UNITED INDUSTRIES CORPORATION
October 25, 1999
Mr. Robert L. Caulk
8551 Chaucer Place
Cincinnati OH 45249
RE: Revised Offer of Employment
Dear Bob:
This letter shall supercede our October 4, 1999 offer letter. The purpose of
this letter is to summarize the specifics of our offer to you, which offer has
been revised to reflect recent discussions between the parties and their
respective counsel:
1. POSITION: You will be the President and Chief Executive Officer of United
Industries Corporation ("UIC"). You will also become a member of the UIC
Board of Directors immediately upon your starting work with us.
2. REPORTING STRUCTURE: You will report to UIC's Board of Directors.
3. START DATE: Bearing in mind that we have our next Board meeting on Wednesday,
October 27th, we request that you start no later than Monday October 25th.
Please let us know what start date you can confirm for us as soon as possible.
4. BASE SALARY: Your base salary will be at the annualized rate of $400,000.00,
payable in equal monthly increments. Subsequent increases in base salary shall
be as determined by the Compensation Committee of the Board.
5. INCENTIVE COMPENSATION: You will be a participant in an incentive
compensation plan (description of the plan, which was faxed to you on October
13th, is attached as "Item 5 Exhibit"), with payment based on UIC's attainment
of certain financial and operational targets. Notwithstanding the provisions of
the plan attached as Item 5 Exhibit, you will be eligible to receive a target
bonus of thirty percent (30%) of your base salary if UIC achieves at least 90%
of Target EBITDA, sixty percent (60%) of your base salary if UIC achieves at
least 100% of Target EBITDA, and 90% of base salary if UIC achieves 110% of
Target EBITDA. Your participation for fiscal 1999 (same as calendar 1999) will
reflect an appropriate partial year proration from your start date through
year-end. Notwithstanding the provisions of the above referenced incentive
compensation plan, UIC agrees to guarantee that with respect to the year 2000
you will be paid incentive compensation of no less than 50% of the maximum
incentive compensation payable under the plan (i.e., 1/2 of 60% of base salary
for the year 2000).
6. SIGNING BONUS: You will be paid a $50,000 signing bonus within five (5)
business days after your start date. This payment shows our good faith effort to
compensate you for the bonus you anticipate forfeiting upon your resigning from
Clopay.
7. STOCK OPTIONS: Per the terms of UIC's 1999 Stock Option Plan, you will be
granted stock options to purchase 800,000 shares of UIC stock when you sign the
"United Industries Corporation Stock Option
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MR. ROBERT L. CAULK
OCTOBER 25, 1999
Agreement" which will be substantially in the form attached as "Item 7 Exhibit",
except that the definition of Cause in Section 4.3(a)(i) thereof shall be
revised to be as set forth in "Item 10 Exhibit" to Section 10 ("Severance") of
this letter.
8. STOCK PURCHASE: Per the terms of UIC's 1999 Stock Purchase Plan, you will be
given the opportunity to purchase up to $500,000 of UIC stock at the current
price of $5.00 per share upon your signing the "United Industries Corporation
Executive Stock Purchase Agreement" which will be substantially in the form
attached as "Item 8-A Exhibit". The Company will loan you up to fifty percent
(50%) (the principal amount of $250,000) of the purchase price of UIC stock you
may purchase in accordance with this Section 8. The loan will be at UIC's
borrowing rate and will be evidenced by a promissory note (the "Note")
substantially in the form attached to this letter as "Item 8-B Exhibit". The
loan will be with recourse, secured by a pledge to the Company of all UIC stock
you purchase under this Section, and as evidence of the security for the loan
you will enter into a Pledge Agreement substantially in the form attached to
this letter as "Item 8-C Exhibit".
Notwithstanding the provisions of Section 2 ("Repurchase Option") of the
Executive Stock Purchase Agreement (Item 8-A Exhibit), if you cease employment
at UIC, UIC agrees upon its receipt of your written request to repurchase UIC
stock (at Fair Market Value as defined in the referenced Plan) which you may
have purchased pursuant to the Executive Stock Purchase Agreement, unless you
are terminated for Cause, as defined in "Item 10 Exhibit" attached.
9. CHANGE OF CONTROL: In the event there is a Sale of UIC (as defined in Section
4.1 of the Stock Option Agreement referenced in Item 7 above), vesting of your
options will be accelerated as provided in the Stock Option Agreement. Please
refer to the Stock Option Agreement for further details.
10. SEVERANCE: If you are terminated by UIC (a) without Cause, or (b) because of
Constructive Termination (as defined in "Item 10 Exhibit" attached), or (c)
within 90 days of a Change of Control (as defined in Section 4.1 of the Stock
Option Agreement referenced in Item 7 above), you will receive severance pay
equal to (i) three (3) years' base salary less amounts of base salary UIC will
have paid to you from your starting date through date of termination, but in any
event no less than one (1) year's base salary, plus (ii) incentive compensation
earned but unpaid as of the date of termination (prorated for the period of time
during the applicable bonus year that you worked from January 1st to date of
termination). As you will be paid on a monthly basis during your employment at
UIC, your severance payments will be paid out to you monthly, in that number of
installments equal to 36 less the number of months you were paid your base
salary through date of termination (but in any event no less than 12
installments). However, you will not receive such severance payments if you are
terminated for Cause, as defined in "Item 10 Exhibit" attached.
11. RELOCATION EXPENSES: You will receive the benefits and reimbursement for
expenses as set forth in "Item 11 Exhibit, Relocation Reimbursement" attached.
UIC will also arrange to provide you with a no-interest bridge loan of up to
$250,000 for up to one (1) year to assist you in the sale of your Cincinnati
Ohio residence. If you resign or are terminated for Cause (as defined in Item 10
Exhibit) before completing twelve (12) months with the Company, you must repay
to UIC the full amount of your relocation expenses previously paid by UIC.
12. VACATIONS: You will be entitled to four weeks of paid vacation per year.
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MR. ROBERT L. CAULK
OCTOBER 25, 1999
13. OTHER BENEFITS (INCLUDING UIC'S EXECUTIVE DEFERRED COMPENSATION PLAN):
Unless otherwise specified in this letter, your benefits will consist of
whatever benefit programs may be in effect from time to time for UIC executives,
subject to eligibility requirements as specified in the applicable benefit
plans. Benefit programs may be increased, decreased, changed or discontinued at
any time. Details of UIC's benefit programs are explained in the "Benefits
Basics" brochure included as "Item 13 Exhibit". UIC will waive the one-year
service requirement for Short Term Disability insurance (page 10 of Item 13
Exhibit), and you will be covered immediately as of the date you start work at
UIC.
Also included in the Item 13 Exhibit is a copy of the UIC Executive Deferred
Compensation Plan. The current Plan does not provide for UIC common stock as one
of the various investment options available to Plan participants. However, UIC
will use its best efforts to obtain the consent of the Plan trustee (Commerce
Bank in St. Louis) to amend the Plan to permit participants to elect to have UIC
common stock purchased with the amount of deferred compensation as may be
designated by Plan participants. In your case, such designation may include any
bonus payouts you may receive with respect to fiscal 1999 and fiscal 2000.
14. NONCOMPETITION, CONFIDENTIALITY, AND OTHER OBLIGATIONS TO UIC: Attached to
this letter is "Item 14 Exhibit" which states your obligations regarding (a)
business ethics, (b) confidentiality, (c) protection of intellectual property
interests, (d) nonsolicitation and noncompetition, and (e) termination. You
agree that you will devote your full time and attention to the business and
affairs of the Company.
15. NO BREACH OF EXISTING COVENANTS: By signing this letter, you are confirming
to UIC that you are not subject to any noncompetition covenants or other legal
obligations which prevent you from joining our team.
16. ARBITRATION OF UIC STOCK VALUATION: Notwithstanding any provision to the
contrary in the UIC 1999 Stock Option Plan or the UIC 1999 Stock Purchase Plan,
UIC agrees to submit to arbitration any disputes between you and UIC regarding
the fair market value of UIC common stock. The arbitration shall be conducted in
St. Louis MO in accordance with the rules of the American Arbitration
Association.
If this letter is acceptable to you, please sign and return the enclosed copy of
this letter to my attention at UIC's office in St. Louis, with a copy to Matthew
M. McCarthy, UIC's Vice President, General Counsel and Secretary, also at UIC's
office. I look forward to hearing promptly of your acceptance of our offer.
Sincerely yours,
David A. Jones, Chairman of the Board
Accepted this __ day of October, 1999:
---------------------------------
Robert L. Caulk
cc (w/encls): Irv Berliner, Esq.
Matthew M. McCarthy, Esq. -- UIC
attachments
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