EXHIBIT 10.13

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

Leslie’s Poolmart, Inc.

Lawrence H. Hayward

 

This Amended and Restated Employment Agreement (“Agreement”) is made as of
November 21, 2003, by and between LESLIE’S POOLMART, INC., a Delaware
corporation (“LPM”), and LAWRENCE H. HAYWARD (“Mr. Hayward”).

 

R E C I T A L S

 

A. LPM is a corporation organized under the laws of Delaware. It is engaged in
the business of marketing pool supplies and related pool equipment and products.

 

B. LPM and Mr. Hayward are parties to that certain Employment Agreement January
1, 2000 governing LPM’s employment of Mr. Hayward (the “Original Agreement”).

 

C. LPM wishes to continue the employment of Mr. Hayward as President and Chief
Executive Officer of LPM to manage the business and affairs of LPM. and Mr.
Hayward desires to be so employed and act in such capacities.

 

D. This Agreement amends and restates the Original Agreement in its entirety.

 

A G R E E M E N T

 

Accordingly, the parties agree as follows:

 

1. Employment. LPM will continue to employ Mr. Hayward, and Mr. Hayward will
continue to be employed by LPM, as the President and Chief Executive Officer of
LPM and will continue to be renominated as a member of its Board of Directors.
Mr. Hayward shall serve at the will of the Board of Directors. Mr. Hayward shall
be accorded the authority by the Board of Directors commensurate with his
position as Chief Executive Officer of LPM, and he shall make a good faith
effort to act in the best interests of LPM and perform those duties reasonably
assigned to him by the Board of Directors. Mr. Hayward will devote himself
full-time to the interests of LPM and shall not accept other employment except
with the consent of the Board of Directors of LPM.

 

2. Location of Employment. Mr. Hayward’s principal place of employment shall be
at the executive offices of LPM or at such other location as mutually agreed
upon by the parties.

 

3. Compensation.

 

a. Salary. LPM shall pay Mr. Hayward a salary at the annual rate of $425,000.00,
less normal withholdings, for each calendar year, prorated for any portion
thereof, payable in substantially equal installments in accordance with LPM’s
usual payroll practice, but in no event less frequently than monthly.

 

b. Bonus. Mr. Hayward shall participate in LPM’s bonus plan applicable to top
executives, with a target bonus for each year of not less than 70% of his base
salary in effect at

 

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the end of such year. The bonus shall be paid promptly upon completion of LPM’s
year-end audit for such year.

 

c. Cash Allowances. LPM shall pay Mr. Hayward an annual cash allowance for
expenses that relate to his employment but which might be considered partially
or wholly personal in nature. The allowance shall be $25,000, increased annually
by 5%, plus the amount necessary to gross Mr. Hayward up for any and all tax
liabilities incurred by Mr. Hayward as result of the allowance (so that Mr.
Hayward receives, in the first year for example, $25,000 after payment of
applicable taxes). In addition, LPM shall pay all expenses relating to Mr.
Hayward’s reasonable out-of-pocket legal and accounting expenses incurred in
connection with the preparation and negotiation of this Agreement, also grossed
up for any taxes that may apply.

 

d. Other Benefits. Mr. Hayward shall receive other benefits such as four (4)
weeks of vacation each year (accruing pursuant to LPM’s company policy),
personal and sick leave, insurance and other benefits consistent with the
then-current policies of LPM and equal to those benefits extended to the most
senior executives of LPM. Mr. Hayward will be provided with office facilities,
secretarial support, and business expense reimbursement consistent with the
policies of LPM with respect to its most senior executives.

 

e. Severance. If Mr. Hayward’s employment is terminated by LPM for any reason
other than Mr. Hayward’s death, disability, Just Cause (as defined below), or
pursuant to LPM’s retirement policy, LPM shall pay him a lump-sum cash amount
equal to 200% of the sum of (i) his base salary in effect at the time of
termination, (ii) the greater of his target bonus for such year and the average
of his bonuses for the prior two years, (iii) an amount equal to the monthly
premium payable by Mr. Hayward for health and medical-care insurance coverage of
Mr. Hayward and his dependents for coverage period required under COBRA and (iv)
an amount equal to the monthly premium payable by Mr. Hayward for health and
medical-care insurance coverage of Mr. Hayward and his dependents for coverage
period after the expiration of COBRA period multiplied by 12, provided, however,
that the amount of such premium will be capped at 150% of the premium that was
payable under COBRA. Such payment shall be made at the time Mr. Hayward’s
employment terminates or at such later time as the amount of such payment
becomes reasonably determinable. For the purpose of this section, a termination
for “Just Cause” shall mean a termination of employment for any of the following
reasons:

 

(i) Mr. Hayward’s conviction of a felony, without the right of further appeal,
which has an adverse impact on LPM or which involves the material
misappropriation of LPM’s assets;

 

(ii) an intentional or grossly negligent violation by Mr. Hayward of any
reasonable policy of the Board of Directors of LPM that results in material
damage to LPM and which, if such violation is curable, after notice to do so,
Mr. Hayward fails to correct within a reasonable time;

 

(iii) the performance of services by Mr. Hayward for any other company, entity,
or person which directly competes with LPM during the time Mr. Hayward is
employed by LPM, without the written approval of the Board of Directors of LPM.

 

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Further, Mr. Hayward shall be entitled to all of the severance set forth in this
Section 3(e) if Mr. Hayward terminates his employment with LPM for “Good
Reason.” Mr. Hayward shall be entitled to terminate his employment for “Good
Reason” only upon:

 

(i) written notice of such termination to LPM, effective within 30 days after
being notified that Mr. Hayward is required by LPM to relocate from his existing
home due to the relocation of the corporate office; or

 

(ii) written notice of such termination to LPM, provided such notice is given no
later than 15 days from the earlier of (1) the date of execution of a definitive
agreement for or the consummation of a Change of Control (provided that the
termination will only be effective upon consummation of the Change of Control)
and (2) the consummation of a Change of Control. “Change of Control” shall mean,
a sale by the Green Equity Investors II, L.P. of a majority of the voting
securities of LPM or by LPM of substantially all of its business or assets, or
the consolidation or merger of LPM with another entity (other than a
consolidation or merger in which a majority of the stockholders of LPM comprises
a majority of the holders of voting securities of the surviving entity or the
entity that controls such entity).

 

f. Disability or Death. “Disability.” For purposes of this Agreement, Executive
will be considered “disabled” when Executive is unable to perform the essential
functions of Executive’s job, with or without reasonable accommodation, for a
period of 12 workweeks or more in a rolling 12-month period. Executive
acknowledges that, given Executive’s position, it would be unreasonable and/or
an undue hardship for LPM to be without an individual able to perform the
essential functions of Executive’s position for any longer period of time. If
Mr. Hayward’s employment is terminated as a result of disability or in the case
of death, Mr. Hayward or his estate shall be entitled to receive (i) any unpaid
base salary that had been earned or would have been earned through the end of
the month of termination; (ii) 18 months of Mr. Hayward’s base salary paid in
installments in accordance with LPM’s normal payroll procedures; and (iii) a
pro-rata portion of the bonus to which he would otherwise have been entitled for
the year, based on the number of months in the year of termination during which
he was employed, to be paid at such time bonuses are paid to other executives;
(iv) a pro-rata portion of his cash allowance for the year, (v) any
reimbursements to which he is entitled; (vi) compensation for unused vacation;
(vii) continuation of health insurance coverage for Mr. Hayward’s dependents at
LPM’s expense for 18 months under COBRA; and (viii) any other amounts or
benefits due after the termination of employment under the terms of other
agreements, awards, plans’ arrangements, policies or programs.

 

4. Reimbursement for Expenses. During the term of this Agreement, if LPM’s
executive offices are relocated to a location beyond a 25 mile radius of
metropolitan Phoenix, Arizona, LPM shall reimburse Mr. Hayward for his increase
in travel, housing and living expenses incurred as a result of such relocation,
in addition to the reimbursement of those business expenses set forth in Section
3 above.

 

5. Representation of Mr. Hayward. Mr. Hayward represents and warrants that
execution or delivery of this Agreement, or his performance hereunder will
conflict with, or result in a breach of, any obligation, contract, agreement,
covenant or instrument to which he is a party.

 

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6. Dispute Resolution. This Agreement shall be governed and construed in
accordance with the laws of the state of Mr. Hayward’s principal place of
employment. Mr. Hayward and LPM agree that any and all disputes, controversies
or claims of any nature between them including, without limitation, any disputes
arising out of or concerning this Agreement, Mr. Hayward’s employment or his
termination shall be determined exclusively by final and binding arbitration
before a single arbitrator located in the same county as Mr. Hayward’s principal
place of employment, administered by the American Arbitration Association
(“AAA”) under the National Rules For Resolution Of Employment Disputes of the
AAA, and that judgment upon the award of the arbitrator may be rendered in any
court of competent jurisdiction. This includes any claims Mr. Hayward may have
against LPM or against LPM’s officers, directors, employees or agents in their
capacity as such or otherwise. The arbitrator shall be a former jurist or an
attorney with substantial experience in employment matters and mutually agreed
to by the parties in their reasonable discretion. This agreement to arbitrate
does not include claims covered by unemployment insurance and workers’
compensation statutes.

 

The arbitrator’s authority and jurisdiction shall be limited to determining the
dispute in arbitration in conformity with law to the same extent as if such
dispute were determined as to liability and remedy by a court without a jury.
The arbitrator shall render an award which shall include a written statement of
opinion setting forth the arbitrator’s findings of fact and conclusions of law.
MR. HAYWARD AND LPM EXPRESSLY WAIVE ALL RIGHTS TO A JURY TRIAL IN COURT ON ALL
STATUTORY OR OTHER CLAIMS.

 

7. Golden Parachute Tax Gross-up

 

(a) Application of Gross-up. All payments and benefits provided to Mr. Hayward
by LPM are intended to be reasonable compensation for services by Mr. Hayward,
and LPM intends that Mr. Hayward receive the full economic benefit of such
payments and benefits. In the event that it is determined that any payment or
benefit provided by LPM to or for the benefit of Mr. Hayward, either under this
Agreement or otherwise, and regardless of under what plan or arrangement it was
made, will be subject to the excise tax imposed by section 4999 of the Code or
any successor provision (“section 4999”), LPM will, prior to the date on which
any amount of the excise tax must be paid or withheld, make an additional
lump-sum payment (the “gross-up payment”) to Mr. Hayward. The gross-up payment
will be sufficient, after giving effect to all federal, state and other taxes
and charges (including interest and penalties, if any) with respect to the
gross-up payment, to make Mr. Hayward whole for all taxes (including withholding
taxes) and any associated interest and penalties, imposed under or as a result
of section 4999.

 

(b) Determinations. Determinations under this Section will Section will be made
by LPM’s tax accountants unless Mr. Hayward has reasonable objections to the use
of that firm, in which case the determinations will be made by a comparable firm
chosen by Mr. Hayward after consultation with LPM mutually acceptable to both
parties (the firm making the determinations to be referred to as the “Firm”).
The determinations of the Firm will be binding upon LPM and Mr. Hayward except
as the determinations are established in resolution (including by settlement) of
a controversy with the Internal Revenue Service to have been incorrect. LPM will
pay all fees and expenses of the Firm.

 

(c) Controversy with IRS. If the Internal Revenue Service asserts a claim that,
if successful, would require LPM to make a gross-up payment or an additional
gross-up payment,

 

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LPM and Mr. Hayward will cooperate fully in resolving the controversy with the
Internal Revenue Service. LPM will make or advance such gross-up payments as are
necessary to prevent Mr. Hayward from having to bear the cost of payments made
to the Internal Revenue Service in the course of, or as a result of, the
controversy. The Firm will determine the amount of such gross-up payments or
advances and will determine after resolution of the controversy whether Mr.
Hayward must return any advances must be returned by Mr. Hayward to LPM. LPM
will bear all expenses of the controversy and will gross Mr. Hayward up for any
additional taxes that may be imposed upon Mr. Hayward as a result of its payment
of such expenses.

 

(d) Cooperation with LPM. Mr. Hayward shall notify LPM promptly (in any event no
less than 10 days following receipt thereof) and in writing of any proposed or
final claim by the Internal Revenue Service that, if successful, would require
the payment by LPM of any amount under this Section 7. Mr. Hayward shall not pay
such claim prior to the expiration of the thirty (30) calendar day period
following the date on which Mr. Hayward gives such notice to LPM (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If LPM notifies Mr. Hayward in writing prior to the expiration of
such period that LPM desires to contest such claim (or if Mr. Hayward pays the
related taxes within such shorter period and LPM requests, within such thirty
(30)-day period, that Mr. Hayward claim a refund of some or all of such taxes),
then Mr. Hayward shall:

 

(i) give LPM any information reasonably requested by LPM relating to such claim,

 

(ii) take such action in connection with contesting such claim or claiming such
refund as LPM shall reasonably request in writing from time to time, including
accepting legal representation with respect to such claim by an attorney
reasonably selected by LPM,

 

(iii) cooperate with LPM in good faith in order effectively to contest such
claim or pursue such refund, and

 

(iv) permit LPM to participate in any proceedings relating to such claim;

 

provided, however, that LPM shall bear and pay directly all costs and expenses
incurred in connection with such contest or refund claim (including, but only to
the extent reasonably incurred, out-of-pocket costs and expenses incurred by Mr.
Hayward), and shall indemnify and hold Mr. Hayward harmless, on an after-tax
basis, for any excise tax or income tax imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this subsection 7(d), LPM shall control all proceedings
taken in connection with such contest, and, at its sole discretion, may pursue
or forgo any and all administrative appeals, proceedings, hearings and
conferences with the applicable taxing authority in respect of such claim and
may, at its sole discretion, either direct Mr. Hayward to pay the tax claimed
and sue for a refund or contest the claim in any permissible manner, and Mr.
Hayward agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as LPM shall determine. If the advancement described below is
permitted under applicable law, LPM may direct Mr. Hayward to pay such claim and
sue for a refund, and shall advance the amount of such payment to Mr. Hayward,
on an interest-free basis, and shall indemnify and hold Mr. Hayward harmless,

 

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on an after-tax basis, from any excise tax or income tax imposed with respect to
such advance or with respect to any imputed income in connection with such
advance; and provided, further, that any extension of the statute of limitations
relating to payment of taxes for the taxable year of Mr. Hayward with respect to
which such contested amount is claimed to be due (other than any such extension
arising by operation of law) is limited solely to such contested amount or
issues. Furthermore, LPM’s control of the contest shall be limited to issues
with respect to which the payment under this Section 7 would be payable
hereunder, and Mr. Hayward shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.

 

(e) If, after the receipt by Mr. Hayward of a payment under this Section 7 or an
amount advanced by LPM pursuant to subsection 7(d), Mr. Hayward becomes entitled
to receive any refund with respect to the excise tax to which such payment
relates or with respect to such claim, Mr. Hayward shall promptly pay to LPM the
amount of such refund (together with any interest paid or credited thereon after
Taxes applicable thereto), less any taxes required to be paid by Mr. Hayward
with respect to the receipt thereof. If, after the receipt by Mr. Hayward of an
amount advanced by LPM pursuant to this Section 7 a determination is made that
Mr. Hayward shall not be entitled to any refund with respect to such claim and
LPM does not notify Mr. Hayward in writing of its intent to contest such denial
of refund prior to the expiration of thirty (30) calendar days after LPM’s
receipt of notice of such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall be
offset, to the extent thereof, against the amount of payment required to be
paid. LPM may request that Mr. Hayward pursue a refund of any payment under this
Section 7, and in such case the provisions of subsection 7(d) and this
subsection 7(e) shall govern the pursuit of such refund.

 

(f) Notwithstanding any other provision of this Section 7, LPM may, in its sole
discretion, withhold and pay over to the Internal Revenue Service or any other
applicable taxing authority, for the benefit of Mr. Hayward, all or any portion
of any payment and Mr. Hayward hereby consents to such withholding.

 

(g) LPM’s obligations under this Section 7 will survive the termination of the
Employment Period and any termination of this Agreement. Mr. Hayward shall
cooperate as reasonably requested by LPM in order to reduce the amount of any
payments or benefits to Mr. Hayward that would be subject to the tax imposed by
section 4999.

 

8. Entire Agreement/Modifications. This Agreement constitutes the entire
agreement of the parties with respect to Mr. Hayward’s employment with LPM. It
supersedes any prior agreement, statement or representation. It may be modified
only by written instrument executed by the party against which the modification
is asserted. Failure to require performance of any provision shall not affect
the right at a later time to enforce the same. No waiver by either party of a
breach, whether by conduct or otherwise, shall be construed as a further or
continuing waiver of any such breach. Termination of Mr. Hayward’s employment at
any time will not terminate those provisions of this Agreement imposing
obligations that, by character or design must be performed after such
termination of the employment.

 

9. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition

 

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or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

10. Expiration of Agreement. Unless renewed or extended by mutual written
agreement of the parties hereto, this Agreement will automatically expire on the
fifth anniversary of the date hereof. If LPM’s employment of Mr. Hayward is
terminated prior to the expiration of this agreement, those provisions of this
Agreement imposing obligations that by character or design must continue to be
performed after the fifth anniversary of this Agreement shall survive the
expiration of this Agreement.

 

11. Assignability.

 

a. Subject to the provisions of Section 3(e) above, in the event LPM shall merge
or consolidate with any other partnership, limited liability company,
corporation, or business entity or all or substantially all LPM’s business or
assets shall be transferred in any manner to any other partnership, limited
liability company, corporation or business entity, such successor shall
thereupon succeed to, and be subject to, all rights, interests, duties,
obligations of, and shall thereafter be deemed for all purposes hereof to be,
LPM hereunder.

 

b. This Agreement is personal in nature and none of the parties hereto shall,
without the written consent of the other, assign or transfer this Agreement or
any rights or obligations hereunder, except by operation of law or pursuant to
the terms of Section 11(a) above.

 

c. Nothing expressed or implied herein is intended or shall be construed to
confer upon or give to any person, other than the parties hereto, any right,
remedy or claim under or by reason of this Agreement or of any term, covenant or
condition hereof.

 

12. Confidentiality and Non-Solicitation. The parties recognize that Mr. Hayward
will have access to trade secrets and proprietary information of LPM, and they
recognize that should such information be revealed to a competitor, LPM would be
materially damaged in an amount difficult to calculate. During the term of this
Agreement and thereafter, Mr. Hayward promises not to disclose or use or induce
or assist in the disclosure or use any of the above information except for the
benefit of LPM. Accordingly, Mr. Hayward agrees that for one (1) year after
termination of his employment with LPM, regardless of the reason for such
termination, he shall not, directly or indirectly, on his behalf or the behalf
of any other person or entity, solicit any customers of LPM to cease to do
business or to reduce the amount of business with LPM or to do business with
another company that is a competitor of LPM or solicit any person who is an
employee of LPM to terminate such employment.

 

13. Withholding. All amounts or benefits payable hereunder shall be subject to
applicable tax withholding, and the withholding of any such amounts shall be
treated as payment thereof to Mr. Hayward for purposes of determining whether
all amounts required hereunder to be paid have been paid. Withholding of tax
from any non-cash amounts or benefits that are subject to withholding may be
made from cash amounts otherwise payable to Mr. Hayward.

 

[signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first written above.

 

LESLIE’S POOLMART, INC.

         

LAWRENCE H. HAYWARD

/s/    DONALD J. ANDERSON                    /s/    LAWRENCE H. HAYWARD        

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Name:

Title:

 

Donald J. Anderson

EVP & CFO