Document:

Exhibit 10.1

 

 

Operating Agreement

 

Prestige Brands,
Inc and

Warehousing Specialists, Inc.

7140 N. Broadway

Saint Louis, MO 63147

 

STORAGE AND HANDLING AGREEMENT

 

 

THIS AGREEMENT is made and entered into by and
between Warehousing Specialists, Inc. (WSI), a Missouri Corporation, and
Prestige Brands Inc. (Prestige) a New York corporation

 

WHEREAS, WSI represents that it operates a warehouse facility in the State
of Missouri located at 7140 N Broadway Saint Louis, MO 63147 and further
represents that it has duly complied with all federal and state regulations
relating thereto; and

 

WHEREAS, Prestige Brands Inc desires that space within the WSI Premises be
made available for storage of goods owned by or in possession of Prestige
Brands as well as other warehousing services including daily handling of
product;

 

NOW, THEREFORE, in consideration of these services and premises, the
parties hereto covenant and agree as follows:

 

1.                                       Confirming Documents:  When
WSI receives goods for storage which are owned by Prestige Brands, WSI shall
issue weekly billing. WSI also agrees to supply Prestige Brands designated
personnel access to the LogiView system to track all required information and
reports.

i.      WSI will provide for Prestige Brands up to 30
LogiView and Logistics sign-in accounts with a one year rolling history

 

2.                                       Storage and Handling:  WSI
agrees to unload and receive in storage unit loads of goods, directed to WSI by
Prestige Brands. All receiving, storage, selection and loading as well as
capture origin, item, lot, expiration date if applicable, quantities, item
status, and any OS and D’s. All products will be maintained by Lot control. The
combination of these services will be provided for the case cost outlined
below.

•                  Household Products @ $0.20 cents per case
based upon full pallet shipments allowing for 10% of the product to be case
selected, assuming approximately 6 million cases annually and 16,000 pallets
stored plus or minus a 20% deviation

•                  HB Product @ $0.455 cents per case assuming
the majority is case selected and approximately 2,500 pallets on stored plus or
minus a 20% deviation, inclusive of individual case labeling and banding for
product ship through a parcel service

•                  VAS pallets will be charged at $10.00 per
pallet storage and handling

•                  An up charge of 10% will be assessed for any
purchases made by WSI on behalf of PBI

 

A.           Customer returns can either come back as full
case or pieces. No customer return is to be accepted without a return
authorization number supplied by Prestige Brands. Full case items are to be
received and processed like any other contract manufacturer inbound and
therefore will be calculated and paid under the full case structure outlined
above. Piece returns are to be scanned individually with a software systems and
hardware set-up supplied by Prestige Brands which generates a piece return
tally sheet. This process will be paid by the accessorial guide below,
documenting the actual hours spend on the task by person.

B.             Daily CMF receiving activity must be provided
to Prestige Brands via a copy of each inbound tally and its corresponding
back-up (packing slip, bill of lading ET.)

 

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Each tally is required to be sent overnight delivery
after it is keyed. As an example Monday inbounds paperwork would be delivered
to its NY office by Wednesday morning.

C.             Daily customer returns are submitted to the
Jackson, WY office

D.            Inbound invoicing must take place weekly,
listing all receipts individually and by break out category code, brand code
and SKU. Invoicing must have pallet display units (PDU) converted into open
stock case equivalents.

E.              Product received today is expected to be
available for shipment the next business day. There are however some same day
receipt shipping but only on an exception basis.

The
rates quoted above are inclusive of supply and preparation of all paperwork,
tallies, bills of lading, packing slips, pick tickets, status change requests
et.

 

3.                                       Additional Charges:  If
WSI is required to perform services in addition to those outlined above, such
additional service charges shall be subject to accessorial charges at the rate
of $20.00 per hour inclusive of normal industrial equipment or fixed charge
agreed to at the time of the request, which ever is the lesser amount. Pallets
will be tracked for both Chep and White wood. If White wood is required to be
supplied by WSI a charge of $5.50 per #2 and $7.00 per #1 respectively will be
assessed and billed to Prestige Brands accordingly. WSI will use and/or update
the Chep Web system or EDI daily.

 

4.                                       Duty of Care: 
Prestige Brands agrees that each palletized unit shall be properly
packaged and contained so as to allow normal unloading, stocking and reloading
from and to truck or rail carriers. WSI shall exercise such care in regard to
Prestige Brands goods stored at WSI premises, as a reasonably careful man would
exercise under like circumstances. WSI will obtain and maintain warehouseman’s
liability insurance. No further warranties and liabilities are hereby granted
or expressly implied.

 

5.                                       Title and Ownership of Products.

 

5.1                                 Title and Ownership.  All
Products stored at the WSI Premises and handled pursuant to this Agreement or
which are otherwise in the care, custody or control of WSI 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.

 

5.2                                 Waiver of Liens.  WSI 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 being performed and the services rendered by WSI.  WSI 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 WSI, WSI shall promptly discharge all such
items and shall post appropriate security in connection therewith satisfactory
to Prestige Brands.

 

5.3                                 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 WSI or Prestige Brands, pursuant to this
Section 5.

 

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6.                                       Risk or Loss:  WSI
assumes all risk of damage or loss to its premises due to fire or accident
incurred as a result of the handling and storage of Prestige Brands goods at
manufacturers cost or up a total of $2 million dollars which ever is less.

 

7.                                       Inspections: 
Prestige Brands shall have the privilege of inspecting, at any
reasonable time during normal business hours, the goods and premises on which
they are stored.

 

8.                                       Independent Contractor: 
Prestige Brands and WSI agree that WSI is an independent contractor and
that the WSI shall not be considered an agent or employee of Prestige Brands
for any purpose whatsoever.

 

9.                                       Indemnification:  WSI
shall protect, indemnify and hold harmless Prestige Brands from any loss,
damage, liability and expense, including reasonable counsel fees, for all
injuries, including death to persons or damage to property directly or
indirectly arising from or growing out of WSI’s negligent acts or omissions in
the performance of this Agreement, except such loss or damage that is the
direct result of Prestige Brands negligence.

 

10.                                 Insurance:  During the term of this
Agreement, WSI shall carry and maintain such liability insurance as will
protect WSI and Prestige Brands from claims under any Worker’s Compensation or
other similar acts and from any other damages from personal injury, including
death, which may be sustained by Warehouseman’s workers, contractors or any of
their servants, agents or employees and the general public, and from claims for
property damage, which may be sustained by any of them, due to the performance
of this Agreement.

 

11.                                 Inventory: WSI shall conduct
physical inventories at Prestige Brands request; such inventory shall be
conducted by WSI employees for which all costs associated with such inventories
shall be at Prestige Brands expense. WSI shall conduct cycle counts of Prestige
Brands goods stored on WSI premises. 
Such cycle counts shall be conducted no less than thirty (30) day
increments commencing upon the receipt of Prestige Brands goods at WSI’s
facility so that the entire square footage of product stored is completed as
least once every quarter.

 

12.                                 Physical Inventory:  At
Prestige Brands request, a year-end physical inventory may be conducted at a
date mutually agreeable and at Prestige Brands expense. Immediately following
each physical inventory or cycle count, Prestige Brands and WSI shall adjust
their book inventories to reflect the results of the physical count. Losses and
gains resulting from cycle counts and the annual physical inventory will be
accumulated during the year and netted to one number upon completion of the
annual physical inventory.  Within 30
days of completion of the annual physical inventory, Prestige Brands shall invoice
WSI for any shortages at Prestige Brands manufactured cost based upon damage
and loss variance allowance of .05% of the total cases received that year
following the final reconciliation.

 

13.                                 Movement and Storage of Product:  WSI
shall unload, stock and reload Prestige Brands product in accordance with
Prestige Brands written direction. WSI will “lot” product by date code and ship
product by batch code.

 

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14.                                 EDI Capabilities and Reports:  WSI
agrees to support and abide by Prestige Brands EDI 

expectations; this includes production of
940,943,944,945,856 and UCC-128 labels and 997,s. These transactions will
be completed via FTP connection. Reporting will include the following:

 

	
  Daily

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  • Ship
  Confirmation

  	
   

  	
  • Open order
  reports

  	
   

  	
  • Bill of Ladings

  	
   

  
	
  • Customer
  return tallies

  	
   

  	
  • Scan reports

  	
   

  	
  • Inbound receipts

  	
   

  
	
  • Inbound
  appointment log

  	
   

  	
  • Exception
  report

  	
   

  	
  • Adjustment report

  	
   

  
	
  • Chep pallet
  report (856)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Weekly

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  • VAS
  production report

  	
   

  	
  • Handling
  Invoice

  	
   

  	
  • Freight Invoice

  	
   

  
	
  Monthly

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  • Activity
  recap by SKU

  	
   

  	
  • Receipts by
  SKU

  	
   

  	
  • Shipments by SKU

  	
   

  
	
  • Turns report

  	
   

  	
  • Stock status
  for finished goods

  	
   

  	
  • Stock status
  for VAS components

  	
   

  
	
  • Critical inventory/short dated

  	
   

  	
  • Score cards

  	
   

  	
   

  	
   

  

 

All
reporting must be broken out by its general ledger hierarchy and all Invoicing
PDU converted into open stock case equivalent.

 

15.                                 Claims and Service Resolution:  Both
parties agree to resolve matters of claims and service complaints in a timely
and reasonable manner.

 

16.                                 Successors:  Covenants, terms and conditions
made and entered into by the Parties hereto are declared to be binding on their
respective heirs, representatives and assigns.

 

17.                                 Term of Agreement:  The
term of this Agreement shall commence after execution by the parties and shall
continue in full force and effect for a period of thirty six (36) months from
the time of first receiving and shall thereafter automatically renew for
successive terms of one year 90 days prior to the expiration unless prior
written notice of intention to terminate has been provided. If at any time
either party shall be in continuing material breach of its obligations
hereunder the non-breaching party may terminate this Agreement on 30 days
notice. In the event that either party shall declare insolvency or bankruptcy
the other party shall have the right but not the obligation to terminate this
Agreement on 30 days notice. If the goals provided in Exhibit 2 to this
Agreement are not substantially achieved within 18 months of the commencement
of the term, Prestige Brands shall have the right, but not the obligation, to
terminate this Agreement on 90 days written notice. It is expressly agreed and
understood that the achievement of the goals specified in Exhibit 2 is a
continuing and ongoing obligation.  If
after a period of acceptable performance a decline ensues such that the goals
are not being substantially achieved, Prestige Brands shall have the right, but
not the obligation, to terminate this Agreement on 90 days written notice.

 

18.                                 Payment:  All payments to WSI by Prestige
Brands will be made by check with 30 day terms. A late payment of past due
balance plus 1 1⁄2% per month will be assessed against the outstanding balance of
any past due invoices. Prestige may elect to pay by wire with no discount.

 

19.                                 Waiver:  No waiver of any of the provisions
of this Agreement shall be deemed, or shall constitute a waiver of any other
provision, whether or not similar nor shall any waiver constitute a continuing
waiver.  No waiver shall be binding
unless executed in writing by the party making the waiver.

 

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20.                                 Required Signatures:  Execution of this
Agreement is not complete or binding until all required signatures of Prestige
Brands and WSI set forth below have been obtained.

 

21.                                 Waiver of Liens:  A waiver of liens
will be required of WSI and is attached as exhibit 1 and is part of this
agreement

 

22.                                 Required KPI’s: A list of required KPI goals are attached as exhibit 2

 

This agreement and any addendum, schedules or exhibits hereto contain the
entire Agreement between and may be modified only in writing executed by both
parties. This Agreement shall be governed by and construed under the laws of
the State of New York as applied.

 

 

Warehousing
Specialists, Inc. (WSI)

 

 

	
  Prestige Brands, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   /s/ Eric M. Millar

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title    Senior VP of Operations

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
    4/13/2005

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Warehousing Specialists, Inc. (WSI)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ Hilton A. Kahn

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title

  	
      Principal

  	
   

  	
   

  	
   

  
	
  Date:

  	
        3/28/2005

  	
   

  	
   

  	
   

  
											

 

 

Exhibit 2 KPI Requirements 

 

Receiving
Accuracy:  Goal 98%

Inbound
tally sent to PBI is accurate for item, lot and quantity against the packing
slip or actual count. Example: If 70 tallies submitted in a week and 2 had
errors the score would be 97.14%

 

Tally
Timeliness:  Goal 98%

Inbound
receipts are made available for shipment by the next business day or earlier
and tallies sent to PBI by the next business day.

 

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Ship/Chep
Confirmations:  Goal 100%

945’s
for all prior day shipments must be received by PBI no later than 08:00 EST

 

Inventory
Accuracy:  Goal 98%

A
cycle count program ensuring the entire warehouse is counted on a quarterly
basis must be established. Accuracy is determined by: Item, lot, expiry and
quantity being correct on both stock status and physical location.

 

7Exhibit 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.

 

 

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

 

2

 

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

 

3

 

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.

 

6

 

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.

 

7

 

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.

 

8

 

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

  

 

9

 

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.

 

10

 

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

 

11

 

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.

 

12

 

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

 

13

 

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

  	
   

  

 

14

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