transaction which may now or hereafter be permitted under
the laws of the Commonwealth of Massachusetts to be
conducted, whether in that Commonwealth or elsewhere, by
a business corporation organized under Chapter 156B of
the Massachusetts General Laws.
3. The total number of shares and the par value, if any, of
each class of stock which the corporation is authorized
to issue is as follows:
WITHOUT PAR VALUE WITH PAR VALUE
CLASS OF STOCK NUMBER OF SHARES NUMBER OF SHARES PAR VALUE
Preferred None None
Common Stock None 80,000,000 $.125
4. If more than one class is authorized, a description of
each of the different classes of stock with, if any, the
preferences, voting powers, qualifications, special or
relative rights or privileges as to each class thereof
and any series now established:
"Not Applicable".
5. The restrictions, if any, imposed by the articles of
organization upon the transfer of shares of stock of any
class are as follows:
"None".
6. Other lawful provision, if any, for the conduct and
regulation of the business and affairs of the
corporation, for its voluntary dissolution, or for
limiting, defining, or regulating the powers of the
corporation, or of its directors or stockholders, or of
any class of stockholders:
ARTICLE 6A
A. In addition to any affirmative vote required by law or these
Restated Articles of Organization or the By-laws of the Corporation, and
except as otherwise expressly provided in Section B of this Article 6A, a
Business Combination (as hereinafter defined) with, or proposed by or on
behalf of, any Interested Stockholder (as hereinafter defined) or any
Affiliate or Associate (as hereinafter defined) of any Interested
Stockholder or any person who thereafter would be an Affiliate or Associate
of such Interested Stockholder shall require the affirmative vote of not
less than eighty percent (80%) of the votes entitled to be cast by the
holders of all the then outstanding shares of Voting Stock (as hereinafter
defined), voting together as a single class. Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that a
lesser percentage or separate class vote may be specified, by law or in any
agreement with any national securities exchange or otherwise.
B. The provisions of Section A of this Article 6A shall not be
applicable to any particular Business Combination, and such Business
Combination shall require only such affirmative vote, if any, as is
required by law or by any other provision of these Restated Articles of
Organization or the By-laws of the Corporation, or any agreement with any
national securities exchange, if the Business Combination shall have been
approved, either specifically or as a transaction which is within an
approved category of transactions, by a majority (whether such approval is
made prior to or subsequent to the acquisition of, or announcement or
public disclosure of the intention to acquire, beneficial ownership of the
Voting Stock that caused the Interested Stockholder to become an Interested
Stockholder) of the Continuing Directors (as hereinafter defined).
C. The following definitions shall apply with respect to this
Article 6A:
1. The term "Business Combination" shall mean:
a. any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (i) any Interested
Stockholder or (ii) any other company (whether or not itself
an Interested Stockholder) which is or after such merger or
consolidation would be an Affiliate or Associate of an
Interested Stockholder; or
b. any sale, lease, exchange, mortgage, pledge, transfer or
other disposition or security arrangement, investment, loan,
advance, guarantee, agreement to purchase, agreement to pay,
extension of credit, joint venture participation or other
arrangement (in one transaction or a series of transactions)
with or for the benefit of any Interested Stockholder or any
Affiliate or Associate of any Interested Stockholder
involving any assets, securities or commitments of the
Corporation, any Subsidiary or any Interested Stockholder or
any Affiliate or Associate of any Interested Stockholder
which (except for any arrangement, whether as employee,
consultant or otherwise, other than as a director, pursuant
to which any Interested Stockholder or any Affiliate or
Associate thereof shall, directly or indirectly, have any
control over or responsibility for the management of any
aspect of the business or affairs of the Corporation, with
respect to which arrangements the value tests set forth
below shall not apply), together with all other such
arrangements (including all contemplated future events), has
a aggregate Fair Market Value and/or involves aggregate
commitments of $10,000,000 or more or constitutes more than
5 percent of the book value of the total assets (in the case
of transactions involving assets or commitments other than
capital stock) or 5 percent of the stockholders' equity (in
the case of transactions involving assets or commitments
other than capital stock) or 5 percent of the stockholders'
equity (in the case of transactions in capital stock) of the
entity in question (the "Substantial Part"), as reflected in
the most recent fiscal year-end consolidated balance sheet
of such entity existing at the time the stockholders of the
Corporation would be required to approve or authorize the
Business Combination involving the assets, securities and/or
commitments constituting any Substantial Part; or
c. the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation or for any amendment to
the Corporation's By-laws; or
d. any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries or any other transaction (whether or not with
or otherwise involving an Interested Stockholder) that has
the effect, directly or indirectly, of increasing the
proportionate share of any class or series of Capital Stock,
or any securities convertible into Capital Stock or into
equity securities of any Subsidiary, that is beneficially
owned by any Interested Stockholder or any Affiliate or
Associate of any Interested Stockholder; or
e. any agreement, contract or other arrangement providing
for any one or more of the actions specified in the
foregoing clauses (a) to (d).
2. The term "Capital Stock" shall mean all capital stock of the
Corporation authorized to be issued from time to time under
Article 3 of these Restated Articles of Organization, and the
term `Voting Stock' shall mean all Capital Stock which by its
terms may be voted on all matters submitted to stockholders of
the Corporation generally.
3. The term "person" shall mean any individual, firm, company
or other entity and shall include any group comprised of any
person and any other person with whom such person or any
Affiliate or Associate of such person has any agreement,
arrangement or understanding, directly or indirectly, for the
purpose of acquiring, holding, voting or disposing of Capital
Stock.
4. The term "Interested Stockholder" shall mean any person
(other than the Corporation or any Subsidiary and other than
any profit-sharing, employee stock ownership or other employee
benefit plan of the Corporation or any Subsidiary or any
trustee of or fiduciary with respect to any such plan when
acting in such capacity) who (a) after June 26, 1986, becomes
or announces or publicly discloses a plan or intention to
become the beneficial owner of Voting Stock representing ten
percent (10%) or more of the votes entitled to be cast by the
holders of all then outstanding shares of Voting Stock, except
any person who becomes such a 10% holder solely as the result
of Corporate action; or (b) is an Affiliate or Associate of the
Corporation and at any time after June 26, 1986 and within the
two-year period immediately prior to the date in question has
become the beneficial owner of Voting Stock representing ten
percent (10%) or more of the votes entitled to be cast by the
holders of all then outstanding shares of Voting Stock, unless
such Affiliate or Associate has become such a 10% holder solely
as a result of Corporate action.
5. A person shall be a "beneficial owner" of any Capital Stock
(a) which such person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; (b) which such
person or any of its Affiliates or Associates has, directly or
indirectly, (i) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding
or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, except
a revocable proxy given in response to a public proxy or
consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the Securities Exchange Act of
1934 and the rules and regulations thereunder (the "Act") (or
any subsequent provisions replacing such Act, rules or
regulations); or (c) which is beneficially owned, directly or
indirectly, by any other person with which such person or any
of its Affiliates or Associates has any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting
or disposing of any shares of Capital Stock. For the purposes
of determining whether a person is an Interested Stockholder
pursuant to Paragraph 4 of this Section C, the number of shares
of Capital Stock deemed to be outstanding shall include shares
deemed beneficially owned by such person through application of
this Paragraph 5 of Section C, but shall not include any other
shares of Capital Stock that may be issuable pursuant to any
agreement, arrangement or understanding, or upon exercise of
conversion rights, warrants or options, or otherwise.
6. The terms "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 under
the Securities Exchange Act of 1934, as amended and the rules
and regulations thereunder (the "Act"), as in effect on date of
amendment (the term "registrant" in said Rule 12b-2 meaning in
this case the Corporation).
7. The term "Subsidiary" means any company of which a majority
of any class of equity security is beneficially owned by the
Corporation; provided, however, that for the purposes of the
definition of Interested Stockholder set forth in Paragraph 4
of this Section C, the term "Subsidiary" shall mean only a
company of which a majority of each class of equity security is
beneficially owned by the Corporation.
8. The term "Continuing Director" means any member of the Board
of Directors of the Corporation (the "Board of Directors"),
while such person is a member of the Board of Directors, who is
not an Affiliate or Associate or representative of the
Interested Stockholder and was a member of the Board of
Directors prior to the time that the Interested Stockholder
became an Interested Stockholder, and any successor of a
Continuing Director while such successor is a member of the
Board of Directors, who is not an Affiliate or Associate or
representative of the Interested Stockholder and is recommended
or elected to succeed the Continuing Director by a majority of
Continuing Directors.
9. The term "Fair Market Value" means (a) in the case of cash,
the amount of such cash; (b) in the case of stock, the highest
closing sale price during the 30-day period immediately
preceding the date in question of a share of such stock on the
Composite Tape for New York Stock Exchange Listed Stocks, or,
if such stock is not quoted on the Composite Tape, on the New
York Stock Exchange, or, if such stock is not listed on such
Exchange, on the principal United States securities exchange
registered under the Act on which such stock is listed, or, if
such stock is not listed on any such exchange, the highest last
quoted price or, if not so quoted, the highest average of the
high bid and low asked prices in the over-the-counter market
with respect to a share of such stock during the 30-day period
preceding the date in question on the National Association of
Securities Dealers, Inc. Automated Quotations System or any
similar system then in use, or if no such quotations are
available, the fair market value on the date in question of a
share of such stock as determined by a majority of the
Continuing Directors in good faith; and (c) in the case of
property other than cash or stock, the fair market value of
such property on the date in question as determined in good
faith by a majority of the Continuing Directors.
D. A majority of the Continuing Directors shall have the power and
duty to determine for the purposes of this Article 6A, on the basis of
information known to them after reasonable inquiry, all questions arising
under this Article 6A, including, without limitation, (a) whether a person
is an Interested Stockholder, (b) the number of shares of Capital Stock or
other securities beneficially owned by any person, (c) whether a person is
an Affiliate or Associate of another, (d) whether a Proposed Action is
with, or proposed by, or on behalf of an Interest Stockholder or an
Affiliate or Associate of an Interested Stockholder, (e) whether the assets
that are the subject of any Business Combination have, or the consideration
to be received for the issuance or transfer of securities by the
Corporation or any Subsidiary in any Business Combination has, an aggregate
Fair Market Value of $10,000,000 or more, and (f) whether the assets or
securities that are the subject of any Business Combination constitute a
Substantial Part. Any such determination made in good faith shall be
binding and conclusive on all parties.
E. Nothing contained in this Article 6A shall be construed to
relieve any Interested Stockholder from any fiduciary obligation imposed by
law.
F. This Article 6A shall not be exclusive with respect to its
subject matter.
G. Except as otherwise provided in the Restated Articles of
Organization or as otherwise required by law, any merger or consolidation
or sale, lease or exchange of all or substantially all of the Corporations
assets, including its goodwill, which would otherwise require a vote of
stockholders of this Corporation pursuant to Chapter 156B of the General
Laws of the Commonwealth of Massachusetts shall require the affirmative
vote of a majority of the shares of each class of stock of this Corporation
outstanding and entitled to vote on the question.
H. For the purposes of this Article 6A, a Business Combination or
any proposal to amend, repeal or adopt any provision of these Restated
Articles of Organization inconsistent with this Article 6A (collectively,
"Proposed Action") is presumed to have been proposed by, or on behalf of,
an Interested Stockholder or an Affiliate or Associate of an Interested
Stockholder or a person who thereafter would become such if (1) after the
Interested Stockholder became such, the Proposed Action is proposed
following the election of any director of the Corporation who with respect
to such Interested Stockholder, would not qualify to serve as a Continuing
Director or (2) such Interested Stockholder, Affiliate, Associate or person
votes for or consents to the adoption of any such Proposed Action, unless
as to such Interested Stockholder, Affiliate, Associate or person a
majority of the Continuing Directors makes a good faith determination that
such Proposed Action is not proposed by or on behalf of such Interested
Stockholder, Affiliate, Associate or person, based on information known to
them after reasonable inquiry.
I. Notwithstanding any other provisions of these Restated Articles
of Organization or the By-laws of the Corporation (and notwithstanding the
fact that a lesser percentage or separate class vote may be specified by
law, these Restated Articles of Organization or the By-laws of the
Corporation), any proposal to amend, repeal or adopt any provision of these
Articles of Organization inconsistent with this Article 6A which is
proposed by or on behalf of an Interested Stockholder or an Affiliate or
Associate of an Interested Stockholder shall require the affirmative vote
of the holders of not less than eighty percent (80%) of the votes entitled
to be cast by the holders of all the then outstanding shares of Voting
Stock, voting together as a single class; provided, however, that this
Section H shall not apply to, and such eighty percent (80%) vote shall not
be required for, any amendment, repeal or adoption unanimously recommended
by the Board of Directors if all of such directors are persons who would be
eligible to serve as Continuing Directors within the meaning of Section C,
Paragraph 8 of this Article 6A.
ARTICLE 6B
The business and affairs of the Corporation shall be managed by or
under the direction of a Board of Directors consisting of not less than
three nor more than eighteen directors, the exact number of directors to be
determined from time to time by resolution adopted by affirmative vote of a
majority of the entire Board of Directors. The directors shall be divided
into three classes, designated Class I, Class II and Class III. Each class
shall consist, as nearly as may be possible, of one-third of the total
number of directors constituting the entire Board of Directors. If the
number of directors is changed, any increase or decrease shall be
apportioned among the classes so as to maintain the number of directors in
each class as nearly equal as possible, and any additional director of any
class elected to fill a vacancy resulting from an increase in such class
shall hold office for a term that shall coincide with the remaining term of
that class, but in no case will a decrease in the number of directors
shorten the term of any incumbent director. A director shall hold office
until the annual meeting for the year in which his term expires and until
his successor shall be elected and shall qualify, subject, however, to
prior death, resignation, retirement, disqualification or removal from
office. Any vacancy on the Board of Directors that results from an increase
in the number of directors may only be filled by a majority of the Board of
Directors then in office, provided that a quorum is present, and any other
vacancy occurring in the Board of Directors may only be filled by a
majority of the directors then in office, even if less than a quorum, or by
a sole remaining director. Any director elected to fill a vacancy not
resulting from an increase in the number of directors shall have the same
remaining term as that of his predecessor.
Nominations for the election of directors at an annual meeting may
be made by the Board of Directors or a committee appointed by the Board of
Directors or by any stockholder entitled to vote generally in the election
of directors. However, any stockholder may nominate one or more persons for
election as directors at an annual meeting only if written notice of such
stockholders intent to make such nomination or nominations has been given,
either by personal delivery or by United States mail, postage prepaid, to
the Secretary not later than forty-five days prior to the anniversary of
the date of the immediately preceding annual meeting. Each such notice
shall set forth: (a) the name and address of the stockholder who intends to
make the nomination and of the person or persons to be nominated; (b) a
representation that the stockholder is a holder of record of this
Corporation entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to nominate the person or persons
specified in the notice; (c) a description of all arrangements or
understandings between the stockholder and each nominee and any other
person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the stockholder; (d) such other
information regarding each nominee proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission; and (e) the consent of
each nominee to serve as a director if so elected. The presiding officer of
the meeting may refuse to acknowledge the nomination of any person not made
in compliance with the foregoing procedure.
A director may not be removed from office without cause, and may
be removed for cause only after a reasonable notice and opportunity to be
heard before the body proposing to remove him.
Notwithstanding any other provision of these Restated Articles of
Organization, the affirmative vote of holders of 80% of the shares entitled
to vote at an election of directors shall be required to amend, alter,
change or repeal, or to adopt any provision as part of these Restated
Articles of Organization inconsistent with the purpose and intent of, this
Article 6B.
ARTICLE 6C
Except as otherwise provided herein or required by law, the
Corporation may authorize, at a meeting of stockholders duly called for the
purpose, by a vote of a majority of each class of stock outstanding and
entitled to vote thereon, any amendment of these Restated Articles of
Organization.
ARTICLE 6D
The Board of Directors shall have the power to make, amend or
repeal the Bylaws of the Corporation in whole or in part.
ARTICLE 6E
Directors of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for any breach of
fiduciary duty as a Director occurring on or after April 24, 1987
notwithstanding any provision of law imposing such liability; provided,
however, that the foregoing provision shall not be deemed to eliminate or
limit any liability of a Director (i) for any breach of the Director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section Sixty-one or Sixty-two of the
Business Corporation Law of the Commonwealth or (iv) for any transaction
from which the Director derived an improper personal benefit.
ARTICLE 6F
Meetings of the stockholders of the Corporation shall be held
anywhere within the United States, as determined by the Board of Directors
of the Corporation, as permitted by the provisions of the Massachusetts
Business Corporation Law.
We further certify that the foregoing restated articles of
organization effect no amendments to the articles of organization of the
corporation as heretofore amended.
(*If there are no such amendments, state "None".)
These Restated Articles of Organization shall become effective on
April 30, 1998 at 5:00 P.M.
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereto
signed our names this 24th day of April in the year 1998.
/s/ Jeffrey A. Hutsell President
/s/ Peter R. Johnson Clerk
EXHIBIT 3(b)
AMENDED AND RESTATED
BY-LAWS
OF
ENESCO GROUP, INC.
As Amended Through May 1, 1998
AMENDED AND RESTATED BY-LAWS OF ENESCO GROUP, INC.
TABLE OF CONTENTS
ARTICLE PAGE
I OFFICES.......................................................1
Sec. 1 Principal Office.......................................1
Sec. 2 Other Offices..........................................1
II MEETINGS OF STOCKHOLDERS......................................1
Sec. 1 Place of Meetings......................................1
Sec. 2 Quorum.................................................1
Sec. 3 Annual Meetings........................................1
Sec. 4 Special Meetings.......................................2
Sec. 5 Notices................................................2
Sec. 6 Adjournments...........................................2
III DIRECTORS.....................................................2
Sec. 1 Number and Term........................................2
Sec. 2 Annual Meetings........................................2
Sec. 3 Regular Meetings.......................................2
Sec. 4 Special Meetings.......................................3
Sec. 5 Waiver of Notice.......................................3
Sec. 6 Quorum.................................................3
Sec. 7 Action without Meeting.................................3
Sec. 8 Powers.................................................3
Sec. 9 Execution of Corporation Documents and Instruments.....3
Sec. 10 Committees of the Board of Directors..................4
Sec. 11 Remuneration of Outside Directors.....................4
IV OFFICERS......................................................4
Sec. 1 Election of Officers...................................4
Sec. 2 Terms of Office........................................4
Sec. 3 Compensation of Officers, Employees and Agents.........5
Sec. 4 Vacancies..............................................5
CHAIRMAN OF THE BOARD
Sec. 5........................................................5
Sec. 6........................................................5
PRESIDENT
Sec. 7........................................................5
Sec. 8........................................................5
VICE-PRESIDENTS
Sec. 9........................................................6
TREASURER
Sec. 10.......................................................6
Sec. 11.......................................................6
Sec. 12.......................................................6
Sec. 13.......................................................6
ASSISTANT TREASURERS
Sec. 14.......................................................7
SECRETARY
Sec. 15.......................................................7
ASSISTANT SECRETARIES
Sec. 16.......................................................7
CLERK
Sec. 17.......................................................7
ASSISTANT CLERKS
Sec. 18.......................................................8
BONDS
Sec. 19.......................................................8
V INDEMNIFICATION OF OFFICERS AND DIRECTORS.....................8
VI STOCK.........................................................9
Sec. 1 Holders to be Recognized...............................9
Sec. 2 Form of Stock Certificates.............................9
Sec. 3 Replacement of Certificates Lost, Etc..................9
Sec. 4 Fixing Date for Determination of Stockholders
of Record...........................................10
Sec. 5 Restrictions on Transfer..............................10
Sec. 6 Massachusetts Control Share Acquisition Act...........10
VII SEAL AND FISCAL YEAR.........................................10
Sec. 1 Seal..................................................10
Sec. 2 Fiscal Year...........................................11
VIII AMENDMENT OF BY-LAWS.........................................11
Sec. 1.......................................................11
Sec. 2.......................................................11
AMENDED AND RESTATED BY-LAWS OF
ENESCO GROUP, INC.
ARTICLE I
OFFICES
Sec. 1. Principal Office. The location of the principal office of the
Corporation in the Commonwealth of Massachusetts shall be in the City of
Westfield, unless such location shall at any time be changed as permitted
by law.
Sec. 2. Other Offices. The Corporation may also have offices in such other
places within and without the Commonwealth of Massachusetts as the business
of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Sec. 1. Place of Meetings. Meetings of the stockholders of the Corporation
shall be held anywhere within the United States, as determined by the Board
of Directors of the Corporation, as permitted by the provisions of the
Massachusetts Business Corporation Law.
Sec. 2. Quorum. A majority of the stock issued, outstanding and entitled to
vote on the matters to be presented, which is represented by the holders
thereof, either in person or by proxy, shall be a quorum at any meeting of
stockholders.
Sec. 3. Annual Meetings. The annual meeting of the stockholders shall be
held on the fourth Thursday of April in each year at 10:00 A.M. unless by
order of the Board of Directors the notice of the annual meeting shall
designate some other hour on such date. At each annual meeting the
stockholders entitled to vote thereat on the matter shall elect the class
of Directors whose term of office is expiring, in accordance with the
provisions of Article 6B of the Restated Articles of Organization of the
Corporation, as amended. At each annual meeting the stockholders entitled
to vote thereat on the matter shall have placed before them for
ratification the name of the Auditor appointed by the Board of Directors in
accordance with law.
Sec. 4. Special Meetings. Special meetings of stockholders may be called by
the President, or by the Directors, or in any other manner specifically
authorized by law; provided, however, that if one or more stockholders
request the special meeting, the holders of at least ninety percent in
interest of the capital stock entitled to vote at the meeting must submit
written application therefor.
Sec. 5. Notices. Notice of any meeting of stockholders shall, at least
seven days prior to the date thereof, be mailed by the Clerk or an
Assistant Clerk or delivered by either to each stockholder entitled to vote
on any of the matters to be presented at his address as the same appears on
the stock records of the Corporation or so mailed or delivered to his
residence or to his usual place of business.
Sec. 6. Adjournments. Any meeting of the stockholders may be adjourned to
any other time and place by the stockholders present or represented by
proxy at the meeting and entitled to vote on the matters to be presented,
although less than a quorum, and it shall not be necessary to notify any
stockholder of any such adjournment. Any business which could have been
transacted at any meeting of stockholders as originally called may be
transacted at any such adjournment thereof.
ARTICLE III
DIRECTORS
Sec. 1. The business and affairs of the Corporation shall be managed by or
under the direction of a Board of Directors as set forth in Article 6B of
the Restated Articles of Organization of the Corporation, as amended. Each
Director shall be a voting stockholder or shall become such prior to acting
as a director.
Sec. 2. Annual Meetings. Following each annual meeting of stockholders and
at the place thereof, if a quorum of the Board of Directors is present
thereat, the annual meeting of the Board of Directors shall proceed
thereafter without notice; but if a quorum of the Board is not present
thereat, or, if present, does not so proceed to hold such meeting, the
annual meeting of such Board shall be called in the manner hereinafter
provided with respect to the call of a special meeting of the Board.
Sec. 3. Regular Meetings. Regular meetings of the Board of Directors may be
held at such times and places within or without the Commonwealth of
Massachusetts as shall from time to time be fixed by the Board, and no
notice need be given of regular meetings held at times and places so fixed.
Sec. 4. Special Meetings. Special meetings of the Board of Directors may be
called at any time by the Chairman of the Board or the President, and the
Secretary or an Assistant Secretary shall give notice of any special
meeting so called to all Directors stating the time and place within or
without the Commonwealth of Massachusetts, and such notice shall be
sufficient if given either (i) by mailing the same postage prepaid
forty-eight hours before the date of the meeting addressed to each Director
at his usual place of business or residence, or (ii) by delivery thereof in
hand or by telegram dispatched prepaid not less than twenty-four hours
before the date of the meeting, or (iii) orally or by telephone not less
than twenty-four hours before the date of the meeting.
Sec. 5. Waiver of Notice. Any requirement of notice of any meeting of the
Board of Directors shall be deemed satisfied as to any Director who waives
the same or whose attendance at such meeting constitutes a waiver under the
law.
Sec. 6. Quorum. A majority of the Board of Directors in office shall
constitute a quorum for the transaction of business, and a meeting of the
Board, whether a quorum be present or not, may be adjourned by those
present without the necessity of notifying any Director of any such
adjournment. Any business which could legally be transacted at any meeting
of the Board of Directors may be transacted at any adjournment thereof
without any new notification.
Sec. 7. Action without Meeting. Any action required or permitted to be
taken at any meeting of the Board of Directors may be taken without a
meeting if all Directors consent in writing to such action. Such written
consent shall be filed with the minutes of the Board of Directors.
Sec. 8. Powers. The Board of Directors shall manage the business of the
Corporation and shall have all the powers of the Corporation, except such
as by law, the Articles of Organization or by the By-Laws of the
Corporation are conferred upon or reserved to the stockholders.
Sec. 9. Execution of Corporation Documents and Instruments. The Board of
Directors shall designate the persons, in addition to those specifically
authorized elsewhere in these By-Laws, who shall be empowered on behalf of
the Corporation to sign checks, contracts, bids, deeds, releases,
securities devices, notes and other documents and instruments of the
Corporation, as well as the terms and conditions, if any, of such signing.
Sec. 10. Committees of the Board of Directors. The Board of Directors may
establish such committees, including an Executive Committee, consisting of
members elected by it from among its number as it deems advisable in the
conduct of the business of the Corporation and may delegate such functions
and duties to such committees from time to time as may be permitted by law.
Sec. 11. Remuneration of Outside Directors. Any Director who is entitled to
compensation from the Corporation as an officer or employee thereof shall
not receive any additional compensation for his services as a director. The
Board of Directors may provide for remuneration of all other Directors in
such amounts and in such manner as the Board may from time to time deem
advisable.
ARTICLE IV
OFFICERS
Sec. 1. Election of Officers. The Officers of the Corpora- tion shall be
elected by the Directors and shall include a President, a Treasurer, and a
Clerk, and, when deemed desirable by the Board of Directors, a Chairman of
the Board, one or more Vice-Presidents, one or more Assistant Treasurers, a
Secretary and one or more Assistant Secretaries, one or more Assistant
Clerks and such other officers as the Board of Directors may, from time to
time, deem necessary or advisable for the management of the affairs of the
Corporation. The President, Treasurer and Clerk shall be elected at the
Annual Meeting of Directors. All other officers may be elected at such
annual meeting or at any regular or special meeting of the Board of
Directors.
Sec. 2. Terms of Office. The President, the Treasurer and the Clerk shall
(unless sooner removed in accordance with law) holder office until the next
annual meeting of the Board of Directors and until their respective
successors are elected. All other officers shall (unless sooner removed in
accordance with law) hold their respective offices until the next annual
meeting and the election of the first mentioned officers thereat.
Sec. 3. Compensation of Officers, Employees and Agents. The officers,
employees and agents of the Corporation shall receive such compensation and
upon such terms as the Board of Directors may from time to time determine.
The determination of such compensation may be delegated by the Board of
Directors to (i) a Compensation Committee composed of members of the Board
who are elected to that Committee by it or appointed under is authorization
except that the determination of the compensation of the members of the
Compensation Committee cannot be delegated to that Committee, and (ii) to
such other individuals or committees to the extent and in the manner
permitted by the law.
Sec. 4. Vacancies. If any corporate office specified in this Article
becomes vacant for any reason, including resignation, the Board of
Directors may elect a successor who shall hold office for the unexpired
term unless sooner removed in accordance with law.
CHAIRMAN OF THE BOARD
Sec. 5. The Chairman of the Board shall preside at all meetings of the
stockholders and of the Board of Directors.
Sec. 6. The Chairman of the Board shall have the power, on behalf of the
Corporation, to sign contracts, deeds and releases and, with the Treasurer
or Assistant Treasurer, to sign or endorse security devices, notes, and,
when authorized by the Board of Directors, to sign or endorse such other
documents and instruments as the Board of directors may specify. The
Chairman of the Board shall also have such additional powers and duties as
the Board of Directors may from time to time assign him.
PRESIDENT
Sec. 7. In the absence or disability of the Chairman of the Board or at his
request, or if his office be vacant, the President shall preside at all
meetings of the stockholders and of the Board of Directors.
Sec. 8. The President shall have the power on behalf of the Corporation (i)
to sign contracts, deeds and releases and (ii) with the Treasurer or
Assistant Treasurer, to sign or endorse certificates of stock, security
devices, notes, and (iii) when authorized by the Board of Directors, to
sign or endorse such other documents and instruments as the Board of
Directors may specify. The President shall have also such additional powers
and duties as the Board of Directors may from time to time assign to him.
VICE PRESIDENTS
Sec. 9. Each of the Vice-Presidents shall bear such title and shall have
such powers and duties as may be assigned to him from time to time by the
Board of Directors.
TREASURER
Sec. 10. The Treasurer shall have the custody of the money, funds and
securities of the Corporation and shall have charge of its books and
keeping of its accounts. He shall make financial and accounting reports to
the Board of Directors at least quarterly and more often when requested by
it, and shall make a report at the annual meeting of stockholders. He shall
keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation and shall deposit all monies and other
valuable effects in the name and to the credit of the Corporation in such
depositories as may be designated from time to time by the Board of
Directors.
Sec. 11. The Treasurer shall, with the President or a duly authorized
Vice-President, sign all certificates of stock, and with the Chairman of
the Board or the President or a duly authorized Vice-President, sign or
endorse security devices and notes and, when authorized by the Board of
Directors, sign or endorse such other documents and instruments as the
Board may specify.
Sec. 12. The Treasurer shall also keep books for the recording of stock and
transfers thereof and the names and addresses of stockholders and shall be
transfer agent of the Corporation for the transfer of all certificates of
stock; provided that the Board of Directors may, with respect to the
transfer of shares of any class of the capital stock of the Corporation,
appoint any other person or corporation to act as transfer agent, and, when
the Board deems it desirable, any person or corporation to act as registrar
thereof.
Sec. 13. The Treasurer also shall have such additional powers and duties as
may be assigned to him from time to time by the Board of Directors.
ASSISTANT TREASURERS
Sec. 14. In the absence or disability of the Treasurer, or if his office be
vacant, the Assistant Treasurers, in the order of the seniority of their
election, shall have the powers and duties appertaining to the office of
Treasurer set forth in Sections 10 and 12 above and when duly authorized by
the Board of Directors shall perform all or any part of the duties set
forth in Sections 11 and 13 above. In addition to the foregoing, each of
the Assistant Treasurers shall have such other powers and duties as may be
assigned to him from time to time by the Board of Directors.
SECRETARY
Sec. 15. The Secretary shall attend all meetings of the Board of Directors
and the Executive Committee and shall record all votes and minutes of all
proceedings thereat in books to be kept for that purpose. When required by
law or these By-Laws, proper notice of meetings of the Board of Directors
shall be given by him. In addition to the foregoing, the Secretary shall
have such other powers and duties as may be assigned to him from time to
time by the Board of Directors.
ASSISTANT SECRETARIES
Sec. 16. In the absence or disability of the Secretary or at his request,
or if his office be vacant, the Assistant Secretaries, in the order of the
seniority of their elections, shall perform the duties herein assigned to
the Secretary. In addition to the foregoing, each Assistant Secretary shall
have such other powers and duties as may be assigned to him from time to
time by the Board of Directors.
CLERK
Sec. 17. The Clerk shall be a resident of the Commonwealth of Massachusetts
unless the Board of Directors shall appoint a Resident Agent as permitted
by law. He shall attend all meetings of stockholders and act as clerk
thereof and shall record all votes and minutes of all proceedings thereat
in books to be kept for that purpose. Such books shall be kept as provided
by law. When required by law or these By-Laws, proper notice shall be given
by him of all meetings of stockholders. In addition to the foregoing, the
Clerk shall have such other powers and duties as may be assigned to him
from time to time by the Board of Directors.
ASSISTANT CLERKS
Sec. 18. In the absence or disability of the Clerk or at his request, or if
his office be vacant, the Assistant Clerks, in the order of the seniority
of their election, shall perform the duties herein assigned to the Clerk.
In addition to the foregoing, each Assistant Clerk shall have such other
powers and duties as may be assigned to him from time to time by the Board
of Directors.
BONDS
Sec. 19. Any officer of the Corporation may be required to give a bond for
the faithful performance of his duties in such form and with such sureties
as the Board of Directors may direct.
ARTICLE V
INDEMNIFICATION
In order to induce directors, officers, employees and other agents
of the Corporation to serve as such and as partial consideration for such
service, the Corporation shall, to the fullest extent and under the
circumstances permitted by Massachusetts law, as amended from time to time,
indemnify any person serving or who has served as a director or officer of
the Corporation or a President or Vice President of any division of the
Corporation or any person serving or who has served at the Corporation's
request (1) as director or officer of a direct or indirect subsidiary of
the Corporation or another organization or (2) in any capacity with respect
to any employee benefit plan of the Corporation, and the Board of Directors
may, to the extent legally permissible, indemnify any person serving or who
has served as an employee or other agent of the Corporation or as an
employee or other agent or in any capacity with respect to any employee
benefit plan of a direct or indirect subsidiary of the Corporation or
another organization, against all liabilities and expenses, including
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and counsel fees, reasonably incurred by him or her in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, in which he or she may be involved
or with which he or she may be threatened, while serving or thereafter, by
reason of his or her being or having been such a director, officer,
trustee, partner, person serving with respect to an employee benefit plan,
employee or agent, except (unless other- wise permitted by Massachusetts
law) with respect to any matter as to which he or she shall have been
adjudicated in any proceeding not have acted in good faith in the
reasonable belief that his or her action was in the best interest of the
Corporation or, to the extent such matter relates to service with respect
to an employee benefit plan, in the best interests of the participants or
beneficiaries of such employee benefit plan. Expenses, including without
limitation counsel fees, reasonably incurred by any such director, officer,
person serving with respect to any employee benefit plan, employee or agent
in connection with the defense or disposition of any such action, suit or
other proceeding may be paid from time to time by the Corporation in
advance of the final disposition thereof upon receipt of an undertaking by
such individual to repay the amounts so paid to the Corporation if it shall
be adjudicated that indemnification for such expenses is not authorized
under this Article. The right of indemnification hereby provided shall not
be exclusive of or affect any other rights to which any such director,
officer, person serving with respect to any employee benefit plan, employee
or agent may be entitled. Nothing contained in this Article shall affect
any other rights to indemnification to which such directors, officers,
persons serving with respect to an employee benefit plan, employees or
agents may be entitled by contract or otherwise under law. The Board of
Directors is authorized to enter into agreements regarding indemnification
which are not inconsistent with the provisions of this Article.
ARTICLE VI
STOCK
Sec. 1. Holders to be Recognized. The Corporation shall be entitled to
treat the record holder of any share or shares of stock as the holder in
fact thereof and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other
person except as may be otherwise expressly provided by law.
Sec. 2. Form of Stock Certificates. All certificates of stock shall be in
such form and contain such information as shall be required by law and be
signed, either manually or by facsimile, as hereinbefore provided.
Sec. 3. Replacement of Certificates Lost, Etc. In case of the alleged loss,
destruction, mutilation, or wrongful taking of a certificate of stock, a
new certificate may be issued in place thereof, upon such terms and
conditions as the Board of Directors may prescribe.
Sec. 4. Fixing Date for Determination of Stockholders of Record. The Board
of Directors may fix in advance a time, which shall be not more than sixty
days before the date of any meeting of stockholders or the date for the
payment of any dividend or the making of any distribution to stockholders
or the last day on which the consent or dissent of stockholders may be
effectively expressed for any purpose, as the record date for determining
the stockholders having the right to notice of and to vote at such meeting
and any adjournment thereof or the right to receive such dividend or
distribution or the right to give such consent or dissent, and in such case
only stockholders of record on such record date shall have such right,
notwithstanding any transfer of stock on the books of the Corporation after
the record date; or without fixing such record date the Board of Directors
may for any of such purposes close the transfer books for all or any part
of such period.
Sec. 5. Restrictions on Transfer. The Board of Directors may impose
restrictions on transfer of securities of the Corporation pursuant to the
Rights Agreement dated as of September 7, 1988 by and between the
Corporation and The Connecticut Bank and Trust Company, N.A. (East
Hartford, Connecticut), as and to the extent required by such Rights
Agreement, as amended from time to time.
Sec. 6. Massachusetts Control Share Acquisition Act. Until such time as
this Section 6, Article VI shall be repealed or the By-Laws otherwise shall
be amended to provide otherwise, in each case in accordance with Article
VIII of the By-Laws, the provisions of Chapter 110D of the Massachusetts
General Laws ("Chapter 110D") shall not apply to "control share
acquisitions" of the Corporation within the meaning of Chapter 110D.
ARTICLE VII
SEAL AND FISCAL YEAR
Sec. 1. Seal. The seal of the Corporation shall have inscribed thereon the
name of the Corporation and the words "INCORPORATED 1931 MASSACHUSETTS".
The corporate seal may be used by causing it or a facsimile thereof to be
impressed or affixed to any document.
Sec. 2. Fiscal Year. The fiscal year of the Corporation shall begin on the
first day of January of each year and end on the thirty-first day of
December.
ARTICLE VIII
AMENDMENT OF BY-LAWS
Sec. 1. Any of these By-Laws may be added to, altered, amended or repealed
by the stockholders of the Corporation entitled to vote on the matter at
any annual or special meeting of stockholders. The nature or substance of
the proposed addition, alteration, amendment or repeal shall be stated in
the notice of the meeting.
Sec. 2. The Board of Directors shall also have the power to make, amend or
repeal the By-Laws of the Corporation in whole or in part subject to
amendment or repeal by stockholders as provided by law.
EXHIBIT 10(a)
FOURTH AMENDMENT TO
STANHOME INC. SUPPLEMENTAL PENSION PLAN
WHEREAS, Stanhome Inc., a Massachusetts corporation (the
"Company"), has heretofore adopted and maintains a supplemental pension
plan for the benefit of certain of its employees designated the "Stanhome
Inc. Supplemental Pension Plan" (the "Plan"); and
WHEREAS, the Company desires to amend the Plan in certain
respects;
NOW, THEREFORE, pursuant to the power of amendment contained in
Section 5 of the Plan, the Plan is amended effective January 1, 1998 in the
following respects:
1. Section 2 of the Plan is amended to substitute the word "terms"
for the phrase "penultimate three sentences" as such phrase appears three
times therein.
2. A new section is added at the end of the Plan to read as
follows:
13. Termination of Qualified Plan. In the event the
Qualified Plan is terminated by the Company, all references in
this Plan to the Qualified Plan shall be treated as references to
such plan as in effect immediately prior to its termination. In
addition, the following special provisions shall apply:
(i) Notwithstanding the first paragraph of
Section 3 of this Plan, a Participant's Supplemental
Pension shall be paid, subject to the second paragraph of
Section 3 of this Plan, in the same form and at the same
time, with any survivor benefit payable to the same
Beneficiary, as the Pension payable to the Participant
under the annuity contract purchased to satisfy the
obligation to provide benefits to the Participant under
the Qualified Plan.
(ii) For purposes of Section 7 of this Plan, the
"Committee" shall be comprised of the individuals who
constituted the Committee immediately prior to the
termination of the Qualified Plan. Thereafter, subject to
the second paragraph of Section 7 of the Plan (relating
to composition of the Committee upon the occurrence of a
Change in Control), the board of directors of the Company
shall have the same power to remove or appoint members of
the Committee, and to fill vacancies thereon, as
described in Section 11.1 of the Qualified Plan (as in
effect immediately prior to the termination thereof).
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officers this 6th day of April, 1998.
STANHOME INC.
By: /s/ Allan Keirstead
----------------------------
Title: Executive Vice President
Chief Administrative and
Financial Officer
ATTEST:
/s/ Mark I. Cohen
- ---------------------------
Title: Assistant Secretary
EXHIBIT 10(b)
CHANGE IN CONTROL AGREEMENT
AGREEMENT, effective as of January 1, 1998 (the "Effective Date")
between Stanhome Inc., a Massachusetts corporation (the "Company") and
Eugene Freedman (the "Employee").
WHEREAS, the Employee has been employed by Enesco Corporation, a
wholly-owned subsidiary of the Company, since 1959 and is, as of the
effective date of this Agreement, the Chairman and Chief Executive Officer
of Enesco Corporation (the "Employer"); and
WHEREAS, the parties deem it to be in the best interest of both the
Employee, the Employer and the Company for the Company to continue (as in
his recently expired employment agreement dated June 1, 1983, as amended)
to provide a severance payment in the event his employment terminates under
certain circumstances hereinafter described,
NOW, THEREFORE, in consideration of the mutual promises, covenants
and conditions and of the agreements hereinafter contained, the Company and
the Employee agree as follows:
1. Severance Benefit.
(a) Upon the termination of the Employee's employment by the Employer
for any reason other than death, Disability, termination for
Substantial Cause, or voluntary termination without Good Reason
within two years or less after a Change in Control as defined
below, the Company will pay him as a severance benefit an amount
equal to three times the annual rate of his Total Compensation at
the time of such termination.
(b) The Employee's employment is deemed to be terminated following a
Change in Control if the Employee's employment terminates prior to
a Change in Control at the direction of a person (as defined in
paragraph 4(a)(i) below) who has entered into an agreement with
the Company to effectuate a Change in Control and such employment
terminates for any other reason other than death, Disability,
termination for Substantial Cause, or voluntary termination
without Good Reason and the circumstances constituting Good Reason
occur at the direction of such person.
(c) Notwithstanding any other provisions of this Agreement, in the
event that any payment or benefit received by an Employee in
connection with a Change in Control or the termination of the
Employee's employment (whether pursuant to the terms of this or
any other plan, arrangement or agreement with the Company, the
Employer, any Person (as defined in Section 4(a)(i) of this
Agreement) whose actions result in a Change in Control or any
Person affiliated with the Company or such Person) (all such
payments and benefits, including the severance benefit, being
hereinafter called "Total Payments") would be subject (in whole or
in part), to the excise tax imposed under Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") (the
"Excise Tax"), then the severance benefit under this Agreement
shall be reduced to the extent necessary so that no portion of the
Total Payments is subject to the Excise Tax (after taking into
account any reduction in the Total Payments provided by reason of
Section 280G of the Code in such other plan, arrangement or
agreement) if (i) the net amount of such Total Payments, as so
reduced, (and after deduction of the net amount of federal, state
and local income tax on such reduced Total Payments) is greater
than (ii) the excess of (A) the net amount of such Total Payments,
without reduction (but after deduction of the net amount of
federal, state and local income tax on such Total Payments), over
(B) the amount of Excise Tax to which the Employee would be
subject in respect of such Total Payments. For purposes of
determining whether and the extent to which the Total Payments
will be subject to the Excise Tax, (A) no portion of the Total
Payments, the receipt or enjoyment of which the Employee shall
have effectively waived in writing prior to the date of
termination of the Employee's employment, shall be taken into
account, (B) no portion of the Total Payments shall be taken into
account which in the opinion of tax counsel selected by the
Company and reasonably acceptable to the Employee does not
constitute a "parachute payment" within the meaning of Section
280G(b) (2) of the Code, (including by reason of Section 280G(b)
(4) (A) of the Code) and, in calculating the Excise Tax, no
portion of such Total Payments shall be taken into account which
constitutes reasonable compensation for services actually
rendered, within the meaning of Section 280G(b) (4) (B) of the
Code, in excess of the base amount (within the meaning of Section
280G(b) (3) of the Code) allocable to such reasonable
compensation, and (C) the value of any non-cash benefit or any
deferred payment or benefit included in the Total Payments shall
be determined by the Company in accordance with the principles of
Sections 280G(d) (3) and (4) of the Code. Prior to the payment
date set forth in subsection 1(a) hereof, the Company shall
provide the Employee with its calculation of the amounts referred
to in this subsection and such supporting materials as are
reasonably necessary for the Employee to evaluate the Company's
calculations. If the Employee objects to the Company's
calculations, the Company shall pay to the Employee such portion
of the severance benefit (up to 100% thereof) as the Employee
determines is necessary to result in the Employee receiving the
greater of clauses (i) and (ii) of this subsection.
2. Payment. The severance benefit shall be payable in a lump sum
on or before the date of the Employee's termination.
3. Term. The term of this Agreement shall be a period beginning
on the Effective Date and ending on the first to occur of (i) the
Employee's death, disability, retirement, termination for
substantial cause or voluntary termination without good reason; or
(ii) three years after written notification by the Employer of its
intention to terminate. All obligations and rights arising under
paragraph 1 at the time of the termination of this Agreement shall
survive such termination.
4. Change In Control; Potential Change In Control
(a) As used herein, "Change in Control" of the Company means a Change
in Control of a nature that would, in the opinion of Company
counsel, be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); provided
that, without limitation, such a Change in Control shall be deemed
to have occurred if
(i) any "Person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act) (other than the Company or any subsidiary of
the Company, any trustee or fiduciary holding securities under an
employee benefit plan of the Company or any of its subsidiaries or
a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their
ownership of the stock of the Company) becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing
twenty-five percent (25%) or more of the combined voting power of
the Company's then outstanding securities; or
(ii) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board of Directors
of the Company and any new director (other than a director
designated by a Person who has entered into an agreement with the
Company to effect a transaction described in Clause (i), (iii) or
(iv) of this paragraph) whose election by the Board or nomination
for election by the Company's stockholders was approved by a vote
of at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved
cease for any reason to constitute a majority thereof; or
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other
than (A) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving
entity), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company, at least 75% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person acquires 25%
or more of the combined voting power of the Company's then
outstanding securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the
Company's assets.
Notwithstanding the foregoing, no Change in Control of the
Company shall be deemed to have occurred if Employee is a member
of a management group which first announces a proposal which
constitutes a Potential Change in Control, unless otherwise
determined by a majority of the Board of Directors who are not
members of such management group.
(b) A "Potential Change in Control" shall be deemed to have occurred
if the conditions set forth in any one of the following paragraphs
shall have been satisfied:
(i) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control;
(ii) the Company or any Person publicly announces an intention to
take or to consider taking actions which, if consummated, would
constitute a Change in Control;
(iii) any Person who is or becomes the beneficial owner, directly
or indirectly, of securities of the Company representing 10% or
more of the combined voting power of the Company's then outstanding
securities, increases such Person's beneficial ownership of such
securities by 5% or more over the percentage so owned by such
Person on the date hereof; or
(iv) the Board of Directors adopts a resolution to the effect that,
for purposes of this Agreement, a Potential Change in Control has
occurred.
5. Total Compensation. As used herein, "Total Compensation" means
the Employee's annual base salary rate at the time of termination
plus any bonus to which he is entitled under the Company's
Management Incentive Plan, or its successor or substitute plan or
policy. For purposes of the calculation to be made under paragraph
1(a) above, the Employee's annual base salary shall be the rate at
the time of termination but not less than the rate in effect
immediately prior to the Change in Control, and the bonus shall be
equal to 100% of the target bonus payable to the Employee under the
Company's Management Incentive Plan for the year in which his
termination occurs, but not less than 100% of the target bonus for
the year in which the Change of Control occurred.
6. Disability. As used herein, "Disability" means a medically
determinable physical or mental condition which renders the
Employee incapable of performing the work for which he was employed
at his normal place of employment for at least six consecutive
months. A termination by reason of Disability shall not be deemed
to have occurred unless the Employee fails to return to work at his
normal place of employment within thirty (30) days after receiving
written notice of termination from the Employer.
7. Substantial Cause. As used herein, "Substantial Cause" means (i)
the willful and continued failure by the Employee to substantially
perform the Employee's duties with the Employer (other than any
such failure resulting from the Employee's incapacity due to
physical or mental illness or any such actual or anticipated
failure after the issuance of a notice of termination for Good
Reason by the Employee) after a written demand for substantial
performance is delivered to the Employee by the Board, which demand
specifically identifies the manner in which the Board believes that
the Employee has not substantially performed the Employee's duties,
or (ii) the willful engaging by the Employee in conduct which is
demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise. For purposes of clauses (i)
and (ii) of this definition, no act, or failure to act, on the
Employee's part shall be deemed "willful" unless done, or omitted
to be done, by the Employee not in good faith and without
reasonable belief that the Employee's act, or failure to act, was
in the best interest of the Company and the Employer.
8. Good Reason. A voluntary termination under any of the following
circumstances shall be considered to be for "Good Reason":
(a) assignment to the Employee of duties or title inconsistent with his
status as an officer, or removal of the Employee from involvement
in management decision-making functions consistent with his prior
experience with the Employer;
(b) failure to continue the Employee's participation in the Company's
Management Incentive Plan or in any successor or substitute plan or
policy and, if such termination follows a Change in Control,
equivalent to the management incentive plan as in effect
immediately prior to the Change in Control;
(c) failure to pay when due the Employee's base salary, or any
installment of deferred compensation when due, or a reduction in
the Employee's base salary, or a failure to continue in effect for
the Employee's benefit fringe benefits in which he now
participates, including retirement plans, health and insurance
plans, vacation plans, and automobile programs, or the taking of
any action which materially reduces such benefits, provided that,
unless such reduction in base salary or failure to continue
benefits occurs within two years after a Change in Control, it will
not be considered Good Reason if taken in connection with a general
reduction applicable to all officers;
(d) assignment of the Employee to any location other than within fifty
(50) miles of his present office location; or
(e) within two years after a Change in Control, a requirement that the
Employee travel away from his office location more than 25% of the
working days in the year, provided that Employee may be required to
increase his travel by 10% of his working days if the Employee had
been travelling more than 15% of his working days at the time of
the Change in Control. Working days for these purposes shall
exclude vacation days.
9. Fringe Benefits. For a period of thirty six (36) months (the
"Extended Period") following any termination giving rise to
benefits under this Agreement, the Employee shall continue to
participate fully in those fringe benefits of the Employer in which
he is a participant prior to such termination, including the group
insurance programs (i.e. medical insurance, including dependent
coverage; life insurance; accidental death and dismemberment
insurance), but excluding the Employer's automobile program;
provided, however, that if the Employee is barred from
participating in a particular plan or arrangement under such
program's terms, the Company shall arrange to provide the Employee
for the Extended Period with a substitute benefit substantially
equivalent to the affected plan or arrangement. The coverage set
forth in the preceding sentence shall be subject only to such
periodic review as may be required by the group insurance carrier
to determine whether he has become a participant in a comparable
program of another employer, in which case continuance or
discontinuance of coverage will be determined in accordance with
the terms and conditions of the group insurance policy and the
benefits payable under this provision will be secondary to the
comparable program of the other employer.
All benefits covered by this paragraph 9 shall be provided
at no cost to the Employee and subject to the benefit limitation
provision of paragraph 1.
10. Legal Fees. In the event legal fees and expenses must be
incurred by the Employee in seeking to obtain or enforce any right
or benefit provided by this Agreement, the Company shall reimburse
the Employee for such cost, provided, however, that fees and
expenses incurred in connection with that portion of a claim that
is determined by a court or arbitrator to be frivolous shall not be
paid by the Company.
11. Mitigation. Inasmuch as the severance benefit provided for in
this Agreement is in recognition of past services rendered to the
Employer, the Employee will not be required to mitigate the amount
of any payment provided for by this Agreement by seeking other
employment nor shall the amount of any payment so provided be
reduced by any compensation earned by the Employee as the result of
employment by another employer after the date of termination or
otherwise.
12. Other Compensation. The lump sum severance benefit payable
pursuant to this Agreement shall be in addition to and not in
substitution for any amounts of compensation accrued in favor of
the Employee up to the date of termination, including a pro-rated
portion of any incentive compensation to which he is entitled,
based upon the number of days of employment during such year prior
to such termination date, and shall also be in addition to and not
in substitution for any amount or benefit to which the Employee may
otherwise be entitled under any insurance policy, profit-sharing
plan, employee stock ownership plan, stock option plan or written
employment contract between the Employee and the Employer, or the
Company, or any regular or supplemental retirement plan or contract
maintained by the Employer or the Company on the Employee's behalf.
Notwithstanding the foregoing, the benefits payable hereunder shall
be in substitution for any account or benefit to which the Employee
may otherwise be entitled under (i) the Employer's regular
severance policy; or (ii) any other severance agreement between the
Employee and the Employer.
13. Confidential Information. The Employee agrees that he will not
use or disclose to anyone (other than for the benefit of the
Employer or the Company) either during the term of his employment
or at any time thereafter, any confidential information obtained by
or made known to him while employed by the Employer. As used
herein, "Confidential Information" includes, but is not limited to,
trade secrets of the Employer or the Company or of any other
organization associated or affiliated with or owned by or owning
the Employer or the Company.
14. Covenant Not to Proselyte. For a period of thirty-six (36)
months after termination giving rise to benefits under this
Agreement, the Employee agrees that he will not attempt, directly
or indirectly, to induce any employee of the Employer or the
Company to terminate his or her employment with the Employer or the
Company.
15. Entirety of Agreement and Amendment. This Agreement constitutes
the entire Agreement between the parties and no amendment, waiver,
alteration or modification of this Agreement shall be valid unless
in each instance such amendment, waiver, alteration or modification
is agreed to in writing by both parties. Mere delay by the Employee
in exercising any rights under this Agreement will in no event be
deemed a waiver of such rights. This Agreement supersedes all
previous severance agreements that may have been made between the
Company or the Employer and the Employee.
16. Notices and Statements. All notices and statements hereunder
shall be in writing, and, if directed to the Company, shall be
deemed given if deposited postage prepaid in the U.S. Mail or
delivered to the Company, Attention: President at 333 Western
Avenue, Westfield, Massachusetts, 01085, or, if directed to the
Employee, shall be deemed given if delivered to him personally or
deposited postage prepaid in the U.S. Mail addressed to him at his
then current personal residence as it appears on the Company
records, or to such other addresses as either party may hereafter
designate in writing for the purpose. Written notice of termination
of employment by the Employer or the Employee after a Change in
Control must specify the provision(s) in the Agreement relied upon
and detail the facts and circumstances alleged as the basis for
termination of employment. Any such notice shall be effective
thirty (30) days after receipt by the appropriate party (except for
termination for Substantial Cause).
17. Applicable Law. To the extent permitted by law, this Agreement
shall be deemed to have been made in the Commonwealth of
Massachusetts, and its validity, construction and performance shall
be determined in accordance with the laws of said Commonwealth.
18. Assignment. Neither party may assign this Agreement or any of
the rights or duties hereunder, except that the Company may assign
any of its rights and duties under this Agreement to (1) a
successor or assignee of all or substantially all of the business
or assets of the Company, or (2) any corporation with which the
Company merges or with which the Company may be consolidated,
provided that any such successor or assignee or surviving entity of
a merger or consolidation must expressly assume in writing such
rights, duties and obligations of the Company, and except further
that the rights and obligations of the Employee under this
Agreement shall inure to the benefit of and be enforceable by the
Employee's personal or legal representative, executor, etc.
19. Not an Employment Contract. The parties agree that this
Agreement is not intended as, and is not, an employment contract
with the Company or the Employer. The Employer may terminate the
Employee's employment at any time during the term of this Agreement
subject to providing such benefits as may be specified in the
Agreement.
20. Arbitration. At the election of either the Company or the
Employee, all controversies in connection with, or related to, any
alleged breach of this Agreement or any of its provisions requiring
ongoing action or interpretation, including, without limitation,
injunctive relief, shall be settled by binding arbitration in
Boston, Massachusetts in accordance with the rules of the American
Arbitration Association then in effect. Company or Employee may
demand arbitration upon ten (10) days notice to the other. The
arbitration panel shall consist of three (3) members, one to be the
Employee's nominee, one to be the Company's nominee and a third to
be selected by the other two. In the event the two arbitrators
cannot agree on a third within seven (7) days after the demand for
arbitration, the third shall be chosen by the American Arbitration
Association in Boston, Massachusetts pursuant to its rules and
regulations. In the event of the death or incapacity of Employee,
his duly authorized executor or representative or its nominee shall
be or choose one arbitrator in his stead. Judgment upon any award,
including injunctive relief, rendered may be entered in any court
having jurisdiction thereof. The fees and expenses of the
arbitrators shall be borne by the parties hereto in proportion to
the questions answered adversely to their several questions and
interpretations, as determined by the arbitrators, and the parties
agree that the findings of a majority of such three (3) arbitrators
shall be conclusive on them, and their respective heirs, successors
and assigns, executors, administrators, and personal
representatives.
21. Invalidity of any Provision. If any provision of this Agreement
or the application thereof to any party or circumstance is held
invalid or unenforceable, in whole or in part, the remaining
provisions of this Agreement and the application of such provisions
to the other party or circumstances will not be affected thereby,
the provisions of this Agreement being severable or modifiable in
any such instance.
IN WITNESS WHEREOF, this Agreement has been executed by a duly
authorized officer of the Company and by the Employee.
Dated: May 1, 1998
STANHOME INC.
by /s/ H. L. Tower
_____________________
H. L. Tower
Chairman and C.E.O.
/s/ Eugene Freedman
_______________________
(Employee)
EXHIBIT 10(c)
RELEASE AGREEMENT
This Release Agreement is entered into by and between John J. Dur,
a resident of Henniker, New Hampshire (hereinafter referred to as
"Associate"), and Stanhome Inc., a Massachusetts corporation having a
principal place of business at 333 Western Avenue, Westfield, Massachusetts
(hereinafter referred to as the "Company").
In consideration of the promises, conditions and representations
set forth herein, the severance payments being provided to Associate by the
Company as set forth below, and other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged by Associate and
the Company (hereinafter sometimes referred to collectively as the
"Parties"), the Parties hereby agree as follows:
1. Termination Date. Associate's employment with the Company and
its subsidiaries shall terminate involuntarily without cause as of the
close of business on April 30, 1998 (the "Termination Date").
2. Continuation of Salary and Benefits After Termination. Prior to
the Termination Date, Associate's salary and his participation in all
compensation and benefit plans and programs in which he currently is a
participant or from which he currently receives benefits will remain in
effect on the same terms as are in effect as of the effective date of this
Agreement.
As of the Termination Date, Associate's salary and any other
compensation and benefits he receives from the Company will terminate,
other than compensation and/or benefits to which he continues to be
entitled (a) pursuant to the terms of this Agreement, (b) as a matter of
U.S. federal or state law, (c) pursuant to the agreements between the
Parties to this Agreement listed below, or (d) pursuant to the terms of the
compensation or benefit plans or programs in which he continues to be a
participant or has a right to receive such compensation or benefits after
the Termination Date listed below.
The agreements and compensation and benefit plans and programs
referred to herein are as follows:
o Medical and Life Employee Group Insurance Plan under Policy
#2232182 issued by Connecticut General Life Insurance Company
to Stanhome Inc.
o Accidental Death and Dismemberment Group Insurance Plan under
policy issued by AIG Insurance Company to Stanhome Inc.
o Stanhome Pension Plan and related Trust Agreement dated January
1, 1980, as amended
o Stanhome Supplemental Pension Plan and related Trust Agreement
dated January 1, 1995, as amended
o Stanhome Investment Savings Plan and related Trust Agreement
dated January 1, 1993, as amended
o Stanhome Supplemental Investment Savings Plan and related Trust
Agreement dated January 1, 1995, as amended
o Stanhome Paysop Plan and related Trust Agreement dated October
15, 1985, as amended
o Stanhome Inc. 1991 Stock Option Plan
o Stanhome Inc. 1996 Stock Option Plan
o Management Incentive Plan
o Change in Control Agreement effective January 1, 1996
o Stanhome Matching Gifts Program
With respect to those Company compensation and benefit plans and programs
in which Associate will continue to participate subsequent to the
Termination Date, Associate's participation in such compensation and
benefit plans and programs will be on terms no less favorable than in
effect as of the effective date of this Agreement. Furthermore, the Company
and Associate agree that after his Termination Date he will not become
entitled to any increased benefits under such compensation and benefit
plans and programs, but the benefits payable by the Company to Associate
thereunder shall be based upon his length of service and compensation level
as of the Termination Date. The payments described in this Agreement are
made in recognition of the Associate's efforts on behalf of the Company and
shall not be reduced in the event the Associate is paid any compensation by
a purchaser or by any payments to Tozai Strategists by the Company.
3. Consideration.
A. Severance Payments. Following the Termination Date, and for a
period of twenty-four (24) consecutive months commencing May 1, 1998 and
ending on April 30, 2000 (the "Severance Period"), Associate will receive
severance payments equal to $23,800.00 per month. Payment will be made on
the 15th day of each such month, commencing May 15, 1998. Such payments,
based on Associate's current base salary, are in addition to anything of
value to which Associate is already entitled or provided pursuant to this
Agreement, any other agreement between the Parties or other Company plan or
program. Moreover, such severance payments are not intended to include any
unused, accrued vacation time to which Associate may be entitled or any
other accrued but unpaid compensation or benefit to which Associate may be
entitled under any Company compensation or benefit plan or program.
B. Stock Options. Upon the Termination Date, the Company will
promptly deliver to Associate appropriate amendments to Associate's
Certificates of Grant relating to the Company's 1991 Stock Option Plans
providing that the options under such plan shall be exercisable by the
Associate or his guardian or legal representative(s) during the three-year
period following his termination of employment as to the additional number
of shares of the Company's common stock, par value $.125 per share, which
the Associate would have become entitled to purchase during such three-year
period if the Associate's employment had not terminated.
C. Additional Payments. During the Severance Period, Associate
will be paid an additional $1,400. each month of said period at the same
time as he is paid the Severance Payments provided for in paragraph 3.A of
this Agreement. These additional payments represent the Associate's present
car allowance ($1,400. per month). Associate's present annual $5,000.
medical supplementary bonus and annual $5,000. financial planning bonus
will be paid in February 1999 and February 2000.
D. Bonus. Associate acknowledges receipt of payment by the Company
to him of the Special MIP bonus payment due him under Paragraph 2(A) of the
Letter Agreement dated July 9, 1997 between the Company and Associate in
full satisfaction of the Company's obligation to Associate under said
Paragraph. In the event that the criteria are met for a bonus award to
Associate under the 1998 Management Incentive Plan, Associate will be paid
the pro-rata portion of the bonus award (for January through April of 1998)
by March 15, 1999. The Special MIP bonus and 1998 MIP bonus, if any, will
be included in the Final Average Earnings calculation for the Supplemental
Pension Plan. In addition, if the Special MIP bonus or 1998 MIP Bonus are
considered compensation for French tax purposes, such French taxes will be
covered by the Company's Expatriate Policy.
E. Insurance. Associate will continue to be covered by the group
medical insurance coverage as set forth in the Stanhome Group Insurance
Plan booklet dated December, 1994 (the "Plan") under the policy issued by
Connecticut General Life Insurance Company (Policy #2232182) regardless of
the location of Associate's eventual residence. Should the Plan be
terminated in the future, the Company and its successors and assigns, as
applicable, agree to provide Associate with coverage that is substantially
the same as provided in the Plan. This group medical insurance coverage
will cease effective April 30, 2000, or at such earlier time as Associate
becomes eligible for coverage under a new employer's medical plan.
During the Severance Period, the Company, its successors and
assigns, will contribute 80% of the cost of the personal and dependent
coverage and Associate will contribute 20% of such cost, which percentages
shall be adjusted as necessary to be the same percentages as may be in
effect for the cost of medical coverage of active employees of the Company
and its successors and assigns. The continued medical coverage, as set
forth in the Plan and the guaranteed contributions outlined above toward
both personal coverage and dependent coverage, is binding upon and may not
be revoked by the Company or any of its successors or assigns and will
continue until coverage ceases as outlined above provided that Associate
has paid his portion of the premium. In the event that Associate fails to
pay his portion of the premium on time, the Company will pay the full
premium and notify Associate of his failure to make timely payment.
Associate shall have ten (10) days from his receipt of such notice to cure
his failure to pay by repaying to the Company the amount advanced by the
Company on his behalf, and the Company shall not allow his insurance
coverage to be cancelled or to lapse until such ten-day period shall have
expired.
The Company, its successors and assigns, shall continue to provide
at its sole expense the life insurance ($572,000. Death Benefit) and
accidental death and dismemberment employee insurance coverage, as
presently in effect, to the Associate during the Severance Period, or until
Associate becomes eligible for a new employer's insurance coverage, if
earlier.
The Termination Date shall be treated as an event under the
Consolidated Budget Reconciliation Act of 1985 (COBRA), and Associate will
receive COBRA information under separate cover.
F. Outplacement. The Company also will provide Associate with
outplacement services as mutually agreed upon between the Parties, provided
such outplacement services commence within twelve months from the
Termination Date.
G. Repatriation. The Associate, having repatriated to the United
States prior to the Termination Date, remains entitled to any benefits
under the Company Relocation Program, which have not been paid as of the
date of this Agreement.
H. References. The Company will provide references for Associate in
accordance with its policy.
I. Taxes. Tax issues relating to the Associate's employment as an
Expatriate will be the responsibility of the Company in accordance with the
Company's Expatriate Policy; but applicable taxes on all payments made to
the Associate or his estate following the Termination Date (except for any
1998 MIP bonus to the extent considered part of 1998 compensation for
French tax purposes) will be the sole responsibility of Associate (provided
that the Company shall deduct applicable federal and state withholding
income taxes on such payments) and will not be tax equalized.
The Company will pay for Associate's tax preparation and advice for
calendar years 1997 and 1998 and Associate will be entitled to any foreign
tax credits that remain unused after the final tax equalization payment is
made.
J. Vacation and Vacation Pay. Your unused vacation for calendar
years 1997 and 1998 was paid to you in a lump sum on March 15, 1998.
K. French Termination Benefits. Any severance payments or other
benefits required to be paid to Associate under the applicable laws or
regulations of France by reason of Associate's termination from the Company
or any of its affiliated companies shall be deducted from the payments and
benefits to be paid or provided to Associate pursuant to this Agreement.
L. Pension. Associate's pension will be calculated as of his
Termination Date and will include the additional five years of service and
five years of age as part of the previously announced Stanhome
restructuring initiative. The Final Average Earnings on which Associate's
pension will be determined will include his 1997 and 1998 MIP award (if
any). The incremental pension benefit generated by the inclusion of the
1997 and any 1998 MIP award will be made a part of his non-qualified
pension.
M. Resignation from French Branch. The Associate declares that he
has submitted his written resignation from the French branch of Stanhome
Worldwide Direct Selling Group, Inc. effective on February 27, 1998, a copy
of which is attached as Annex A.
4. Release.
A. From Associate to the Company. In exchange for the compensation
described in Paragraph 2 and other good and valuable consideration,
Associate hereby agrees that he, his representatives, heirs, executors,
administrators, agents, estate, successors and assigns release and forever
discharge the Company and its affiliates and their successors,
predecessors, assigns, directors, shareholders, officers, employees and/or
agents, both individually and in their official capacities with the Company
and/or its affiliates from any and all actions, causes of action, suits,
claims, demands, obligations, costs, judgments, complaints, contracts,
agreements, promises, debts, damages, and liabilities of whatever kind or
nature, at law, in equity or otherwise, whether existing or contingent,
known or unknown, relating to any matter, cause, or thing whatsoever
arising on or prior to the date of this Agreement, including but not
limited to rights or claims relating in any way to Associate's employment
with or his termination of employment from the Company, including but not
limited to claims arising under common law, contract, implied contract,
public policy, tort, personal injury, or any federal, state or local
statute, law, constitution, ordinance, regulation or order, including but
not limited to the Age Discrimination in Employment Act, as amended, 29
U.S.C. Section 621, et seq., Title VII of the Civil Rights Act, The
Americans with Disabilities Act, The Massachusetts Fair Employment
Practices Act (Ch. 151C of MA statutes), the New Hampshire Employment Law
(Ch. 275 of NH statutes), and/or any other applicable employment related
foreign or U.S. federal, state or local statute, law, ordinance, regulation
or order; provided, however, that nothing contained in this Paragraph 4
shall limit Associate's right to enforce the terms or sue for breach of (i)
this Agreement, any agreement listed in Paragraph 2 of this Agreement, or
any other agreement whatsoever unrelated to compensation and severance
matters between the Parties hereto whether or not such agreement is listed
in Paragraph 2 of this Agreement, (ii) any compensation or benefit plan or
program in which he remains a participant or beneficiary beyond the
Termination Date in accordance with the provisions of Paragraph 2, or (iii)
Associate's right to indemnification as an officer or director of the
Company and/or its affiliates. This release is intended by Associate to be
a general release as to the claims described herein.
B. From the Company to Associate. In exchange for Associate's
release of the Company and the covenants made by Associate in Paragraph 8
hereof, the Company hereby agrees that it and its affiliates and
subsidiaries, and their successors, predecessors, assigns, directors,
shareholders, officers, employees and agents, both individually and in
their official capacities with the Company and its affiliates, attorneys,
and agents release and forever discharge Associate, his representatives,
heirs, executors, administrators, agents, attorneys, estate, successors and
assigns, from any and all actions, causes of action, suits, claims,
demands, obligations, costs, judgments, complaints, contracts, agreements,
promises, debts, damages and liabilities of whatever kind or nature, at
law, in equity or otherwise, whether existing or contingent, known or
unknown, relating to any matter, cause, or thing whatsoever arising on or
prior to the date of this Agreement, including but not limited to rights or
claims relating in any way to Associate's employment with or his
termination of employment from the Company (other than those involving
fraud, gross negligence or gross willful misconduct) disclosed on the books
or records of the Worldwide Direct Selling Group or disclosed to the
Company's representatives during preparation for the Company's sale of that
Group, provided, however, that nothing contained in this Paragraph 4 shall
limit the Company's right to enforce the terms or sue for breach of (i)
this Agreement, any agreement listed in Paragraph 2 of this Agreement, or
any other agreement whatsoever unrelated to compensation and severance
matters between the Parties hereto whether or not such agreement is listed
in Paragraph 2 of this Agreement, or (ii) any compensation or benefit plan
or program in which he remains a participant or beneficiary beyond the
Termination Date in accordance with the provisions of Paragraph 2. This
release is intended by the Company to be a general release as to the claims
described herein.
5. Indemnification. To the extent that Associate is not otherwise
indemnified under a Company by-law or insurance policy, the Company will
indemnify and hold harmless Associate against all liabilities and expenses,
including amounts paid in satisfaction of judgments, in compromise or as
fines and penalties, and counsel fees, reasonably incurred by Associate in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, in which Associate may be involved
or which Associate may be threatened arising out of actions taken by
Associate in his capacity as an officer, director, employee, agent or
representative of the Company or a direct or indirect subsidiary of the
Company or, at the Company's request, another organization, or in any
capacity with any employee benefit plan of the Company, or such a
subsidiary or organization, with the exception of actions by him with
respect to which a court of competent jurisdiction determines that
Associate did not act in good faith in the reasonable belief that his
action was in the best interest of the Company, or to the extent such claim
relates to his service with respect to an employee benefit plan, in the
best interests of the participants or beneficiaries of such employee
benefit plan, without regard of the date when such claim is brought.
Expenses, including without limitation counsel fees, reasonably incurred by
Associate in connection with the defense or disposition of any such action,
suit or other proceeding shall be paid from time to time by the Company in
advance of the final disposition thereof upon receipt of an undertaking by
Associate to repay to the Company the amounts previously advanced if it
shall be adjudicated that indemnification for such expenses is not
authorized hereunder.
6. Waiver of Rights and Claims Under the Age Discrimination in
Employment Act, as Amended. Associate has been informed that because he is
over 40 years of age, he has or might have specific rights and/or claims
under the Age Discrimination in Employment Act, as amended. In
consideration for the compensation described hereunder, Associate
specifically waives such rights and/or claims to the extent that such
rights and/or claims arose prior to the date this Agreement was executed.
Associate acknowledges that he has been provided such information or
materials as is required by law in connection with this waiver.
7. Company Files, Documents and Other Property. Associate warrants
that he will return to the Company upon its request all keys or other
items, including all Company files, reports, books, data and documents,
that are in his possession or control and that are the property of the
Company and not his personal files, reports, books, data and documents.
8. Representations.
A. Associate is hereby advised by the Company to consult with an
attorney prior to executing this Agreement.
B. Associate was further advised, when he was presented with this
Agreement on or before April 8, 1998 that he had at least 45 days within
which to consider the Agreement, until the close of business on May 23,
1998.
C. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts, without giving effect
to the principles of conflicts of law thereof.
D. The terms of this Agreement are contractual in nature and not a
mere recital. Captions herein are inserted for convenience, do not
constitute a part of this Agreement, and shall not be admissible for the
purpose of proving the intent of the Parties.
E. Associate represents that he has read this Agreement, fully
understands the terms and conditions of such Agreement, and is knowingly
and voluntarily executing the same without any duress or undue influence.
9. Resignations and Stock Transfers. Upon the Termination Date,
Associate agrees to (i) resign from any position held by him with the
Company or any direct or indirect affiliated company or organization,
including but not limited to positions as an officer, director, committee
member, or any other position, except for his position as Chairman of the
Board of Directors of Cosmhogar, S.A. and a Director of Stanhome European
Development Center, S.A., (ii) take any action necessary to transfer shares
of stock held in his name or for his benefit on behalf of the Company in
any direct or indirect affiliate of the Company, as requested by the
Company, to the Company or a designee of the Company, and (iii) take any
action and execute anything as may be necessary to accomplish the
foregoing.
10. Change in Control. Associate's Change in Control Agreement
effective as of January 1, 1996 (the "Change in Control Agreement") shall
remain in effect up to and including the Termination Date, and subsequent
to the Termination Date in the event that an agreement with the Company to
effectuate a Change in Control, as defined in the Change of Control
Agreement, is entered into prior to the Termination Date. It is agreed that
Associate's termination under this Agreement is (i) for reasons other than
those set forth under Paragraphs 1(a) and 1(b) of the Change in Control
Agreement and (ii) at the direction of the person (as defined in Paragraph
4(a)(i) of the Change in Control Agreement) who has entered into such an
agreement with the Company to effectuate such a Change in Control as
described under and subject to said Paragraph 1(b). To the extent that any
payments made to Associate under the Change in Control Agreement are made
for the same purpose as the severance amounts specified above in Paragraphs
3.A and 3.D (without giving effect to the Gross-Up Payment in Paragraph
1(c) of the Change in Control Agreement for these purposes), such Change in
Control payments shall be in substitution for such severance amounts except
to the extent that any bonus shall be due and payable with respect to any
year preceding that in which the Change in Control occurs. To the extent
the amounts specified in Paragraphs 3.A and 3.D are greater than those paid
under the Change in Control Agreement, the amount by which such amounts and
benefits in Paragraphs 3.A and 3.D exceed the amounts paid under the Change
in Control Agreement shall be paid in accordance with the terms of this
Agreement. If Associate is paid all amounts due him under the Change in
Control Agreement in the event of a Change in Control, then Associate shall
not be paid any amounts due him under Paragraph 3.C for the remaining term
of this Agreement.
If a Change in Control, as defined in the Change in Control
Agreement, occurs after the Termination Date, the payments to be made to
Associate under Paragraphs 3.A, 3.C and 3.D shall be paid in a lump sum
upon the occurrence of such Change in Control.
If any of the payments and benefits under this Agreement are
subject to the Excise Tax imposed under Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code") (the "Excise Tax"), such
payments and benefits shall be deemed to be "...other payments or benefits
received or to be received by the Employee in connection with a Change in
Control or the Employee's termination of employment..." under Paragraph
1(c) of the Change in Control Agreement and the Company shall pay Associate
the Gross-Up Payment as shall be determined in accordance with said
Paragraph 1(c) as if it had remained in effect.
Except as provided under this paragraph, all amounts and benefits
to be paid or provided under this Agreement shall be so paid or provided as
set forth herein without regard to the Change in Control Agreement.
11. Non-Disclosure and Non-Competition Covenants.
A. Associate agrees that he will not use or disclose to anyone
(other than for the benefit of the Worldwide Direct Selling Group), at any
time hereafter, any confidential information obtained by Associate or made
known to Associate while he was employed by the Worldwide Direct Selling
Group. As used herein, "confidential information" includes but is not
limited to trade secrets and the names and addresses of employees, dealers,
customers, suppliers and vendors, including any and all employee dealer,
customer, supplier and vendor lists of it or any affiliate.
B. Unless expressly permitted in writing by the Company, for a
period of twelve months following the Termination Date, Associate will not,
directly or indirectly, alone, as a member of a partnership, or as an
officer, agent, employee, director, stockholder, member, investor,
consultant or associate of any limited liability company or corporation
own, manage, operate, join, control or participate in the ownership,
management, operation, or control of, or work for or be connected in any
capacity with, any business that does (i) bear or use the names "Stanhome"
or "Stanley Home Products" or any name similar to that of Stanhome Inc.,
(ii) compete with the direct selling business of the Worldwide Direct
Selling Group or (iii) attempt to induce any employee of the Company and/or
one or more of its affiliates to terminate his or her employment
relationship, nor will Associate directly or indirectly employ any such
person so induced.
C. Paragraphs 11.A and 11.B do not have any application with
respect to Associate's position as an employee, consultant or advisor to
Laboratoires de Biologie de Vegetale Yves Rocher or any of its
subsidiaries.
12. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of any successor or assigns of the Company, and any such
successor or assign shall be deemed substituted for the Company under the
terms of this Agreement, and as a condition thereof, such successor and
assign shall expressly assume in writing the rights, duties and obligations
of the Company. As used in the Agreement, the term "successor or assign" or
"successors or assigns" shall include any person, firm, corporation, or
other entity which at any time, whether by merger, consolidation, purchase,
or otherwise, acquires all or substantially all of the assets, capital
stock or business of the Company. The rights and obligations of Associate
under this Agreement, including his right to exercise vested stock options,
shall inure to the benefit of, be binding upon, be exercisable by and be
enforceable by Associate's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Associate should die while any amount would still be payable to him
hereunder if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to his devisee, legatee or other designee or if there is no such
designee, to his estate.
13. Amendment or Modification. This Agreement may not be amended,
modified, altered or changed except upon written consent of the Parties.
14. Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other
provisions but the obligation to be fulfilled under such invalid or
unenforceable provision shall automatically be reduced to the limit of
validity or enforceability prescribed by law, and this Agreement shall be
construed in all respects as if such invalid or unenforceable provision
were omitted.
15. Validity. If any of the provisions of this Agreement are
declared or determined by any court of competent jurisdiction to be
illegal, invalid or inoperative, such determination shall not affect the
validity or efficacy of the remaining parts, terms or provisions of this
Agreement and any such illegal, invalid or inoperative part, term or
provision shall be deemed severable and not to be a part of this Agreement.
16. Waiver. No waiver of any provision of this Agreement shall be
effective unless made in writing and signed by the waiving party. The
waiver of any breach of this Agreement by either party or the failure of
either party to require the performance of any term or obligation of this
Agreement, in whole or in part, in any one instance shall not constitute a
waiver of or prevent any subsequent enforcement of such term or obligation
in another instance or be deemed a waiver of any subsequent breach.
17. Entire Agreement. Associate and the Company agree that this
Agreement contains and constitutes the entire understanding and agreement
between the Parties hereto respecting the terms of Associate's termination
from the Company and supersedes all previous written or verbal
negotiations, agreements, commitments, and writings in connection with
severance or compensation arrangements, including the Letter Agreement
dated July 9, 1997, between Associate and the Company, and addendum to such
Letter Agreement dated November 13, 1997. This Agreement expressly does not
supersede or cancel the Change in Control Agreement effective January 1,
1996, any compensation and benefit agreements, plans and programs listed in
Paragraph 2 of this Agreement or any other agreements whether or not listed
in Paragraph 2 of this Agreement not referred to in the preceding sentence.
18. Execution. This Agreement may be executed in two or more
duplicate counterparts, each of which shall be treated as an original, but
all of which together shall constitute one and the same instrument, and in
pleading or proving any provision of this Agreement it shall not be
necessary to produce more than one such counterpart.
19. Notice. Any notice required under this Agreement shall be in
writing and shall be delivered by certified mail, return receipt requested,
overnight delivery or telecopy to the following addresses:
a. All notices to Associate shall be addressed to him as follows:
Mr. John J. Dur
P.O. Box 590
16 French Pond Road
Henniker, NH 03242
b. All notices to the Company shall be addressed to it as follows:
Mr. Allan G. Keirstead
Vice Chairman, Executive Vice President,
Chief Administrative and Financial Officer
Stanhome Inc.
333 Western Avenue
Westfield, Massachusetts 01085
Either Party may change the address to which notices are to be sent
by providing notice in writing to the other Party in accordance with the
terms hereof.
20. Effective Date. Associate may revoke this Agreement for a
period of seven (7) days following its execution by him, and the Agreement
shall not become effective or enforceable until the date upon which this
revocation period has expired (the "Effective Date"). If the Effective Date
is later than the Termination Date, all payments that would have been made
prior to such date shall be paid as of the Effective Date.
Executed this 8 day of April, 1998.
/s/ John J. Dur
-------------------------------------------
John J. Dur
STANHOME INC.
By: /s/ Allan G. Keirstead
----------------------------------------
Allan G. Keirstead
Vice Chairman, Executive Vice President,
Chief Administrative & Financial Officer
ANNEX A
6, rue Jean Jaures
Tour Cofonca
92807 Puteaux Cedex, France
H. L. Tower
Chairman and Chief Executive Officer
Stanhome Worldwide Direct Selling Group, Inc.
Suite 1300
1105 North Market Street
Wilmington, Delaware 19899
U.S.A.
Paris, February 27, 1998
Dear Bill:
I hereby communicate to you my resignation as employee with regard to
all functions I exercised in the French branch of Stanhome Worldwide Direct
Selling Group, Inc. as of February 27, 1998.
I request that you waive and release me from my obligation to work
during the notice period and I hereby renounce any compensatory notice
period indemnity.
Sincerely,
/s/ John J. Dur
----------------------------
John J. Dur
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-END> MAR-31-1998 MAR-31-1997
<CASH> 23,074 0
<SECURITIES> 0 0
<RECEIVABLES> 110,954 0
<ALLOWANCES> 13,738 0
<INVENTORY> 98,164 0
<CURRENT-ASSETS> 221,501 0
<PP&E> 83,098 0
<DEPRECIATION> 48,131 0
<TOTAL-ASSETS> 379,421 0
<CURRENT-LIABILITIES> 153,344 0
<BONDS> 0 0
0 0
0 0
<COMMON> 3,154 0
<OTHER-SE> 201,556 0
<TOTAL-LIABILITY-AND-EQUITY> 379,421 0
<SALES> 108,220 0
<TOTAL-REVENUES> 108,220 0
<CGS> 57,452 0
<TOTAL-COSTS> 57,452 0
<OTHER-EXPENSES> 40,725 0
<LOSS-PROVISION> 2,592 0
<INTEREST-EXPENSE> 756 0
<INCOME-PRETAX> 6,151 0
<INCOME-TAX> 2,645 0
<INCOME-CONTINUING> 3,506 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 3,506 0
<EPS-PRIMARY> .21 (1.77)
<EPS-DILUTED> .21 (1.77)
<FN>
NOTE* AS PER FASB STATEMENT NO. 128, EARNINGS PER
SHARE, "PRIMARY" IS NOW "BASIC".
</TABLE>
