EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT
AGREEMENT (“Agreement”), effective as of January 19,
2007 (“Effective Date”), is made and entered into by
and between PRESTIGE BRANDS HOLDINGS, INC. (the
“Company”) and MARK PETTIE
(“Executive”).
W I T N E S S E T
H:
WHEREAS , the Company desires to employ Executive upon
the terms and subject to the conditions hereinafter set forth, and
Executive desires to accept such employment;
NOW,
THEREFORE, for and
in consideration of the premises, the mutual promises, covenants
and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1.
EMPLOYMENT .
Subject to the
terms and conditions of this Agreement, the Company hereby employs
Executive as its Chief Executive Officer, reporting to the Board of
Directors of the Company (the” Board”). During the term
of this Agreement, subject to Section 3.1 , Executive also
shall serve as Chairman of the Board.
2.
DURATION OF AGREEMENT .
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2.1
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Initial Term . This employment shall begin as of the
Effective Date, and shall continue until it terminates pursuant to
this Agreement. Unless extended pursuant to Section 2.2 , or
earlier terminated pursuant to any of Sections 5, 6, 7, 8 or
9 , this Agreement will terminate on March 31, 2008. The
specified period during which this Agreement is in effect is the
“Term.”
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2.2.1
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By
Agreement . The Term may
be extended to a specified future date at any time by the specific
written agreement of the parties signed prior to the original
expiration date specified in Section 2.1 , or any subsequent
expiration date established pursuant to Section
2.2.2.
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2.2.2
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Annual
Extension . For purposes
of this Agreement, April 1, 2008 and each April 1 thereafter shall
be referred to as an “Anniversary Date,” and the
one-year period from each Anniversary Date to the next shall be
referred to as a “Contract Year.” On each Anniversary
Date, beginning April 1, 2008, unless either party to this
Agreement has notified the other in writing not less than three (3)
months prior to such Anniversary Date of that party’s
intention to allow this Agreement to expire and not be renewed at
the end of the then current Term, the Term shall automatically be
extended for one Contract Year on and from each Anniversary
Date.
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3.
POSITION AND DUTIES .
3.1
Position . Executive shall serve as the Company's
Chief Executive Officer. Executive shall perform such duties and
responsibilities as may be prescribed from time-to-time by the
Board, which shall be consistent with the responsibilities of
similarly situated executives of comparable companies in similar
lines of business. So long as Executive is serving as Chief
Executive Officer, the Company shall nominate Executive for
election as a member of the Board at each meeting of the Company's
shareholders at which the election of Executive is subject to a
vote by the Company's shareholders and to recommend that the
shareholders of the Company vote to elect Executive as a member of
the Board, and the Company shall designate Executive as Chairman of
the Board in each Term. From time to time, Executive also may be
designated to such other offices within the Company or its
subsidiaries as may be necessary or appropriate for the convenience
of the businesses of the Company and its subsidiaries; provided,
however, during the Term, he shall, in addition to the title of
Chief Executive Officer, also continue to hold the title of
Chairman.
3.2
Full-Time Efforts . Executive shall perform and
discharge faithfully, diligently and to the best of his ability
such duties and responsibilities and shall devote his full-time
efforts to the business and affairs of the Company. Executive
agrees to promote the best interests of the Company and to take no
action that in any way damages the public image or reputation of
the Company, its subsidiaries or its affiliates.
3.3
No Interference With Duties . Executive shall not (i)
engage in any activities, or render services to or become
associated with any other business that in the reasonable judgment
of the Board violates Article 11 of this Agreement; or (ii) devote
time to other activities which would inhibit or otherwise interfere
with the proper performance of his duties, provided ,
however , that it shall not be a violation of this Agreement
for Executive to (i) devote reasonable periods of time to
charitable and community activities and industry or professional
activities, or (ii) manage personal business interests and
investments, so long as such activities do not interfere with the
performance of Executive’s responsibilities under this
Agreement. Executive may, with the prior approval of the Board (or
applicable committee), serve on the boards of directors (or other
governing body) of other for profit corporations or entities,
consistent with this Agreement and the Company's
policies.
3.4
Work Standard . Executive hereby agrees that he shall
at all times comply with and abide by all terms and conditions set
forth in this Agreement, and all applicable work policies,
procedures and rules as may be issued by Company. Executive also
agrees that he shall comply with all federal, state and local
statutes, regulations and public ordinances governing the
performance of his duties hereunder.
4.
COMPENSATION AND BENEFITS .
4.1
Base Salary . Subject to the terms and conditions set
forth in this Agreement, the Company shall pay Executive, and
Executive shall accept an annual salary (“Base Salary”)
in the amount of Four Hundred Twenty-five Thousand and No/100
Dollars ($425,000). The Base Salary shall be paid in accordance
with the Company’s normal payroll practices. The
Executive
shall be
entitled to periodic reviews (no less frequently than annually) for
increases in Base Salary during each Contract Year, as shall be
determined and approved by the Board, taking into account the
performance of the Company and the Executive, and other factors
that the Board considers relevant to the salaries of executives
holding similar positions with enterprises comparable to the
Company. The first such review shall take place during or before
April 2008.
4.2
Incentive, Savings and Retirement Plans . During the
Term, Executive shall be entitled to participate in all incentive
(including, without limitation, long term incentive plans), savings
and retirement plans, practices, policies and programs applicable
generally to senior executive officers of the Company
(“Senior Executives”), and on the same basis as such
Senior Executives, except as to benefits that are specifically
applicable to Executive pursuant to this Agreement. Without
limiting the foregoing, the following provisions shall apply with
respect to Executive:
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4.2.1
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Annual Bonus
Plan . Executive shall be
entitled to an annual bonus (including a guaranteed prorated target
bonus of no less than Sixty Two Thousand Eight Hundred and Seventy
Seven dollars ($62,877) for the fiscal year ended March 31, 2007
based upon days of service from the Effective Date through March
31, 2007), the amount of which shall be determined by the
Compensation Committee of the Board (the "Committee"). The amount
of and performance criteria with respect to any bonus in any fiscal
year subsequent to March 31, 2007 shall be determined not later
than the date or time prescribed by Treas. Reg. § 1.162-27(e)
in accordance with a formula to be agreed upon by the Company and
Executive and approved by the Committee that reflects the financial
and other performance of the Company and the Executive's
contributions thereto. Throughout the Term, the Executive's annual
target (subject to such performance and other criteria as may be
established by the Committee) bonus shall be no less than
seventy-five percent (75%) of the Base Salary and the maximum bonus
shall be no less than one hundred fifty percent (150%) of the Base
Salary. Executive’s bonus for the fiscal year ended March 31,
2008 shall be reduced by any amounts paid to Executive pursuant to
Section 4.2.6 .
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4.2.2
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Welfare
Benefit Plans . During
the Term, Executive and Executive’s eligible dependents shall
be eligible for participation in, and shall receive all benefits
under, the welfare benefit plans, practices, policies and programs
provided by the Company (including, without limitation, medical,
prescription, dental, disability, executive life, group life,
accidental death and travel accident insurance plans and programs)
(“Welfare Plans”) to the extent applicable generally to
Senior Executives.
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4.2.3
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Vacation . From the Effective Date through March 31, 2008
and during each Contract Year thereafter through the Term,
Executive shall be granted four (4) weeks’ paid vacation in
accordance with the Company’s vacation policy as in effect
and as approved by the Committee from time to time. The timing of
paid vacations shall be scheduled in a reasonable manner by the
Executive.
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4.2.4
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Business
Expenses . Executive
shall be reimbursed for all reasonable business expenses incurred
in carrying out the work hereunder. Executive shall follow the
Company’s expense procedures that generally apply to other
Senior Executives in accordance with the policies, practices and
procedures of the Company to the extent applicable generally to
such Senior Executives.
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4.2.5
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Perquisites . Executive shall be entitled to receive such
executive perquisites, fringe and other benefits as are provided to
the senior most executives and their families under any of the
Company’s plans and/or programs in effect from time to time
and such other benefits as are customarily available to Senior
Executives.
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4.2.6
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Signing and
Retention Bonus .
Provided that Executive continues to be employed by the Company at
the dates established hereafter in this section for payment, he
shall be paid a bonus of Seventy-five thousand and 00/100 dollars
($75,000) on April 1, 2007 and Seventy-five thousand and 00/100
dollars ($75,000) on April 1, 2008.
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4.2.7
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LTIP .
Beginning April 2007, Executive shall participate to the same
extent as other Senior Executives in awards under the
Company’s 2005 Long-Term Equity Incentive Plan (the
“LTIP Plan”). Executive’s LTIP Award shall have
at the time of grant a value of 150% of the Executive’s total
cash compensation during the fiscal year immediately preceding the
date of the LTIP Award. Executive will be granted an LTIP Award,
consisting of restricted stock, in April 2007 with a value of
$1,125,000, subject to all of the other terms and provisions of the
LTIP Plan. The composition of future LTIP Awards beginning April 1,
2008 shall be determined in accordance with the prevailing practice
applicable to Senior Executives. The Company confirms that upon a
“Change in Control” (as defined in the LTIP Plan), all
awards to the Executive thereunder fully vest with no requirement
that the Executive’s employment with the Company have
terminated.
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4.3 Legal
Fees. Within, ten (10) days following receipt of appropriate
written documentation, the Company will reimburse Executive up to
$15,000 for reasonable and customary legal fees and expenses
incurred by Employee with respect to the negotiation and execution
of this Agreement.
5.
TERMINATION FOR CAUSE .
This Agreement
may be terminated immediately at any time by the Company without
any liability owing to Executive or Executive’s beneficiaries
under this Agreement, except Base Salary through the date of
termination and benefits under any plan or agreement covering
Executive which shall be governed by the terms of such plan or
agreement, under the following conditions, each of which shall
constitute “Cause” or “Termination for
Cause”:
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(a)
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Any willful act
by Executive involving fraud and any willful breach by Executive of
applicable regulations of competent authorities in relation to
trading or dealing with stocks, securities, investments, regulation
of the Company’s business and the
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like or any willful act by Executive resulting
in an investigation by applicable regulatory authorities which, in
each case, a majority of the Board determines in its sole and
absolute discretion materially adversely affects the Company or
Executive’s ability to perform his duties under this
Agreement;
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(b)
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Attendance at
work in a state of intoxication or otherwise being found in
possession at his place of work of any prohibited drug or
substance, possession of which would amount to a criminal
offense;
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(c)
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Executive's
personal dishonesty or willful misconduct in connection with his
duties to the Company;
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(d)
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Breach of
fiduciary duty to the Company involving personal profit by the
Executive;
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(e)
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Assault or
other act of violence against any employee of the Company or other
person during the course of his employment;
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(f)
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Conviction of
the Executive for any felony or crime involving moral
turpitude;
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(g)
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Material
intentional breach by the Executive of any provision of this
Agreement or of any Company policy adopted by the Board;
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(h)
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The willful
continued failure of Executive to perform substantially
Executive’s duties with the Company (other than any such
failure resulting from incapacity due to Disability, and
specifically excluding any failure by Executive, after good faith,
reasonable and demonstrable efforts, to meet performance
expectations for any reason), after a written demand for
substantial performance is delivered to Executive by a majority of
the Board that specifically identifies the manner in which such
Board believes that Executive has not substantially performed
Executive’s duties.
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For purposes of
this provision, no act or failure to act, on the part of the
Executive, shall be considered “willful” unless it is
done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive’s action or
omission was in the best interest of the Company. Any act, or
failure to act, based upon and performed in accordance with
authority given pursuant to a resolution duly adopted by the Board
or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interest of the Company.
The cessation of employment of Executive shall not be deemed to be
for Cause unless and until there shall have been delivered to
Executive a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the entire membership of the
Board at a meeting of the Board called and held for such purpose
(after reasonable notice is provided to Executive and Executive is
given an opportunity to be heard before the Board), finding that,
in the good faith opinion of such Board, Executive is guilty of the
conduct described in any one or more of subparagraphs (a) through
(h) above, and specifying the particulars thereof in
detail.
6.
TERMINATION UPON DEATH .
Notwithstanding anything herein to the
contrary, this Agreement shall terminate immediately upon
Executive’s death, and the Company shall have no further
liability to Executive or his beneficiaries under this Agreement,
other than for payment of Accrued Obligations (as defined in
Section 9(a)(1) ), and the timely payment or provision of
Other Benefits (as defined in Section 9(c) ), including
without limitation benefits under such plans, programs, practices
and policies relating to death benefits, if any, as are applicable
to Executive on the date of his death. This payment shall be paid
in a lump sum to the Executive’s estate within 90 days after
the Company is given notice of the Executive’s death. The
rights of the Executive’s estate with respect to stock
options and restricted stock, and all other benefit plans, shall be
determined in accordance with the specific terms, conditions and
provisions of the applicable agreements and plans; provided,
however, that any LTIP Award granted under Section 4.2.7 of
this Agreement shall immediately vest and become distributable as
soon as practicable after the death of the Executive.
7.
DISABILITY .
If the
Company determines in good faith that the Disability of Executive
has occurred during the Term (pursuant to the definition of
Disability set forth below), it may give to Executive written
notice of its intention to terminate Executive’s employment.
In such event, Executive’s employment with the Company shall
terminate effective on the 30th day after receipt of such written
notice by Executive (the “Disability Effective Date”),
provided that, within the 30 days after such receipt, Executive
shall not have returned to full-time performance of
Executive’s duties. If Executive’s employment is
terminated by reason of his Disability, this Agreement shall
terminate without further obligations to Executive, other than for
payment of Accrued Obligations (as defined in Section
9(a)(1) ) and the timely payment or provision of Other Benefits
(as defined in Section 9(c) , including without limitation
benefits under such plans, programs, practices and policies
relating to disability benefits, if any, as are applicable to
Executive on the Disability Effective Date. The rights of the
Executive with respect to stock options and restricted stock, and
all other benefit plans, shall be determined in accordance with the
specific terms, conditions and provisions of the applicable
agreements and plans; provided, however, that any LTIP Award
granted under Section 4.2.7 of this Agreement shall
immediately vest and become distributable upon the Disability
Effective Date.
For purposes of
this Agreement, “Disability” shall mean: (i) a
long-term disability entitling Executive to receive benefits under
the Company’s long-term disability plan as then in effect; or
(ii) if no such plan is then in effect or the plan does not apply
to Executive, the inability of Executive, as determined by the
Board, to perform the essential functions of his regular duties and
responsibilities, with or without reasonable accommodation, due to
a medically determinable physical or mental illness which has
lasted (or can reasonably be expected to last) for a period of six
consecutive months. At the request of Executive or his personal
representative, the Board's determination that the Disability of
Executive has occurred shall be certified by two physicians
mutually agreed upon by Executive, or his personal representative,
and the Company. Without such independent certification (if so
requested by Executive), Executive’s termination shall
be
deemed a
termination by the Company without Cause and not a termination by
reason of his Disability.
8.
EXECUTIVE'S TERMINATION OF EMPLOYMENT .
Executive’s employment may be
terminated at any time by Executive for Good Reason or no reason.
For purposes of this Agreement, “Good Reason” shall
mean:
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(a)
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Other than his
removal for Cause pursuant to Section 5 , without the
written consent of Executive, the assignment to Executive of any
duties inconsistent in any material respect with Executive’s
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as in effect
on the Effective Date, or any other action by the Company which
results in a demonstrable diminution in such position, authority,
duties or responsibilities (including without limitation the
designation of another person as Chairman); but excluding, for this
purpose an isolated, insubstantial and inadvertent action not taken
in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by Executive;
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(b)
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A reduction by
the Company in Executive’s Base Salary as in effect on the
Effective Date or as the same may be increased from time to
time;
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(c)
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A reduction by
the Company in Executive's annual target bonus (expressed as a
percentage of Base Salary) unless such reduction is a part of an
across-the-board decrease in target bonuses affecting all other
Senior Executives; provided, however that in any event, the Company
may not reduce Executive’s annual target bonus (expressed as
a percentage of Base Salary) below seventy-five percent (75%) of
the Base Salary;
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(d)
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The
Company’s giving notice under Section 2.2.2 of its
intention not to renew this Agreement unless at that time, the
Company could terminate this Agreement and Executive’s
employment for “Cause.”
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(e)
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The failure by
the Company to continue in effect any “pension plan or
arrangement” or any “compensation plan or
arrangement” in which Executive participates or the
elimination of Executive’s participation in any such plan
(except for across the board plan changes or terminations similarly
affecting other Senior Executives); provided however that nothing
in this provision shall have the effect of impairing Ex
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