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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
AGREEMENT dated as of June 16, 1997 between General Nutrition,
Incorporated, a Pennsylvania Corporation ("Company"), and Xxxxxxx X. Xxxxx
("Executive").
WHEREAS, Executive is employed by Company as President and Chief Executive
Officer under the terms of an employment agreement dated March 24, 1989 and
amendments thereto; and
WHEREAS, Company and Executive wish to enter into an updated agreement to
provide for the continuation of Executive's employment by Company on the terms
and conditions set forth below;
NOW, THEREFORE, the parties hereto agree as follows:
1. EMPLOYMENT. Company agrees to employ Executive, and Executive agrees to
serve, as its President and Chief Executive officer until February 3, 2001 or
until Executive's employment with the Company is terminated by either party as
specified in Paragraph 6 hereof (the "Employment Period").
2. DUTIES. Executive is engaged to perform such duties as are assigned to
him as President and Chief Executive Officer of Company by its Board of
Directors. Executive shall devote his full time and attention to the performance
of such duties, which shall remain similar to the duties he is presently
performing. At no time during the Employment Period shall Executive take on
additional employment without permission in writing from Company.
3. COMPENSATION.
(a) Base Salary. For all services rendered by Executive during the
Employment Period, Company shall pay Executive a base salary at the rate of
$929,700 per year. Salary payments shall be subject to withholding of applicable
taxes. Executive's base salary shall be adjusted on each February 1 during the
Employment Period to reflect changes from the prior February 1 in the Consumer
Price Index For All Urban Consumers prepared by the United States Department of
Labor.
(b) Incentive Bonus. Executive shall not be eligible to participate
annually during the Employment Period in the Company's Incentive Compensation
Plan.
(c) Stock Options. The Company has established stock option plans for key
employees under which Executive has been granted options to purchase shares of
common stock of Company and may be granted additional options in the future. It
is anticipated that any shares of common stock of Company issued to Executive
pursuant to the options shall be duly registered by Company. The terms and
conditions of the options shall be set forth in the option agreement and stock
option plan.
(d) Disability. During the Employment Period, Company shall continue in
effect a program comparable to its current long-term disability insurance
program so as to provide insurance payments to Executive upon complete
disability of $120,000 per year for a period and under terms reasonably
comparable to those provided under the current long-term disability insurance
program.
(e) Company Aircraft. Executive shall be entitled to personal use of the
Company's private airplane for up to 100 hours per year plus up to $35,000 per
year in airplane related expenses, (pilots lodging, meals and other incidental
expenses related to operation of the airplane) as part of his compensation, and
such compensation shall include additional amounts to approximate the federal
and any state income taxes applicable to such additional compensation. If the
Company does not have available a Company-owned or leased private airplane, then
Executive may in the alternative, charter on the same compensation terms herein
discussed, a private airplane substantially similar to the type of plane
primarily used by the Company for up to the aggregate number of hours of private
use per year when combined with actual use of Company-owned or leased airplane
during such year, equivalent to the costs of 100 hours of such personal use at
the preferential use rate offered to the Company by a private airplane
transportation provider for the corporate lease of such airplanes. If personal
use of a Company-
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owned or leased private airplane by Executive exceeds 100 hours per year or when
combined with Executive's use of a chartered airplane, aggregate use exceeds the
cost of 100 hours of such use per year at the Company's preferential use rate,
then Executive shall reimburse the Company for the incremental cost of such
excess use.
(f) Other Compensation. Executive shall be eligible during the Employment
Period to participate in all employee benefit plans to which the Company's
executives are generally entitled to participate, except as may be required by
law or relevant plan provisions.
4. REIMBURSEMENT OF EXPENSES. During the Employment Period, Company shall
provide Executive an automobile allowance and associated operating expenses in
accordance with the Company's policy in effect on the date hereof and with
membership dues to a luncheon club and a golf club. Executive shall furnish
Company with periodic, itemized expense reports if directed by Company.
5. DISCLOSURE OF CONFIDENTIAL INFORMATION. Executive shall not during or
within two (2) years after any termination of his employment, disclose all or
any part of the following valuable, special and unique assets of Company's
business to any person, corporation, association or other entity for any reason
whatsoever:
(a) Company's financial and sales information.
(b) Company's manufacturing formulas and processes.
(c) Company's business plans and projections; and
(d) Company's trade secrets.
In the event of a breach or a threatened breach by Executive of the
provisions of this paragraph, Company shall be entitled to an injunction
restraining Executive from disclosing in whole, or in part, Company's
confidential information. Nothing herein shall prohibit Company from pursuing
any other remedies legally available to Company for such breach or threatened
breach, including the recovery of damages from Executive.
6. TERMINATION ARRANGEMENTS.
(a) Death or Disability. In the event Executive's employment with Company
is terminated by reason either of his death during the Employment Period or by
reason of his medically determined physical or mental disability during the
Employment Period, the Company shall continue to provide Executive (or
Executive's Estate in the event of Executive's death) the compensation,
including adjustments, set forth in Section 3 hereof until February 3, 2001 or
at Executive's (or Executive's Estate's) option and in lieu thereof, a lump sum
equal to the total aggregate base salary, excluding adjustments, due Executive
under Section 3(a) hereof through February 3, 2001 discounted at the rate of 6%
per annum, simple interest. Any such lump sum payment shall be made within 30
days of termination.
(b) Without Cause. In the event Executive's employment is terminated by
Company before February 3, 2001, without cause, Company shall continue to
provide Executive (or Executive's Estate in the event of Executive's death) the
compensation, including adjustments, set forth in Section 3 hereof until
February 3, 2001 or, at Executive's (or Executive's Estate's) option and in lieu
thereof, a lump sum equal to the total aggregate base salary, excluding
adjustments, due under Section 3(a) through February 3, 2001, discounted at the
rate of 6% per annum, simple interest. In addition, in the event of Executive's
termination without cause, the value of the Company aircraft benefit set forth
in Section 3(e) hereof, shall be fixed at $200,000 per year and Executive shall
be provided with a lump sum payment equal to the total aggregate value of the
aircraft benefit through February 3, 2001, discounted at the rate of 9% per
annum, simple interest. Any such lump sum payment shall be made within 30 days
of termination.
Termination without cause, hereunder, shall include a significant reduction
in Executive's duties and responsibilities.
(c) Resignation. Executive may resign from employment with Company upon
one (1) months' written notice. In the event Executive's employment is
terminated before February 3, 2001 by reason of Executive's resignation, no
additional payments, beyond those earned or vested prior to the date of such
resignation, shall be payable hereunder.
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(d) For Cause. In the event Executive's employment is terminated by
Company for cause before February 3, 2001, no additional payments, beyond those
earned or vested prior to the date of such termination, shall be payable
hereunder. Termination of employment "for cause" means a dismissal by Company of
Executive because of:
(i) Executive's gross negligence, willful misconduct or gross neglect
of duty; or
(ii) any criminal act constituting bad faith by Executive in dealing
with or on behalf of the Company.
7. CHANGE OF CONTROL.
(a) Cash Bonus. In the event of a change of control of the Company, as
defined in subparagraph (e) below, while Executive is employed under this
Agreement, and in consideration of his agreement to remain in the employment of
the Company for one year following the date of the change of control, Company
shall pay to Executive a bonus equal to three times Executives' then current
base pay. This bonus shall be in addition to Executive's regular salary and
other forms of compensation. Such bonus shall be paid as follows:
(i) 50% within 30 days after the date of change of control; and
(ii) 50% within 30 days of the first anniversary of such change of
control, if Executive is still in the Company's employ as of that date.
Should Executive be terminated without cause or as a result of his death or
disability prior to such first anniversary, Executive (or Executive's estate in
the event of death) shall be entitled to the "first anniversary payment" within
30 days of such termination. Termination without cause hereunder, shall include
a significant reduction in Executive's duties and responsibilities.
Should Executive resign or be terminated for cause prior to the first
anniversary date, he shall not be eligible to receive any further amount on the
first anniversary date.
Payments under this Section 7 are separate and distinct from and in
addition to any other payments contemplated under this Agreement.
(b) Options. In the event of a Change of Control of Company, options
granted to Executive will continue to be subject to the terms and conditions set
forth in Executive's option agreements and stock option plans. However, in the
event Executive's employment is terminated following a Change of Control but
before February 3, 2001 (i) by Company without cause (ii) by Executive's death
or (iii) by Executive's medically determined physical or mental disability,
then, notwithstanding any provisions to this Agreement or any option agreement
or stock option plan to the contrary, all Options held by Executive shall
immediately become fully vested without further notice or action by Executive or
his estate, and those options shall be exercisable for a period of twelve (12)
months after such termination.
(c) Gross-Up Payments. In the event Executive is subject to an excise tax
under Code Section 4999, in respect of payments or other compensation made under
this Agreement, as determined by the Company's independent auditors, Company
agrees to pay Executive an additional amount which, after the payment by
Executive of federal income and excise taxes on such additional amount, is equal
to the amount of the excise tax payable without regard to the additional amount.
Should Executive fail to pay such excise tax or be determined, pursuant to any
administrative or judicial proceeding, not to be subject to such excise tax,
Company's obligation to make an additional payment hereunder shall cease as to
the amount not paid or so determined and Executive shall promptly refund to
company any such additional payment previously paid to executive.
(d) Expenses of Enforcement. In the event Executive's employment is
terminated by Company, other than for cause, before February 3, 2001 or
following a Change of Control, then, notwithstanding any provisions to this
Agreement to the contrary, Company shall pay all reasonable legal fees and
expenses incurred by Executive in the successful enforcement of Executive's
rights under this Agreement.
(e) Definition. For purposes of this Agreement, a Change of Control means:
(i) an acquisition by an individual, entity or group (excluding the Company or
an employee benefit plan of the Company or a corporation
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controlled by the Company's shareholders) of twenty-five percent (25%) or more
of the Company's Common Stock or voting securities; (ii) a change in a majority
of the current Board of Directors (the "Incumbent Board") (excluding any persons
approved by a vote of at least a majority of the Incumbent Board other than in
connection with an actual or threatened proxy contest); (iii) consummation of a
complete liquidation or dissolution of the Company or a merger, consolidation or
sale of all or substantially all of the Company's assets (collectively, a
"Business Combination") other than a Business Combination in which all or
substantially all of the stockholders of the Company receive fifty percent (50%)
or more of the stock of the company resulting from the Business Combination, at
least a majority of the board of directors of the resulting corporation were
members of the Incumbent Board, and after which no person owns twenty percent
(20%) or more stock of the resulting corporation, who did not own such stock
immediately before the Business Combination or (iv) any other event required to
be reported as a change of control under the Securities Exchange Act of 1934.
Notwithstanding the foregoing, no Change of Control shall be deemed to
occur if Executive, either alone or in concert with a group of employees of
Company, shall acquire more than 50% of the outstanding stock of GNCI or the
Company or, as a result of the acquisition of a lesser amount of stock, shall
become the single largest stockholder of a GNCI or the Company or, as a result
of the acquisition of a lesser amount of stock, shall become the single largest
stockholder of GNCI or the Company and thereby be able to elect or to cause to
be elected to the Board of Directors of GNCI or the Company a majority, of
members acceptable to Executive or such group of employees.
8. NOTICES. Any notice to be given under this Agreement shall be deemed
received five (5) business days thereafter if sent in writing, properly
addressed, by certified mail, and one (1) business day thereafter if sent in
writing, properly addressed, by overnight express courier or by hand. Notices to
Executive shall be sent to Executive's residence. Notices to Company shall be
sent to its home office.
9. WAIVER OF BREACH. The failure by a party to enforce its rights against
the other party following a breach of any provision of the Agreement shall not
operate or be construed as a waiver of any other provision hereof or any
subsequent breach by such other party.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
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11. ENTIRE AGREEMENT. This Agreement supersedes and replaces any and all
prior employment agreements, both written and oral, between the parties. It
contains the entire understanding between parties and can only be amended or
supplemented by a written agreement signed by the parties.
EXECUTIVE GENERAL NUTRITION, INCORPORATED
By: /s/ XXXXXXX X. XXXXX By: /s/ XXXXX X. XXXXXX
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Xxxxxxx X. Xxxxx
Title: Vice President
Date: 6/16/97 Date: 6/16/97
Witness: /s/ XXX XXXXXXXXXX Witness: /s/ XXX XXXXXXXXXX
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GENERAL NUTRITION COMPANIES, INC.
COMPENSATION COMMITTEE
By: /s/ XXXXXX X. XXXXXXXX
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Xxxxxx X. Xxxxxxxx
By: /s/ XXXXX XXXXX
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Xxxxx Xxxxx
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