Exhibit 10.2

 

TRANSPORTATION MANAGEMENT AGREEMENT

 

THIS AGREEMENT, made this 13th day of April, 2005.

 

BY AND BETWEEN

 

Prestige Brands Inc., a Delaware corporation. hereinafter referred to as
“PRESTIGE BRANDS”

 

AND

 

Nationwide Logistics, Inc., a Missouri corporation, hereinafter referred to as
“NLI”

 

WITNESSETH THAT:

 

WHEREAS, PRESTIGE BRANDS desires to utilize the services of NLI in operating for
PRESTIGE BRANDS’s business, a complete transportation management function
including but not limited to freight routing (inbound, replenishment, and
outbound), freight bill payment and auditing, claims administration, proof of
delivery procurement, report generation and automation, plus other
administrative traffic duties, and compliance with tariffs by all involved
parties; and

 

WHEREAS, NLI has agreed to provide the services required on the terms and
conditions hereinafter set forth; and

 

WHEREAS, NLI has represented that it is skilled in all aspects of and laws
relating to the traffic and transportation business and is capable of performing
the transportation management services required by PRESTIGE BRANDS and willing
to enter into this Agreement with PRESTIGE BRANDS.

 

NOW, THEREFORE, in consideration of the mutual covenants and promises herein
contained, it is agreed by and between the parties hereto as follows:

 

1.             Term of Agreement

 

A.             THE INITIAL TERM OF THIS AGREEMENT SHALL BE FOR A PERIOD OF
THIRTY SIX (36) MONTHS COMMENCING ON OR ABOUT THE 1ST DAY OF JUNE, 2005, OR UPON
THE RECEIPT OF MEANINGFUL INVENTORY AT THE WAREHOUSE FACILITY BUT NOT LATER THAN
120 DAYS FOLLOWING THE FIFTEENTH DAY OF APRIL, 2005.  THE TERM OF THIS AGREEMENT
MAY BE EXTENDED UPON THE MUTUAL WRITTEN CONSENT OF BOTH PARTIES FOR TWO SEPARATE
BUT CONSECUTIVE THREE (3) YEAR PERIODS.  PRESTIGE BRANDS’S ELECTION TO EXTEND
THIS AGREEMENT SHALL BE EVIDENCED BY WRITTEN NOTICE DELIVERED NOT LESS THAN
ONE-HUNDRED EIGHTY (180) DAYS PRIOR TO EXPIRATION OF EACH THREE (3) YEAR PERIOD.

 

2.             Services Generally

 

A.             NLI AGREES TO PERFORM ALL TRANSPORTATION MANAGEMENT SERVICES
NECESSARY OR DESIRED BY PRESTIGE BRANDS FOR THE PROPER AND EFFICIENT OPERATION
OF THE OF THE TRAFFIC FUNCTION.

 

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B.             IN ORDER TO PROVIDE THE ABOVE SERVICES NLI WILL PROVIDE DIRECTLY
OR BY A THIRD PARTY CONTRACT (AS IT APPLIES TO FOR-HIRE CARRIERS ONLY) THE
NECESSARY MANPOWER, DESIGNATED ADMINISTRATIVE SERVICES AND OPERATIONS FUNCTIONS
ON BEHALF OF PRESTIGE BRANDS DURING ITS NORMAL BUSINESS HOURS. (0800-1700
CENTRAL STANDARD TIME)  THE DATE OF START-UP WILL BE DETERMINED MUTUALLY BY
PRESTIGE BRANDS AND NLI.

 

C.             NLI AGREES TO PROVIDE, AT ITS COST, ALL LABOR, COMPUTER HARDWARE,
SOFTWARE (WITH WEB ACCESS FOR AT LEAST THIRTY (30) USERS), PROGRAMMING, EDI
TRANSMISSIONS (EXCLUDING ANY VAN CHARGES) OFFICE SPACE, FURNITURE, FIXTURES,
TELECOMMUNICATIONS AND SUPPLIES SUCH AS BILLS OF LADING, PACKING SLIPS AND
LABELS, SPECIFICALLY AS IT APPLIES TO THE MANAGEMENT OF FREIGHT FOR PRESTIGE
BRANDS.

 

D.             NLI SHALL HAVE QUALIFIED REPRESENTATIVES AVAILABLE TO PRESTIGE
BRANDS BY TELEPHONE AT ALL TIMES DURING THE TERM OF THIS AGREEMENT (TWENTY-FOUR
(24) HOURS A DAY, SEVEN (7) DAYS A WEEK) TO RECEIVE AND PROVIDE INFORMATION,
ANSWER QUESTIONS, AND OTHERWISE PROVIDE THE ASSISTANCE CONTEMPLATED BY THIS
AGREEMENT, WHEN SUCH REPRESENTATIVE(S) ARE NOT ON SITE, IF ON-SITE PERSONNEL ARE
REQUIRED, AT PRESTIGE BRANDS.

 

E.             NLI AGREES TO MANAGE PRESTIGE BRANDS’S TRANSPORTATION FUNCTION IN
SUCH A WAY TO MAINTAIN AT LEAST MINIMUM PERFORMANCE STANDARDS AS FOLLOWS:

 

(i)            an average of 96% on-time pickup and delivery standard as defined
in Addendum B in the aggregate for all PRESTIGE BRANDS loads routed by NLI
during each fiscal year of the Agreement; and

 

F.              NLI SHALL REVIEW ALL AGREEMENTS AND CONTRACTS IT PLANS TO ENTER
INTO TO EFFECT ITS OBLIGATIONS AND DUTIES HEREUNDER WITH PRESTIGE BRANDS PRIOR
TO ENTERING INTO SAME.  PRESTIGE BRANDS MUST APPROVE ANY SUCH AGREEMENT OR
CONTRACT AND SUCH CONSENT WILL NOT BE UNREASONABLY WITHHELD BUT, WHICH APPROVAL
SHALL NOT RELIEVE NLI OF ITS OBLIGATIONS INCLUDING ITS INDEMNITY OBLIGATIONS
HEREUNDER.

 

3.             Fees and Charges

 

NLI AGREES TO NEGOTIATE ON BEHALF OF PRESTIGE BRANDS THE MOST COMPETITIVE
FREIGHT RATES (INCLUDING TRUCKLOAD, LTL, POOL TRUCK SHIPMENTS AND RAIL) POSSIBLE
PER TRAFFIC LANE, TAKING INTO CONSIDERATION PRESTIGE BRANDS’S MINIMUM SERVICE
REQUIREMENTS AS DEFINED IN ADDENDUM B.

 

•              AS NLI AND PRESTIGE BRANDS WORK TOGETHER TO FULLY DEVELOP THE
RELATIONSHIP AND EXPAND OR REDUCE THE EXTENT OF THE VALUE ADDED SERVICES
(POSSIBLY DUE TO ENHANCED SYSTEMS DEVELOPMENT/INTEGRATION) NLI AND PRESTIGE
BRANDS MAY AGREE TO INCREASE OR REDUCE THE ON-SITE AND/OR OFF SITE HEADCOUNT
RELATIVE TO THE ASSUMED ALLOWANCE IN THE ADDENDUM A (RATE BASED ON A HEADCOUNT
OF FOUR (4)), THE PAYROLL SAVINGS WILL BE PASSED THROUGH TO PRESTIGE BRANDS IN
THE FORM OF A REDUCED “PER CASE” RATE OR REDUCED ADMINISTRATIVE RATE..  THE
HEADCOUNT WILL BE REVIEWED QUARTERLY

 

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WITH THE INITIAL REVIEW OCCURRING ON OR ABOUT OCTOBER 1ST, 2005.  HEADCOUNT
REDUCTIONS MUTUALLY AGREED TO IN THE REVIEW WILL IMPACT THE ADDENDUM A RATE
EFFECTIVE THE FIRST DAY OF THE QUARTER IN WHICH REDUCTION IS PUT IN PLACE.

 

A.             UPON DELIVERY OF LOADS ROUTED BY NLI, NLI WILL PREPARE INVOICES
AND SUCH INVOICES WILL BE PRESENTED TO PRESTIGE BRANDS WEEKLY AND REFLECT
ACTIVITY FROM THE PRIOR SUNDAY THROUGH SATURDAY. SAID BACKUP TO EACH INVOICE
WILL BE BROKEN DOWN BY CATEGORY, BRAND CODE, AND SKU LEVEL FOR ALL COSTS (LINE
HAUL, FUEL SURCHARGE, AND ACCESSORIALS)  THERE MAY CIRCUMSTANCES THAT CARRIER
DATA IS RECEIVED OUTSIDE THE TYPICAL INVOICING PERIOD AND MAY BE REFLECTED ON
THE INVOICE.  SUCH INVOICE WILL BE PAYABLE VIA ELECTRONIC FUNDS TRANSFER (EFT)
BY THE 20TH DAY FROM THE DATE OF THE INVOICE.  TO SERVE AS AN EXAMPLE, INVOICE
DATE IS JANUARY 23 AND COVERS THE PERIOD OF JANUARY 15 THROUGH JANUARY 22
(SUNDAY THROUGH SATURDAY), SUCH INVOICE IS PAYABLE VIA EFT ON FEBRUARY 11.  IT
IS AGREED BY PRESTIGE BRANDS THAT DISPUTED CHARGES, IF ANY, WILL NOT BE A BASIS
FOR WITHHOLDING PAYMENT BY PRESTIGE BRANDS ON NON-DISPUTED ITEMS.  ANY DISPUTED
AMOUNTS MUST BE PROVIDED IN WRITING TO NLI WITHIN THIRTY (30) DAYS FROM THE DATE
THAT SAID INVOICE IS RECEIVED BY PRESTIGE BRANDS OR THE SAID INVOICE SHALL BE
DEEMED TO BE ACCEPTED BY PRESTIGE BRANDS.

 

B.             ANY AND ALL FREIGHT CLAIMS WILL BE SENT TO NLI FROM PRESTIGE
BRANDS ON STANDARD NLI CLAIM FORMS (SEE ADDENDUM E).  ALL CLAIMS WILL BE
REVIEWED AND, TO THE EXTENT REASONABLY POSSIBLE, RESOLVED WITHIN A ONE-HUNDRED
EIGHTY (180) DAY PERIOD FROM RECEIPT OF CLAIM OR EARLIER IF REASONABLY
POSSIBLE.  IF NOT RESOLVED BY PRESTIGE BRANDS AND NLI WITHIN THE ONE-HUNDRED
EIGHTY (180) DAY PERIOD, THE UNRESOLVED CLAIMS WILL BE SUBMITTED TO A THIRD
PARTY ARBITRATOR FOR DETERMINATION.  THE THIRD PARTY ARBITRATOR WILL BE CHOSEN
BY BOTH PRESTIGE BRANDS AND NLI OUT OF A GROUP OF THREE PROPOSED CANDIDATES.  IF
THE PARTIES CANNOT AGREE TO A MUTUALLY ACCEPTABLE ARBITRATOR, THEN THE PARTIES
WILL ASK THE AMERICAN ARBITRATION ASSOCIATION TO SELECT AN ARBITRATOR WITH A
BACKGROUND IN FREIGHT CLAIMS, WITH SAID SELECTION BINDING AND FINAL FOR BOTH
PARTIES.  THE FINAL DECISION OF THE ARBITRATOR IS BINDING AND FINAL TO BOTH
PARTIES.  AT NO TIME WILL PRESTIGE BRANDS DEDUCT FROM NLI INVOICE FOR ANY
FREIGHT RELATED CLAIM UNLESS BOTH PARTIES HAVE RECEIVED A FINAL DECISION IN
WRITING FROM AN ARBITRATOR THAT IS NOT PAID IN FULL WITHIN THIRTY (30) DAYS OF
THE DATE OF THE DECISION.  ALL CLAIM AMOUNTS ARE LIMITED TO ACTUAL
MANUFACTURER’S COST OR RELEASED VALUE OF RESPECTIVE PRODUCT.  CLAIM PROCEEDS
WILL BE REMITTED TO PRESTIGE BRANDS ONCE COLLECTION HAS OCCURRED AND UNDER NO
CIRCUMSTANCES SHALL PRESTIGE BRANDS DEDUCT ANY AMOUNTS FOR CLAIM AMOUNTS
OUTSTANDING.

 

C.             NLI AGREES THAT PRESTIGE BRANDS SHALL HAVE THE RIGHT TO AUDIT ANY
APPLICABLE CHARGES OR OTHER MATTERS PERTAINING TO TRANSPORTATION MANAGEMENT
SERVICES PROVIDED BY NLI PURSUANT TO THIS AGREEMENT.  UPON PRIOR WRITTEN NOTICE,
PRESTIGE BRANDS SHALL HAVE ACCESS TO ANY APPLICABLE NLI RECORDS AND FILES AS

 

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IT PERTAINS TO PRESTIGE BRANDS.  PRESTIGE BRANDS HAS SUCH RIGHTS AS IDENTIFIED
ABOVE FOR A PERIOD NOT TO EXCEED TWELVE (12) MONTHS FROM THE DATE OF THE CHARGE
OR MATTER.  IF THE AGREEMENT IS TERMINATED, PRESTIGE BRANDS WILL HAVE SUCH
RIGHTS AS IDENTIFIED ABOVE FOR A PERIOD NOT TO EXCEED 12 MONTHS FROM
TERMINATION.

 

D.             NLI WILL RECEIVE COMPENSATION FOR SERVICES RENDERED AS SPECIFIED
IN ADDENDUM A TO THIS AGREEMENT, WHICH IS INCORPORATED HEREIN BY REFERENCE.

 

4.             Insurance and Indemnity

 

A.             NLI SHALL, AT ALL TIMES DURING THE TERM OF THIS AGREEMENT AND ANY
EXTENSION OR RENEWAL THEREOF, MAINTAIN INSURANCE COVERAGE AS FOLLOWS:

 

(1)           NLI AND ITS AGENTS SHALL PROVIDE STATUTORY WORKER COMPENSATION
INSURANCE.  COVERAGE WILL BE PROVIDED FOR ALL OF NLI’S EMPLOYEES, TEMPORARY
EMPLOYEES, SUBCONTRACTORS, REPRESENTATIVES OR AGENTS ENGAGED OR IN ANY WAY
INVOLVED IN THE TRANSPORTATION MANAGEMENT SERVICES PROVIDED TO PRESTIGE BRANDS
TO THE EXTENT REQUIRED BY STATE LAW.

 

(2)           NLI SHALL PROVIDE GENERAL CARGO INSURANCE IN AT LEAST THE AMOUNT
OF TWO HUNDRED AND FIFTY THOUSAND DOLLARS ($250,000) PER OCCURRENCE, WHICH
COVERAGE SHALL APPLY TO SHIPMENTS OF GOODS OWNED BY PRESTIGE BRANDS ON VEHICLES
SCHEDULED FOR SUCH SHIPMENTS BY NLI PURSUANT TO THIS AGREEMENT.

 

(3)           GENERAL LIABILITY INSURANCE COVERING CONTRACTUAL OBLIGATIONS OF
NLI SET FORTH HEREIN WITH LIMITS OF NOT LESS THAN ONE MILLION DOLLARS U.S.
($1,000,000) AND SHALL MAINTAIN UMBRELLA LIABILITY INSURANCE NOT LESS THAN FOUR
MILLION DOLLARS U.S. ($4,000,000).

 

B.             NLI AND PRESTIGE BRANDS EACH AGREE TO LOOK TO THEIR RESPECTIVE
INSURANCE COVERAGE FOR RECOVERY OF ANY INSURED PROPERTY DAMAGE OR PERSONAL
INJURY.

 

C.             NLI SHALL INDEMNIFY, HOLD HARMLESS AND DEFEND PRESTIGE BRANDS
FROM ANY AND ALL CLAIMS, LOSSES, LIABILITIES AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS’ FEES AND INCLUDING WORKERS COMPENSATION CLAIMS) ARISING OUT OF OR IN
CONNECTION WITH THE OPERATION OF THE TRAFFIC FUNCTION OR THE PROVIDING OF OTHER
TRANSPORTATION MANAGEMENT SERVICES BY NLI TO THE EXTENT THAT THOSE CLAIMS,
LOSSES, OR LIABILITIES ARISE OUT OF THE NEGLIGENCE OR MISCONDUCT OF NLI OR ITS
EMPLOYEES, TEMPORARY EMPLOYEES, SUBCONTRACTORS, AGENTS OR OTHER REPRESENTATIVES,
BUT THE TOTAL AMOUNT PAID PURSUANT TO ANY SUCH CLAIMS, LOSSES, LIABILITIES AND
EXPENSES SHALL BE LIMITED TO THE FOLLOWING: (I) TO THE EXTENT INSURANCE COVERAGE
EXISTS FOR SUCH CLAIMS WITH A MAXIMUM LIMIT OF $250,000 OR (II) TO THE EXTENT
INSURANCE COVERAGE DOES NOT EXIST OR COVERS ONLY A PORTION OF SUCH CLAIMS,
LOSSES, LIABILITIES AND EXPENSES THEN SUCH AMOUNT SHALL BE LIMITED TO THE NET
PROCEEDS.  AS USED HEREIN, “NET PROCEEDS” SHALL BE DEFINED AS TOTAL BILLINGS
LESS CARRIER COSTS FOR THE TWELVE (12) MONTH PERIOD PRIOR TO SUCH CLAIM).  NOT
WITHSTANDING THE FORGOING, NLI SHALL NOT BE REQUIRED TO

 

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INDEMNIFY, HOLD HARMLESS OR DEFEND PRESTIGE BRANDS FOR ANY AND ALL CLAIMS,
LOSSES, LIABILITIES AND EXPENSES (INCLUDING REASONABLE ATTORNEYS’ FEES AND
INCLUDING WORKERS COMPENSATION CLAIMS) WHERE SUCH CLAIM, LOSS, OR LIABILITY WAS
CAUSED BY THE NEGLIGENCE OR MISCONDUCT OF PRESTIGE BRANDS OR ITS EMPLOYEES,
TEMPORARY EMPLOYEES, SUBCONTRACTORS, AGENTS OR OTHER REPRESENTATIVES.

 

5.             Relationship and Financial Responsibility

 

A.             IT IS UNDERSTOOD AND AGREED BY NLI AND PRESTIGE BRANDS THAT NLI
SHALL BE ACTING SOLELY AS AN INDEPENDENT CONTRACTOR IN THE PERFORMANCE OF ITS
DUTIES HEREUNDER.  NONE OF THE EMPLOYEES, TEMPORARY EMPLOYEES, SUBCONTRACTORS,
REPRESENTATIVES OR AGENTS OF NLI SHALL BE UNDER THE CONTROL OR DIRECTION OF
PRESTIGE BRANDS, AND IN NO EVENT SHALL SUCH PARTIES HAVE ANY CLAIM FOR BENEFITS,
RIGHTS OR OTHER PRIVILEGES ACCORDED EMPLOYEES OF PRESTIGE BRANDS.  BOTH OF THE
PARTIES UNDERSTAND AND AGREE THAT THE RELATIONSHIP OF THE PARTIES PURSUANT TO
THIS AGREEMENT IS NOT A JOINT VENTURE OR PARTNERSHIP, BUT RATHER A
CONTRACTOR/INDEPENDENT CONTRACTOR RELATIONSHIP.  NLI UNDERSTANDS AND AGREES THAT
IT DOES NOT HAVE THE RIGHT TO BIND PRESTIGE BRANDS TO ANY AGREEMENT WITH ANY
THIRD PARTY.

 

It is acknowledged that persons assigned by NLI to perform NLI’s
responsibilities under this Agreement will work closely with PRESTIGE BRANDS’S
organization, and some will work at PRESTIGE BRANDS’S premises as designated by
PRESTIGE BRANDS.  These person(s) will work a minimum eight (8) hour day and at
least a forty (40) hour week.  The proposed NLI manager, as necessary, must meet
the reasonable, mutually acceptable, requirements of PRESTIGE BRANDS.

 

NLI, its employees, temporary employees, subcontractors, representatives and
agents shall, obey all laws and all company rules while present at a PRESTIGE
BRANDS facility and/or working for the benefit of PRESTIGE BRANDS.

 

B.             IF EITHER PARTY MAKES A GENERAL ASSIGNMENT FOR THE BENEFIT OF
CREDITORS, SUFFERS OR PERMITS THE APPOINTMENT OF A RECEIVER FOR ITS BUSINESS OR
ASSETS, OR BECOMES SUBJECT TO ANY PROCEEDING UNDER A BANKRUPTCY OR INSOLVENCY
LAW, WHETHER DOMESTIC OR FOREIGN, OR HAS LIQUIDATED, VOLUNTARILY OR OTHERWISE,
EITHER PARTY MAY TERMINATE THIS AGREEMENT BY THIRTY (30) DAYS WRITTEN NOTICE.

 

C.             ALL INFORMATION NLI RECEIVES FROM PRESTIGE BRANDS IN OPERATING
THE TRAFFIC FUNCTION FROM PERSONNEL, RECORDS, CONVERSATIONS OR DATA, WHETHER IT
BE BY DIRECT OR INDIRECT COMMUNICATION OR OBSERVANCE, SHALL BE TREATED AND
REGARDED AS CONFIDENTIAL AND PROPRIETARY INFORMATION WHICH IS THE EXCLUSIVE AND
SOLE PROPERTY OF PRESTIGE BRANDS. NLI SHALL KEEP THIS INFORMATION STRICTLY
CONFIDENTIAL AND SHALL NOT DIVULGE, COMMUNICATE OR TRANSMIT THIS INFORMATION TO
THIRD PARTIES OR USE THE INFORMATION DURING THE TERM OF THIS AGREEMENT OR AFTER
ITS TERMINATION OR EXPIRATION FOR ANY CAUSE AND SHALL RETURN DATA TO PRESTIGE
BRANDS OR HAVE IT DESTROYED AFTER WRITTEN INSTRUCTION FROM PRESTIGE BRANDS.

 

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D.             NLI AGREES TO COMPLY WITH ALL FEDERAL, STATE, COUNTY, MUNICIPAL
OR OTHER APPLICABLE GOVERNMENT LAWS, REGULATIONS AND ORDINANCES, INCLUDING, BUT
NOT LIMITED TO, THOSE AFFECTING USE, WAGES AND HOURS, AND OTHER TERMS AND
CONDITIONS OF EMPLOYMENT AND ITS EMPLOYEES, TEMPORARY EMPLOYEES, SUBCONTRACTORS,
REPRESENTATIVES OR AGENTS SHALL REQUIRE IT TO DO LIKEWISE.  NLI FURTHER AGREES
TO COMPLY WITH THE RULES AND LAWS OF PRESTIGE BRANDS WHILE PRESENT AT ANY
PRESTIGE BRANDS FACILITY.

 

6.             Title and Ownership of Products.

 

6.1           Title and Ownership.  All Products under the control of NLI and
handled pursuant to this Agreement or which are otherwise in the care, custody
or possession of NLI shall at all times be and remain the property of Prestige
Brands. The Products shall not be subject to attachment or execution nor shall
any person or entity have or acquire any right, lien or claim whatsoever with
respect to the Products.

6.2           Waiver of Liens.  NLI hereby expressly, knowingly and irrevocably
waives the right to claim the benefit of any type of lien whatever which may be
applicable to the work or services being performed and the services rendered by
NLI.  NLI hereby agrees to promptly procure, execute and deliver such documents
evidencing the above-described Waiver of Liens as and when Prestige Brands shall
request. WSI shall immediately notify Prestige Brands of any claims made or
actions taken by any person or juristic entity with respect to the Products.  In
the event a claim for lien or a lien is filed against the Products due to or
arising out of the activities of NLI, NLI shall promptly discharge all such
items and shall post appropriate security in connection therewith satisfactory
to Prestige Brands.

6.3           Survival.  Expiration, termination or cancellation of this
Agreement, regardless of cause or procedure, shall not in any way affect or
impair the rights, obligations, duties and liabilities of NLI or Prestige
Brands, pursuant to this Section 6.

 

7.             Termination and Remedies Upon Default

 

A.             IN THE EVENT OF DEFAULT BY EITHER PARTY IN THE PERFORMANCE OF ANY
OF THE TERMS OR CONDITIONS OF THIS AGREEMENT WHICH DEFAULT SHALL NOT HAVE BEEN
REMEDIED WITHIN SIXTY (60) DAYS AFTER NOTICE OF DEFAULT HAS BEEN DELIVERED IN
WRITING TO THE DEFAULTING PARTY, THE NON-DEFAULTING PARTY MAY, IN ADDITION TO
ANY OTHER REMEDIES WHICH MAY BE AVAILABLE AT LAW OR EQUITY, BY NOTICE OF
TERMINATION DELIVERED TO SUCH DEFAULTING PARTY, TERMINATE THIS AGREEMENT
EFFECTIVE NINETY (90) DAYS FOLLOWING SUCH NOTICE OF DEFAULT UNLESS THE DEFAULT
HAS BEEN CURED.  THE FOLLOWING ITEMS SHALL CONSTITUTE A BASIS FOR IMMEDIATE
TERMINATION FOR CAUSE FOR PURPOSES OF THIS AGREEMENT:

 

I.              A SUBSTANTIAL AND CONTINUING BREACH OF THE OBLIGATIONS OF THIS
AGREEMENT BY THE OTHER PARTY WHICH CONTINUES AFTER NOTICE AND AN OPPORTUNITY TO
CURE IN ACCORDANCE WITH SUB-PARAGRAPH 7A. CONTINUING FAILURE TO MEET PRESTIGE
BRANDS MINIMUM SERVICE REQUIREMENTS (ADDENDUM B) WOULD CONSTITUTE A SUBSTANTIAL
BREACH OF THIS AGREEMENT.

 

II.             A DECLARATION OR ADMISSION OF BANKRUPTCY OR INSOLVENCY BY THE
OTHER PARTY.

 

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III.            INITIATION OF ANY LEGAL PROCEEDING AGAINST THE OTHER PARTY TO
DECLARE SUCH PARTY INSOLVENT OR TO SEEK ANY REORGANIZATION.

 

IV.            A TERMINATION OF THAT CERTAIN STORAGE AND HANDLING AGREEMENT
BETWEEN PRESTIGE BRANDS, INC. AND WAREHOUSING SPECIALISTS, INC. DATED APRIL   ,
2005.

 

IT IS FURTHER UNDERSTOOD AND AGREED THAT ITEMS (II), (III) AND (IV), ABOVE
REQUIRE NO ADDITIOANL OPPORTUNITY TO CURE AND ARE THE BASIS FOR A TERMINATION
FOR CAUSE WITH IMMEDIATE EFFECT.

 

B.             NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, IF NLI SHALL NOT
MAKE ANY PAYMENT AND PERFORM OBLIGATION OF NLI UNDER THIS AGREEMENT, PRESTIGE
BRANDS SHALL HAVE THE RIGHT TO CURE SUCH DEFAULT AND TO DEDUCT THE COST THEREOF
AND INTEREST THEREON FROM ANY PAYMENTS DUE NLI UNDER SECTION 3 OF THIS
AGREEMENT, AND SHALL HAVE ALL OTHER RIGHTS TO DAMAGES AVAILABLE TO PRESTIGE
BRANDS BY LAW OR EQUITY IN CONNECTION WITH SUCH BREACH.

 

C.             IN THE EVENT EITHER PARTY MAKES A CLAIM FOR DAMAGES UNDER THIS
AGREEMENT, DAMAGES SHALL BE LIMITED TO ACTUAL DAMAGES TO SUCH PARTY AND UNDER NO
CIRCUMSTANCES WILL EITHER PARTY BE LIABILE TO THE OTHER PARTY FOR PUNITIVE OR
CONSEQUENTIAL DAMAGES.

 

D.             IN THE EVENT OF TERMINATION, NLI SHALL PROVIDE ANY RECORDS THAT
ARE NECESSARY OR REQUIRED FOR PRESTIGE BRANDS TO CARRY ON ITS NORMAL BUSINESS
ACTIVITIES AT LEAST ONE WEEK PRIOR TO THE EFFECTIVE DATE OF THE TERMINATION.

 

8.             Notices

 

Any notices, reports and other communications under this Agreement shall be in
writing and shall be deemed sufficiently given if and when received by the party
to be notified at its address below or three (3) days after mailing by mail,
return receipt requested, whichever is sooner, addressed as follows (or to such
other address as may be designated subsequently in writing):

 

If to NLI:

 

If to PRESTIGE BRANDS:

 

 

 

Nationwide Logistics, Inc.

 

PRESTIGE BRANDS Inc.

7140 N. Broadway Avenue

 

90 North Broadway

St. Louis, Missouri 63147

 

Irvington, NY 10533

Attn: Steve Weise

 

Attn: Eric Millar

 

9.             Startup Costs/Initial Management Reports

 

A              EACH PARTY WILL BE RESPONSIBLE FOR PAYMENT OF ITS OWN STARTUP
COSTS INCLUDING BUT NOT LIMITED TO COMPUTER HARDWARE, SOFTWARE, PROGRAMMING,
TESTING, EDI, OFFICE SPACE, FURNITURE, FIXTURES, TELECOM EQUIPMENT AND
SUPPLIES.  WITH RESPECT TO TRAVEL PRIOR TO STARTUP, NLI WILL ABSORB TRAVEL COSTS
INCURRED BY NLI EMPLOYEES FOR SITE VISITS.

 

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10.           Non-Compete/Exclusive Provider

 

A              EXCEPT AS SET FORTH HEREIN AND IN PARAGRAPH 9(B) BELOW, PRESTIGE
BRANDS AGREES TO UTILIZE NLI AS THE EXCLUSIVE PROVIDER OF PREPAID TRANSPORTATION
MANAGEMENT SERVICES ORIGINATING FROM THE ST. LOUIS WAREHOUSE LOCATION DURING THE
TERM OF THIS AGREEMENT WITH THE EXCEPTIONS AS LISTED WITHIN ADDENDUM C.

 

B              NOTHING HEREIN SHALL PREVENT PRESTIGE BRANDS FROM PERFORMING
ITSELF, HIRING A THIRD PARTY TO PERFORM NLI’S DUTIES HEREUNDER, OR HIRING THIRD
PARTY CARRIERS TO PERFORM, A SPECIFIC FREIGHT SHIPMENT WHICH NLI IS OBLIGATED TO
PROVIDE HEREUNDER (A) IN THE EVENT NLI FAILS TO PERFORM SUCH SHIPMENT FOLLOWING
NOTICE BY PRESTIGE BRANDS TO NLI AS TO THE PURPORTED SHIPMENT FAILURE; OR (B) IN
THE EVENT THAT BY ARRANGEMENT PRESTIGE BRANDS’ CUSTOMER PICKS UP DIRECTLY; OR
(C) IN THE EVENT THAT PRESTIGE BRANDS CHOOSES TO SHIP DIRECT FROM THE FACTORY
(AS IN THE CASE OF DOLLAR GENERAL); (D) OR IN THE EVENT OF A “COLLECT”
SHIPMENT.  IN ANY SUCH EVENT PRESTIGE BRANDS NLI SHALL NOT BE ENTITLED TO
RECEIVE COMPENSATION HEREUNDER IN RELATION TO SUCH SHIPMENT.

 

C.             NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE
CONTRARY THE PARTIES AGREE THAT AN ACQUISITION OR DIVESTITURE BY PRESTIGE BRANDS
HAVING THE EFFECT OF INCREASING OR DECREASING BY FORTY PERCENT (40%) THE NEED
FOR SERVICES TO BE PROVIDED BY NLI HEREUNDER, EXPRESSED AS TOTAL CASE VOLUME,
SHALL BE THE BASIS FOR THE PARTIES TO RENEGOTIATE IN GOOD FAITH THE TERMS OF
THIS AGREEMENT.  IF AFTER A GOOD FAITH EFFORT THE PARTIES ARE UNABLE TO AGREE TO
REVISED TERMS OF AGREEMENT THIS AGREEMENT MAY THEN BE TERMINATED ON 60 DAYS
NOTICE.

 

11.           Miscellaneous

 

THIS AGREEMENT AND ANY ADDENDUMS, SCHEDULES OR EXHIBITS HERETO CONTAINS THE
ENTIRE AGREEMENT BETWEEN THE PARTIES AND MAY BE MODIFIED ONLY IN WRITING
EXECUTED BY BOTH PARTIES.  COURSE OF CONDUCT WILL NOT EFFECT A MODIFICATION OF
THIS AGREEMENT.

 

A              THE INVALIDITY OF ANY PROVISION OF THIS AGREEMENT SHALL NOT
AFFECT THE ENFORCEABILITY OR VALIDITY OF THE REMAINDER AND THE INVALID PORTION
SHALL BE DEEMED EXCISED.

 

B.             POD’S WILL BE PROVIDED BY NLI FREE OF CHARGE UPON REQUEST FROM
PRESTIGE BRANDS FOR UP TO ONE (1) YEAR FROM DELIVERY DATE.

 

C.             THE WAIVER OF ANY DEFAULT OR BREACH OF ANY PROVISION OF THIS
AGREEMENT BY EITHER PARTY SHALL NOT BE CONSTRUED AS A WAIVER OF SUBSEQUENT
DEFAULTS OR BREACHES.

 

D              THE PARTIES HERETO HAVE RELIED UPON NO REPRESENTATIONS NOT
CONTAINED HEREIN.

 

E.             BOTH PARTIES AGREE THAT THEY HAVE EXECUTED THIS AGREEMENT IN DUE
LEGAL FORM, HAVING FULL LEGAL AUTHORITY TO DO SO.

 

F.              THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT RESPECT TO ITS CONFLICTS OF LAWS
RULES.

 

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G.             PRESTIGE BRANDS CONSENTS OR APPROVALS (AS IT APPLIES TO MATERIAL
CHANGES IN PRESTIGE BRANDS OPERATIONS) MAY BE GIVEN ONLY BY A REPRESENTATIVE OF
PRESTIGE BRANDS FROM TIME TO TIME DESIGNATED IN WRITING BY PRESTIGE BRANDS.  ALL
SUCH CONSENTS OR APPROVALS SHALL BE IN WRITING.

 

H.             NLI’S CONSENTS AND APPROVALS (AS IT APPLIES TO MATERIAL CHANGES
IN NLI’S OPERATIONS AND ANY CHANGES TO THIS CONTRACT) MAY BE GIVEN ONLY BY A
REPRESENTATIVE OF NLI FROM TIME TO TIME DESIGNATED IN WRITING BY NLI.  ALL SUCH
CONSENTS OR APPROVALS SHALL BE IN WRITING.

 

I.              THIS AGREEMENT SHALL BE BINDING UPON THE SUCCESSORS AND
PERMITTED ASSIGNS OF BOTH PARTIES.

 

J.              NEITHER PRESTIGE BRANDS NOR NLI MAY ASSIGN THIS AGREEMENT
WITHOUT THE OTHER’S PRIOR WRITTEN CONSENT, WHICH SHALL NOT BE UNREASONABLY
WITHHELD.

 

K.             IN THE EVENT LITIGATION IS COMMENCED BY EITHER PARTY AGAINST THE
OTHER PARTY, BOTH PARTIES HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF THE
CIRCUIT COURT OF NEW YORK AND BOTH PARTIES WAIVE ANY OBJECTION TO VENUE IN OR
JURISDICTION OF SUCH COURTS WHICH EITHER PARTY MAY NOW OR HEREAFTER HAVE.

 

IN WITNESS WEREOF, the parties hereto have set their hands and seals on the date
first above written.

 

THIS AGREEMENT CONTAINS A BINDING ARBITRATION CLAUSE WHICH MAY BE ENFORCED BY
THE PARTIES HERETO.

 

 

Nationwide Logistics, Inc.

 

 

 

 

 

/s/ Hilton A. Kahn

 

Hilton A. Kahn

 

 

 

 

 

PRESTIGE BRANDS

 

 

 

 

 

/s/ Eric Millar

 

Eric Millar

 

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Nationwide Logistics, Inc.

ADDENDUM A – SERVICE COMPENSATION

 

For

 

Prestige Brands

 

NLI shall be compensated for its services based upon a transaction fee per
case.  This computation shall be as follows:

 

1.     Carrier line haul rates and accessorial charges will be invoiced at cost
on a weekly basis (based on 4 direct employees).  The invoice will convert these
costs to a “rate per case” which will allow for mutual setting of targets and
ease of overall management of the program and

 

2.     The NLI margin on all HBA (Health and Beauty) outbound shipments shall be
charged a flat fee of $.065 per shipped case at the base volume of 3.3 million
cases annually.  To compensate for volume changes on a weekly basis
Prestigebrands will be invoiced at rate per case based on a weekly fee of
$4125.00 (fee could be adjusted based on mutually agreed to headcount changes as
outlined in section 3.a.) divided by the total number of HBA cases. For example
if 63,461 cases are shipped in a given week the following weeks invoice will
reflect $4125.00 divided by 63,461 or $.065 per case conversely if 70,000 cases
are shipped the invoiced NLI margin will be $.059 per case.

 

Note:  In the event the HBA annual case volume falls below 2.64 million or
increases above 3.96 million per year NLI and Prestige brands will develop a
mutually acceptable cost per case fee which protects the NLI intended gross
margin of 5% and reflects the increased or decreased fixed and variable labor
cost structure.

 

3.     The NLI margin on all HHG (House Hold) outbound shipments shall be
charged a flat fee of $.083 per shipped case at the base volume of 5.5 million
cases annually. To compensate for volume changes on a weekly basis
Prestigebrands will be invoiced at rate per case based on a weekly fee of
$8,789.00 (fee could be adjusted based on mutually agreed to headcount changes
as outlined in section 3.a.) divided by the total number of HHG cases. For
example if 105,769 cases are shipped in a given week the following weeks invoice
will reflect $8,789.00 divided by 105,769 or $.083 per case conversely if
120,000 cases are shipped the invoiced NLI margin will be $.074 per case.

 

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Note: In the event the HHG annual case volume falls below 4.40 million or
increases above 6.60 million per year NLI and Prestige brands will develop a
mutually acceptable cost per case fee which protects the NLI intended gross
margin of 5% and reflects the increased or decreased fixed and variable labor
cost structure

 

4.     Gain share shall be defined as the savings or increase from the
established per case base that actually occurs on a cumulative basis at the end
of each calendar quarter. The base will be established by taking the first six
(6) months of actual freight cost data and converting said cost (line haul only)
into a cost per case. For example, if 4.2 million cases (HHG) are shipped in the
first six months of this agreement and the actual freight cost is $6.3 million
dollars, the established cost per case would be $1.50.

 

If at the end of the first quarter after the base has been established ($1.50
per case) the actual case cost is calculated to be $1.40 the following
calculation method would apply:

A)   assume 2.1million cases shipped, gain share to NLI is 10% of net savings
per case

B)    $1.50 - $1.40 = .10cents per case savings

C)    .10 x 10% = .01cents per case (NLI gain share amount)

D)    .01cents per case x 2.1million cases = $21,000 gain share to NLI

 

If at the end of the first quarter after the base has been established ($1.50
per    case) the actual case cost is calculated to be $1.60 the following
calculation method would apply:

A)   assume 2.1 million cases shipped, Prestige to receive 2% of net overage per
case

B)    $1.60 - $1.50 = .10 cents per case additional cost

C)    .10 x 2% = .002 cents per case

D)    .002 cents per case x 2.1 million cases = $4,200 overage charge paid to
Prestige

 

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Nationwide Logistics, Inc.

ADDENDUM B – MINIMUM SERVICE REQUIREMENTS

 

For

 

Prestige Brands

 

Minimum Service Requirements:

 

The minimum service requirement, as identified in Section 2 of the
Transportation Management Agreement, shall be defined as follows:

 

•              On-time service is defined as meeting any delivery appointment
commitments per the actual scheduled appointment.  On-time service will be
measured on a cumulative monthly basis and will be defined as the percentage of
deliveries meeting the on-time requirements.

 

•      On-time service performance benchmark will be defined as 96% on-time for
carrier reasons only.  NLI will provide Prestige Brands with a monthly service
report that will identify all shipments and those shipments that failed to meet
the actual scheduled arrival date.  Any shipment that does not meet its actual
arrival date will be designated with a code (to be set up by customer) to define
the reason for the service failure.  The service failure codes will be broken
down into three major categories: Vendor Related, Carrier Related and
Distribution Center related.  NLI will only be responsible for maintaining said
service level based on Carrier Related failures.

 

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Nationwide Logistics, Inc.

ADDENDUM C – TRANSPORTATION MANAGEMENT SERVICES

 

For

 

Prestige Brands

 

NLI will handle all of Prestige Brands outbound transportation management
functions.  The inbound traffic management will be evaluated jointly by Prestige
Brands and NLI by supplier location and if both parties mutually agree that NLI
can generate cost and/or service benefits to Prestige through the management of
the inbound freight NLI will initiate the management of said freight on a trial
basis.

 

Compensation for the inbound freight will be based on a bid per lane basis
only.  The bid lane rates will be agreed to by PRESTIGEBRANDS and NLI prior to
the movement

 

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Nationwide Logistics, Inc.

ADDENDUM E – LOSS/DAMAGE CLAIM FORM

 

For

 

PrestigeBrands

 

To:

 

Claim Number:

 

Claim Date:

 

 

 

 

 

Amount of Claim:

 

Claim made for:

 

 

 

 

 

Load Number:

 

Delivery Date:

 

 

 

 

 

Claimants Invoice or P.O. Number:

 

 

 

 

 

 

 

Shipper:

 

 

 

 

 

 

 

Origin:

 

 

 

 

 

 

 

Consignee:

 

 

 

 

 

 

 

Destination:

 

 

 

 

 

 

 

DETAILED STATEMENT SHOWING DETERMINATION OF CLAIM:

 

 

 

 

 

Supporting Documents:

 

 

 

 

 

Claimant:

Date:

 

 

By:

 

 

 

 

 

 

 

 

 

Signature

 

 

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