Exhibit (c)(3)(v)
EMPLOYMENT AGREEMENT
AGREEMENT dated as of July 5, 1999 among General Nutrition Companies,
Inc., a Delaware corporation ("Company"), Royal Numico N.V., a company
organized under the laws of The Netherlands ("Parent") and Xxxxx X. Xxxxxxx
("Executive").
WHEREAS, Executive is employed by General Nutrition, Incorporated, a
subsidiary of Company, as Vice President, Strategic Planning & Corporate
Development;
WHEREAS, in connection with an Agreement and Plan of Merger dated as of
July 5, 1999 (the "Merger Agreement"), a subsidiary of Parent will merge with
and into Company (the "Merger"); and
WHEREAS, Parent and Company wish to assure itself of the services of
Executive for the period provided in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereto
hereby agree as follows:
1. EMPLOYMENT. Company and Parent agree to employ Executive, and
Executive agrees to serve in the position set forth above for the period
commencing at the effective time of the Merger (the "Effective Time") and ending
December 31, 2001 (the "Employment Period"); PROVIDED, HOWEVER, that on
January 1, 2001 and each January 1 thereafter, the Employment Period shall
automatically be extended for one additional year, unless not later than 90 days
prior to the date of such automatic extension, the Company or Executive shall
have given notice to discontinue such extensions.
2. DUTIES. Executive is engaged to perform such duties as are assigned
to him by the Company. Executive shall devote his full time and attention to
the performance of such duties, which shall remain similar to the duties he is
performing as of the date of this Agreement. 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 initially pay Executive the base salary in
effect immediately prior to the Effective Time, subject to increase (but not
decrease) based on annual performance reviews conducted by the Chief Executive
Officer of the Company.
(b) INCENTIVE COMPENSATION. Executive shall be eligible to
participate during the Employment Period in any annual bonus or incentive plans,
stock option plans, stock purchase plans and any other long-term compensation
plans, programs or arrangements generally available to members of the senior
management of Company. Executive's maximum annual bonus or incentive plan
opportunity shall not be less than such opportunity as in effect immediately
prior to the date of signing of the Merger Agreement.
(c) 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.
(d) PRIOR CHANGE-OF-CONTROL BENEFIT. In exchange for the
cancelation of his change-of-control retention bonus in effect immediately
prior to the Effective Time, Company shall pay to Executive a bonus equal to
one (1) times base salary. 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 Effective Time; and
(ii) 50% within 30 days of the first anniversary of the Effective
Time, if Executive is still in the Company's employ as of that date.
Should Executive's employment be involuntarily terminated without
Cause (as defined herein) or if Executive resigns with Good Reason (as
defined herein) 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.
Should Executive resign without Good Reason or his employment be
involuntarily terminated with 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 3(d) are separate and distinct from and in
addition to any other payments contemplated under this Agreement.
(e) (i) 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, state and local income,
employment 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.
(ii) EXPENSES OF ENFORCEMENT. In the event Executive's
employment is involuntarily terminated by Company other than for Cause or
if Executive resigns with Good Reason during the Employment Period or
following a Change of Control (as defined herein), 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.
4. REIMBURSEMENT OF EXPENSES. During the Employment Period, Company
shall continue to provide Executive with the perquisites to which he is entitled
immediately prior to the Effective Time. Executive shall furnish Company with
periodic, itemized expense reports if directed by Company.
5. EMPLOYMENT COVENANTS. (a) During the Employment Period (as set
forth in Section 1 hereof and determined without regard to the termination of
Executive's employment), Executive shall not
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(i) engage in any way, directly or indirectly, in any Competing
Business (as defined below) in the Geographic Area (as defined below);
PROVIDED, HOWEVER, in no event shall this provision be construed to
prohibit Executive's employment with any business in which less than 5% of
its consolidated gross revenues for its most recent fiscal year relates to
a Competing Business if Executive's responsibilities at such business do
not directly relate to a Competing Business. "Competing Business" shall
mean any activity relating to the development, manufacture, or the retail
or wholesale sale or distribution (including but not limited to sale or
distribution through retail, specialty retail, Internet, e-commerce, mail
order, multi-level marketing, mass market, or any other channel of
distribution) of vitamin and mineral supplements, sports nutrition
products, herbs, personal care or other health-related products.
"Geographic Area" shall mean the United States and any other country in
which the Parent, Company or any affiliate thereof maintains owned or
franchised facilities or hosts web sites; or
(ii) directly or indirectly solicit, encourage, assist, entice,
or induce any employee of Parent or Company or any of its subsidiaries or
approach any such employee for any of the foregoing purposes, to be
employed by, or render any services to, any person, firm, corporation or
other entity engaged in a Competing Business.
(b) During the Employment Period and thereafter, Executive shall
not, without the Parent's and Company's prior written permission or in
connection with his duties under this Agreement, use or disclose all or any
part of the following valuable, special and unique assets of Parent's or
Company's business to any person, corporation, association or other entity
(but excluding information that had become public knowledge without any
action by, or involvement of, Executive) for any reason whatsoever: the
confidential information and trade secrets of Parent, the Company or any
affiliate thereof, including, but not limited to, the financial and sales
information, manufacturing formulas and processes, business plans and
projections, and personnel information and records.
(c) Executive acknowledges that the restrictions contained in this
Section 5 in view of the nature of the business in which Parent or Company is
engaged, are reasonable and necessary in order to protect the legitimate
interests of the Parent or Company and that any violation of such
restrictions would result in irreparable harm to the Parent or Company. In
the event of Executive's violation of any of these restrictions, the Parent
or Company shall be entitled to seek from any court of competent jurisdiction
preliminary and permanent injunctive relief without proving actual damage or
immediate or irreparable harm and without posting any bond. Nothing herein
shall prohibit the Parent or Company from pursuing any other remedies legally
available to the Parent or Company for such breach or threatened breach,
including the recovery of damages from Executive.
(d) If any of the provisions of this Section 5 should ever be
adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable law in any jurisdiction, then the
affected provisions shall be deemed reformed in such jurisdiction to the
maximum time, geographic, product or service, or other limitations permitted
by applicable law.
6. TERMINATION ARRANGEMENTS.
(a) DEATH OR DISABILITY. In the event Executive's employment
hereunder 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,
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including adjustments, set forth in Section 3(a) hereof for the remainder of
the Employment Period; or, at Executive's (or Executive's estate's) option
and in lieu thereof, the Company shall pay Executive (or Executive's estate)
a lump sum equal to the total aggregate base salary, excluding adjustments,
payable for such period discounted at the rate of 6% per annum, simple
interest. Any such lump sum payment shall be made within 30 days after
termination.
(b) TERMINATION WITHOUT CAUSE; RESIGNATION WITH GOOD REASON. In the
event Executive's employment is involuntarily terminated by Company without
Cause or Executive resigns with Good Reason during the Employment Period,
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 for the remainder of the Employment Period; or, at Executive's
(or Executive's estate's) option and in lieu thereof, Company shall pay
Executive (or Executive's estate) a lump sum equal to the total aggregate base
salary, excluding adjustments, payable for such period, discounted at the rate
of 6% per annum, simple interest. Any such lump sum payment shall be made
within 30 days of termination.
"Good Reason" shall mean (i) the failure to elect or re-elect or
appoint or re-appoint Executive to the positions specified in Section 1 hereof,
(ii) a significant reduction in Executive's duties and responsibilities
hereunder (other than solely by reason of the Company ceasing to be a public
corporation as of the date of this Agreement), or (iii) a material breach of
this Agreement by Company or Parent, which, in each case continues after notice
and a reasonable opportunity to cure such action shall have been provided to
Company and Parent.
"Cause" shall mean (i) Executive's continued gross negligence, willful
misconduct or gross neglect of duty, after notice and a reasonable opportunity
to cure such action shall have been provided to Executive; or (ii) any criminal
act constituting bad faith by Executive in dealing with or on behalf of the
Company.
(c) RESIGNATION WITHOUT GOOD REASON. In the event Executive's
employment is terminated during the Employment Period by reason of Executive's
resignation without Good Reason, no additional payments, beyond those earned or
vested prior to the date of such resignation, shall be payable hereunder.
(d) TERMINATION FOR CAUSE. In the event Executive's employment is
involuntarily terminated for Cause during the Employment Period, no additional
payments, beyond those earned or vested prior to the date of such termination,
shall be payable hereunder.
7. CHANGE OF CONTROL.
(a) CASH BONUS. In the event of a Change of Control of the Company,
as defined in subparagraph (d) below, while Executive is employed under this
Agreement, and in consideration for his remaining 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 two (2) times Executives' then current base
salary. 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.
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Should Executive's employment be involuntarily terminated without
Cause or if Executive resigns with Good Reason 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.
Should Executive resign without Good Reason or his employment be
involuntarily terminated with 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) DEFINITION. For purposes of this Agreement, a Change of Control
shall occur if, after the Merger:
(i) Parent and its "affiliates" (as such term is defined in
Rule 12b-2 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended ("Exchange Act")) cease to beneficially own, directly or
indirectly, securities representing at least 50% of the combined voting
power of the outstanding securities of General Nutrition, Incorporated, a
Pennsylvania corporation, or any successor entity (including by merger,
sale of assets or otherwise); or
(ii) (A) any "person" (as such term is used under Sections 13(d)
and 14(d) of the Exchange Act), other than Parent, Company or any affiliate
thereof, or any employee benefit plan maintained by Parent, Company or any
affiliate thereof, becomes a beneficial owner, directly or indirectly, of
more than 50% of the outstanding equity securities of Parent; or (B) the
sale or disposition of all or substantially all of the assets of Parent, or
(C) approval of a plan of liquidation or dissolution of Parent.
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 Parent and
Company shall be sent to Company's 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.
11. ENTIRE AGREEMENT. Effective as of and conditioned upon the effective
time of the Merger, 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. Notwithstanding the foregoing,
this Agreement does not supersede any excise tax reimbursement to which
Executive is entitled as provided by action of the Compensation Committee of the
Board at its meeting held on June 30, 1999. In the event the Merger shall not
have become effective, this Agreement shall be of no force or effect.
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12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which shall together constitute a valid and binding agreement.
PARENT COMPANY
By: /s/ Johannes C.T. van der Wielen By: /s/ Xxxxxxx X. Xxxxx
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Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
Xxxxx X. Xxxxxxx
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EXECUTIVE
/s/ Xxxxx X. Xxxxxxx
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EXECUTIVE'S SIGNATURE
429 Oaklawn Dr.
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ADDRESS
Xxxxxxxxxx, XX 00000
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