Exhibit (c)(3)(ii)
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 Xxxxxxx X. Xxxx
("Executive").
WHEREAS, Executive is employed by General Nutrition, Incorporated, a
Pennsylvania corporation and subsidiary of Company ("Subsidiary"), as
Executive Vice President of Marketing and Business Development and Chief
Operating Officer;
WHEREAS, in connection with an Agreement and Plan of Merger dated as of
July 5, 1999, 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, as (a) Executive Vice President of Marketing and
Business Development and Chief Operating Officer of Company and (b) as a
Group Director of Parent, for the period commencing at the effective time of
the Merger (the "Effective Time") and ending December 31, 2002 (the
"Employment Period"); PROVIDED, HOWEVER, that on January 1, 2002 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. The Board of Managing Directors of Parent (the
"Management Board") shall propose Executive for election or appointment to
the positions specified above throughout the period of Executive's employment
under this Agreement.
2. DUTIES. Executive is engaged to perform such duties as are
assigned to him by the chief executive officer of Company (the "CEO").
Executive shall report directly and exclusively to the CEO and the scope of
Executive's duties shall be consistent with such reporting relationship.
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 pay Executive a base salary at the
annual rate set forth below. Salary payments shall be subject to withholding
of applicable taxes.
Effective Time until 12/31/00 $400,000
1/1/01 until 12/31/01 $450,000
1/1/02 until 12/31/02 $500,000
Executive's base salary hereunder after December 31, 2002 shall be 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 $250,000.
(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
cancellation of his change-of-control retention bonus in effect immediately
prior to the Effective Time, Company shall pay to Executive a bonus equal to
$180,000. This bonus shall be in addition to Executive's regular salary and
other forms of compensation. Such bonus shall be paid as follows:
(i) $90,000 within 30 days after the Effective Time; and
(ii) $90,000 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
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the Effective Time. Executive shall furnish Company with periodic, itemized
expense reports if directed by Company. Notwithstanding any travel policy of
Company to the contrary, Executive shall be entitled to fly business class on
all international business-related travel.
5. EMPLOYMENT COVENANTS. (a) 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 has 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 and its affiliates, including but not limited to, financial and sales
information, manufacturing formulas and processes, business plans and
projections, and personnel information and records.
(b) 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 Parent and 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, 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
Parent or Company from pursuing any other remedies legally available to
Parent or 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
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,
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.
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"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.
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 (the "Exchange Act")) cease to beneficially own, directly
or indirectly, securities representing at least 50% of the combined voting
power of outstanding securities of Subsidiary or any successor entity
(including by merger, sale of assets or otherwise); or
(ii) (A) any "person" (as such term is used under Section 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
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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 be amended or
supplemented only 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.
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 Executive Title: President and Chief
Officer Executive Officer
Xxxxxxx X. Xxxx
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EXECUTIVE
/s/ Xxxxxxx X. Xxxx
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EXECUTIVE'S SIGNATURE
000 Xxxxx Xxxxx
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XXXXXXX
Xxxxxxxxx, XX 00000
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