EMPLOYMENT AGREEMENT


     This Agreement is effective as of January 1, 1997, (the
"Effective Date") by and between Frank F. Ferola (the
"Employee") and The Stephan Company (the "Company").

     WHEREAS, the Company recognizes the Employee's past and
potential contribution to the growth and success of the Company
and desires to assure the Company of the Employee's employment
in an executive capacity as President, Chief Executive Officer
and Chairman of the Board of Directors of the Company and to
compensate him therefore; and

     WHEREAS, the Employee is desirous of continuing to be
employed by the Company and committing himself to serve the
Company in accordance with the terms herein provided;

     NOW THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements of the parties contained
herein, the parties agree as follows:

     1.  Position.  Responsibilities and Term of Employment.

        1.1  Employment and Duties.  Subject to the terms and
conditions of this Agreement, the Company employs the Employee
to serve in an executive and managerial capacity as the
President, Chief Executive Officer and Chairman of the Board of
Directors of the Company and the Employee accepts such
employment and agrees to perform such reasonable
responsibilities and duties commensurate with such position as
set forth in the Certificate of Incorporation and the Bylaws of
the Company.

        1.2  Initial Term.  Subject to the provisions of this
Agreement, the initial term of this Agreement shall be three (3)
years, commencing with the Effective Date hereof.

        1.3  Renewals of Term. This Agreement shall be renewed
for successive terms of three (3) years each if, at least thirty
(30) days prior to the end of each term of this Agreement,
Employee gives notice of his election to renew this Agreement
for another term.

     2.  Compensation.

        2.1  Annual Base Salary. During the term of this
Agreement, the Company shall pay Employee an annual base salary,
before deducting all applicable withholdings, of $425,000 per
year, payable at the times and in the manner provided by the

Company's standard payroll policies.  Such annual base salary
shall be increased annually by an amount equal to 10% of the
previous year's base salary.

        2.2  Bonus/Incentive Compensation.  In addition to an
annual base salary, the Employee shall receive an annual bonus
for each fiscal year that ends during the term of this
Agreement, which annual bonus shall be based upon increases in
the Company's earnings per share as adjusted from the Company's
certified financial statements on a consolidated basis ("EPS")
from the base year of fiscal 1996 ("Base EPS"), computed as
follows:

          a. If the EPS for a particular fiscal year are
at least 10% higher than the Base EPS, then Employee shall
receive the sum of $100,000;

          b.  In addition to Section 2.2(a), if the EPS for a
particular fiscal year are at least 15% higher than the Base
EPS, then Employee shall receive an additional sum of $150,000;

          C.  In addition to Sections 2.2(a) and (b), for each
incremental 1% increase in the EPS above 10%, the Employee shall
receive the additional sum of $20,000. (e.g., if the EPS are 13%
above the Base EPS, then Employee shall receive a bonus equal to
$100,000 plus $60,000, for a total of $160,000; if the EPS are
more than 15% above the Base EPS, then Employee shall receive a
bonus equal to $100,000 under Section 2.2(a) plus $150,000 under
Section 2.2(b) plus all amounts entitled Under Section 2.2(c)
without limitation);

          d.  For any fiscal year during this Agreement during
which Employee is not an Employee of the Company for the entire
fiscal year, Employee's annual bonus shall be prorated according
to the number of days during such fiscal year on which Employee
was so employed.

          e.  The foregoing bonuses shall be awarded not later
than ten (10) days following the issuance of the certified
financial statements.

          f.  The EPS for any particular year under this section
shall be the EPS of the Company as shown on its certified
financial statements on a consolidated basis as adjusted for any
increases or decreases in the number of outstanding shares of
the Company since December 31, 1996.  For purposes of this
adjustment, the decimals in a percentage figure shall be rounded
up to the next full percentage amount if the decimal is equal to
or greater than half a percent and rounded down if it is less
than a half a percent (e.g., if the adjusted EPS is 12.76%, it
shall be rounded up to 13%; if it is 12.49%, it shall be rounded
down to 12%.  Upon any automatic renewal terms of this
agreement, the Base EPS shall be determined by the EPS of the
Company on the year before expiration of this agreement.

        2.3  Participation in Benefit Plans.  In addition to
supplemental life and health insurance plans in which the
Employee is currently enrolled, the Employee shall be entitled
to participate in, and receive benefits under, all the Company's
employee benefit plans and arrangements in effect on the
Effective Date for as long as such plans and arrangements may be
in effect (including, but not limited to, participation in any
pension, profit sharing, stock incentive plan or stock option
plan adopted by the Company, and all group life, health
(including for family members), disability plans and other
insurance) or any substitute or additional plans, policies or
arrangements made available in the future to similarly situated
employees of the Company, subject to and on a basis consistent
with, the terms, conditions and overall administration of such
plans, policies and arrangements.  The amount of coverage under
life insurance and disability programs shall be at such levels
as are mutually agreeable to the parties.  Nothing paid to the
Employee under any plan, policy or arrangement presently in
effect or made available in the future shall be deemed to be in
lieu of other compensation to the Employee hereunder as
described in this Section 2.

        2.4  Vacation Days.  The Employee shall be entitled to a
minimum of six weeks (thirty (30) days) of paid vacation each
year in addition to paid holidays provided for all management
employees.

        2.5  Expenses. During the term of his employment
hereunder, the Employee shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by him (in
accordance with the policies and procedures established by the
Company or the Board for the senior executive officers of the
Company) in performing services hereunder, including, but not by
way of limitation, a reasonable automobile allowance and all
expenses associated with a car or portable phone.

        2.6  Stock Options Grants.

          (a)  Employee is presently a participant under the
1990 Key Employee Stock Incentive Plan (the "1990 Plan") and
shall retain all rights he currently possesses under said plan.

          (b)  Employee is hereby granted 50,000 additional
options to purchase stock under the 1990 Plan as of the
Effective Date of this contract.  Notwithstanding the terms of
the 1990 Plan, the option price for each of these new options
granted hereby shall be the closing price of the stock on the
last business day before the Effective Date and the option term
to exercise these new options shall be 10 years.

          (c)  Employee shall be granted additional options
to purchase stock under the 1990 Plan or under a substitute plan
directly from the Company (in the event no further stock or an
insufficient amount of stock is available under the 1990 Plan or
a substitute plan) on each anniversary date of the Effective
Date.  Each such annual grant shall be in an amount which is not
less than options for 50,000 shares and may, in the discretion
of the Compensation Committee, be greater based on the Company's
performance during the most recent fiscal year.  This amount of
the grants under this section will be adjusted accordingly for
any stock splits, reverse stock splits, or other stock
adjustments.

     3.  Termination.

        3.1  Termination by Company without Cause.

        If,during the term of this Agreement, the Company
terminates the employment of the Employee and such termination
is without "cause" (as defined in Section 3.2) or this Agreement
is not renewed by the Company for a three year term on the same
terms set forth in this Agreement, this Agreement, except for
the provisions of Sections 4.2 and 4.3, shall terminate and the
Company shall pay and provide the Employee with the following:

          (1)  The Company shall immediately pay to the Employee
an amount equal to the Employee's monthly base salary (to be
determined by dividing the annual base salary specified in
Section 2.1 then in effect on the date of termination by twelve)
multiplied by the sum of the number of months remaining in the
term of this Agreement plus twenty-four (e.g., if three months
remain under the term of this Agreement on the date of
termination, then Employee shall be paid an amount equal to
twenty-seven times his monthly base salary);

          (2)  The Company shall provide the Employee,
throughout a period not to exceed the greater of eighteen months
or the remaining term of this Agreement, such benefits as are
provided to the Employee pursuant to Sections 2.3 and 2.5,
including a car allowance, except where continuation of benefits
cannot be provided as contemplated by the Section 3.1 by reason
of a prohibition in the terms of the benefit plan.  For purposes
of determining the amount of benefits to which the employee
shall continue to be entitled pursuant to Sections 2.3 and 2.5,
the Employee shall be deemed, throughout the period of his
entitlement pursuant to this Section 3.1, to have continued to
have performed services for the Company at a rate of total
compensation equal to the rate in effect on the date of his
termination of employment;

          (3)  The Company shall immediately pay to the Employee
an amount equal to the most recent annual bonus previously paid
to Employee under Section 2.2 multiplied by the sum of the
number of years (including any fractions thereof) remaining in
the term of this Agreement plus two (2) (e.g., if one year
remains under the term of this Agreement on the date of
termination, then Employee shall be paid an amount equal to
three times his last bonus); and

          (4)  The Company agrees that under the 1990 Key
Employee Stock Incentive Plan and any other plan under which the
Employee is a participant, with respect to all grants made to
Employee (a) all stock options, no matter the terms of the
grant, shall be fully vested and may thereafter be exercised by
Employee, or, in the case of his death, by his heirs, at any
time for a period of five (5) years from the date of
termination; (b) all restrictions on Restricted Stock shall
immediately be removed; (c) all conditions under which receipt
of Deferred Stock was or is deferred shall immediately be deemed
fulfilled or waived; and (d) all conditions with respect to
receipt, vesting, and transferability of Stock-Based awards
shall immediately be waived, fulfilled, or lapsed.

       3.2  Termination by the Company for Cause.

        (a)  The Company shall have the right to terminate the
employment of the Employee for cause.  Effective as of the date
that the employment of the Employee terminates by reason of
cause, this Agreement, except for the provisions of Sections 4.2
and 4.3, shall terminate and no further payments of the
Compensation described in Section 2 shall be made, except for
such remaining payments of base salary under Section 2.1
relating to periods during which the Employee was employed by
the Company, benefits under Section 2.3 which are required by
applicable law to be continued, and reimbursement of proper
expenses under Section 2.5.

          (b)  For the purposes of this Section, "cause" shall
mean willful or gross neglect of duties for which the Employee
is employed (other than on account of a medically determinable
disability which renders the Employee incapable of performing
such services); conviction of fraud, misappropriation or
embezzlement in the performance of duties as an employee of the
Company; conviction of a felony involving a crime of moral
turpitude in the performance of duties as an employee of the
Company; or willfully engaging in conduct material to the
Company and in violation of the covenants contained in Section
4. For purposes of this paragraph, no act or failure to act on
the Employee's part shall be considered "willful" unless done or
omitted to be done by him not in good faith and without
reasonable belief that his act or omission was in the best
interest of the Company.

          (c)  No termination of employment of the Employee for
cause shall be effective (i) unless the Company shall deliver
written notice to the Employee reasonably specifying the cause
for which it intends to terminate the employment of the Employee
and the date, not less than 15 days or more than 60 days after
such notice, on which such termination will be effective; (ii)
if the cause specified in the notice is reasonably curable, and
if the Employee diligently seeks to effect such cure prior to
the effective date of termination, so long as such diligent
efforts are proceeding or if such cure is effected prior to the
effective date of termination, the employment of the Employee
shall continue unaffected; and (iii) if the Employee disputes by
written notice that cause exists for termination pursuant to
Section 3.2, or reasonably believes and asserts in writing that
any such cause has been cured prior to the effective date of
termination, the Employee may submit the matter for arbitration
pursuant to Section 6.6 hereof.  If the matter is submitted for
arbitration, then, until the arbitrators render a final
decision, no change in the employment, responsibilities or
compensation of the Employee hereunder shall take place.

        3.3  Other Termination. The Employee may terminate this
Agreement by giving 90 days prior to written notice to the
Company and this Agreement shall terminate, except for the
provisions of Sections 4.2 and 4.3, as of the date specified by
the Employee as the effective date of such termination.

        3.4  Termination by Death or Disability. If the Employee
dies or becomes disabled, this Agreement shall terminate except
for the provisions of Sections 4.2 and 4.3, and the Employee (or
his estate) shall then be entitled to such base salary and
incentive compensation described in Section 2 that relates to
the period that he performed services for the Company, the
acceleration and vesting set forth in Section 3.1(4), and all
applicable benefits (including, as applicable, continued status
as an employee in the event of his disability) to which the
Employee is entitled under the Company's employee benefit plans,
other benefit plans or programs maintained by the Company and
all such other benefits from employment policies and practices
of the Company.  In addition, if the Employee dies or becomes
disabled, the Employee or his estate shall receive his Annual
Base Salary for a period of twelve (12) months.  For the
purposes of this Section 3.4, "disability" shall mean the
inability of Employee to perform assigned duties and
responsibilities assigned to the employee under Section 1.1 by
reason of any medically determinable physical or mental
impairment which can be expected to result in death or to be of
long continued or indefinite duration.  The Employee shall not
be considered to be disabled unless he furnishes proof of the
existence of such disability in the form and manner as the
Company may reasonably require.

        3.5  Termination by Employee Following Certain Corporate
             Events.

          (a)  If the Employee for any reason terminates this
Agreement at any time during the term of this Agreement or any
renewal following (i) a change in control of the Company, (ii)
a sale of all or substantially all of the assets of the Company
or (iii) a dissolution or liquidation of the Company, the
Employee shall be entitled to receive from the Company all of
the amounts and benefits provided in Section 3.1 of this
Agreement.

          (b)  In the event that the Employee becomes entitled
to compensation pursuant to this Section 3.5 (or any other
section of this Agreement) and the payment of such compensation
constitutes a "parachute payment" as defined in Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code") and
subject to a tax under Section 4999 of the Code, the Employee
shall be entitled to the greater of: (1) the compensation
payable pursuant to this Section 3.5 (or any other Services of
this Agreement), net any taxes imposed by Section 4999 of the
Code; or (2) the compensation payable pursuant to this Section
3.5 (or any other Section of this Agreement) reduced to the
extent necessary to ensure that such amount does not constitute
a "parachute payment" as defined in Section 280G of the Code and
subject to a tax under Section 4999 of the Code.

        3.6  Termination by Employee Due to Breach by Company.
If, during the term of this Agreement, the Company shall breach
any of its material obligations hereunder, including without
limitation the obligation to have the Employee serve in the
Capacities of President, Chief Executive Officer and Chairman of
the Board, the Employee may, unless the Company shall have cured
its breach within 15 days after it receives written notice from
the employee reasonably specifying such breach, terminate his
employment hereunder by a second notice to the Company effective
immediately.  In such event the Employee shall be entitled to
receive from the Company all of the amounts and benefits
provided that if the Company disputes by written notice that a
material breach of any of its obligations has occurred, or
reasonably believes and asserts in writing that any such breach
has been cured within the 15-day period specified above, the
Company may submit the matter for arbitration, then, until the
arbitrators render a final decision, no change in the
employment, responsibilities or compensation of the Employee
hereunder shall take place.   The cost of any arbitration
proceeding, including Employee's legal fees, conducted
hereunder shall be borne solely by the Company.

     4.  Best Efforts, Non-Compete and Confidential Information.

        4.1  Best Efforts and Non-Compete During Employment
Term.  The Employee agrees that during the term of his
employment by the Company, he will devote significant business
time and efforts to the Company.  He will not engage in any way
whatsoever, directly or indirectly, in any business that is
competitive with the Company or its affiliates, nor solicit, or
in any other manner work for or assist any business which is
competitive with the business of the Company without the
approval of the Board of Directors, and Employee will not
combine or conspire with any other employee of the Company or
any other person for the purpose of organizing any such
competitive business hereunder shall take place.

        4.2  Confidential Information. The Employee will not
disclose to any other person or entity (except as required by
applicable law or in connection with the performance of his
responsibilities hereunder), or use for his own benefit, any
confidential information of the Company, obtained by him
incident to his employment with the Company.  The term
"confidential information" includes, without limitation, any
information pertaining to computer programs, vendors,
subcontractors and customers, financial information, business
plans, prospects and opportunities which have been discussed or
considered by the Company's management, but does not include any
information which has become public other than by reason of the
Employee's failure to comply with the provisions of this
Section.

        4.3  Continued Applicability. The provisions of Section
4.2 shall remain in effect and shall have full force and effect
for a period of two years after the date that this Agreement
expires or is terminated.

        4.4  Covenant of Good Faith and Fair Dealing. The
parties specifically agree that each owes to the other the
covenant to act in good faith and deal fairly in the performance
of the terms of this agreement.

     5.  Assignment.
         Subject to Section 3.5, this Agreement and the rights
and obligations of the parties hereto shall bind and inure to
the benefit of each of the parties hereto and shall also bind
and inure to the benefit of any successor or successors of the
Company by reorganization, merger or consolidation and any
assignee of all or substantially all of the Company's business
and properties, but, except as to any such successor or assignee
of the Company, neither this Agreement nor any rights or
benefits hereunder may be assigned by the Company or the
Employee.

     6.  Miscellaneous.

        6.1  Governing Law. The parties shall be construed in
accordance with and governed for all purposes by the laws of the
State of Florida.

        6.2  Actions. The parties agree that the rights conveyed
by this Agreement are of a unique and special nature and that
the Company will not have an adequate remedy at law in the event
of failure of the Employee to abide by its terms and conditions
nor will money damages adequately compensate for such injury.
It is, therefore, agreed between the parties that in the event
of breach by the Employee of any of his agreements contained in
the Agreement, the Company shall have the rights, among other
rights, to damages sustained thereby and to obtain an injunction
or decree of specific performance from any court of competent
jurisdiction to restrain or compel the Employee to perform as
agreed herein.  The Employee agrees that this paragraph shall
survive the termination of this employment and he shall be bound
by its terms and all times subsequent to the termination of his
employment for so long a period as Company continues to conduct
the same business or businesses as it was conducting during the
period of this Agreement.  Nothing herein contained shall in any
way limit or exclude any other right granted by law or equity to
the Company.

        6.3  Notices. Any notice, request, or instruction to be
given hereunder shall be in writing and shall be deemed given
when personally delivered or three days after being sent by
United States certified mail, postage prepaid, with return
receipt requested, to the parties at their respective addresses
set forth below:

          (a)  To the Company:
               Attention: Secretary
               The Stephan Company
               1850 West McNab Road
               Fort Lauderdale, Florida 33309

          (b)  To the Employee:
               Attention: Frank F. Ferola
               10265 Shire Oaks Lane
               Boca Raton, Florida  33498


        6.4  Severability. If any paragraph, subparagraph, or
provision hereof is found for any reason whatsoever to be
invalid or inoperative, that paragraph, subparagraph or
provision shall be deemed severable and shall not affect the
force and validity of any other provision of this Agreement.  If
any covenant herein is determined by a court to be overly broad
thereby making the covenant unenforceable, the parties agree and
it is their desire that such court shall substitute a reasonable
judicially enforceable limitation in place of the offensive part
of the covenant and that as so modified the covenant shall be as
fully enforceable as if set forth herein by the parties
themselves in the modified form.  The covenants of Employee in
this Agreement shall each be construed as an agreement
independent of any other provision on this Agreement, and the
existence of any claim or cause of action of Employee against
the Company, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by the Company
of the covenants in this Agreement.

        6.5  Amendment and Waiver. This Agreement may not be
amended, supplemented, or waived except by a writing signed by
the party against which such amendment or waiver is to be
enforced.  The waiver by any party of a breach of any provision
of this Agreement shall not operate to, or be construed as a
waiver of, any other breach of that provision nor as a waiver of
any breach of another provision.

        6.6  Arbitration of Disputes.  Any controversy or claim
arising out of or relating to this Agreement or to the breach
thereof shall be settled by binding arbitration in accordance
with the laws of the State of Florida conducted in the City of
Miami in accordance with the commercial rules of the American
Arbitration Association.  Judgment upon the award rendered by
the arbitrators may be entered in any court having jurisdiction
thereof.  The cost of any arbitration proceeding, including
Employee's legal fees, conducted hereunder shall be borne solely
by the Company.

        6.7  Binding Effect.  Subject to the provisions of
Section 5 hereof, this Agreement shall be binding on the
successors and assigns of the parties hereto.

        6.8  Survival of Rights and Obliqations.

        6.9  Counterparts.  This Agreement may be executed in
two counterparts, each of which is an original but which shall
together constitute one and the same instrument.

EXECUTION

Upon execution below by both parties, this Agreement will
enter into full force and effect as of January 1, 1997.


                                          COMPANY
                                          THE STEPHAN COMPANY



                                          ______________________
                                          By:  David Spiegel
                                          its: CFO


                                          EMPLOYEE



                                          ______________________
                                          Frank F. Ferola