**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 engagedin 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 andChief 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 LPMand 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 ChiefExecutive 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 andshall 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 eachcalendar 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 planapplicable to top executives, with a target bonus for each year of not less than 70% of his base salary in effect at 

 

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 allowancefor 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 taxliabilities 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’sreasonable 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 (accruingpursuant 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 providedwith 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 andthe 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 paymentbecomes 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 orwhich 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. Haywardfails to correct within a reasonable time; 

 

(iii) theperformance 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 byLPM 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 ofControl (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 amajority 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 LPMcomprises 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” whenExecutive 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’sposition, 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 aresult 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 yearof 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 unusedvacation; (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 otheragreements, 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 conflictwith, 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 ofMr. 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 AmericanArbitration 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 claimsMr. 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 andmutually 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 todetermining 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 ofopinion 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 benefitprovided 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 successorprovision (“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 besufficient, 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 anyassociated 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 thedeterminations 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 Firmwill 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 RevenueService 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 asare 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 andwill 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 beimposed 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, wouldrequire 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 shorterperiod 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 taxeswithin 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 suchclaim 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 effectivelyto 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 thissubsection 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 authorityin 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 determinationbefore 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 claimand 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 suchadvance; 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 arisingby 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. Haywardshall 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 becomesentitled 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 afterTaxes 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. Haywardshall 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 ofsuch 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. Haywardpursue 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 theInternal 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 ofthis 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 ofthe 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 suchbreach. 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 unenforceablein 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 ofthe 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 imposingobligations 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 succeedto, 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 Agreementor 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 revealedto 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 aboveinformation 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 thebehalf 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 ofLPM to terminate such employment. 

 

13. Withholding. All amounts orbenefits 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 havebeen 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 yearfirst written above. 

 

LESLIE’S POOLMART, INC.
     
LAWRENCE H. HAYWARD
/s/    DONALD J. ANDERSON              /s/    LAWRENCE H. HAYWARD          
Name:

Title:
 
**Donald J. Anderson**

**EVP & CFO**