AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
Exhibit 10.17.2
AMENDMENT NO. 1
TO
AMENDMENT (“Amendment”) made as of this 3rd day of March, 2009 to the
Employment Agreement dated as of December 19, 2007 (the “Employment Agreement”), by and
among GNC Acquisition Holdings, Inc., a Delaware corporation (“Holdings”), General
Nutrition Centers, Inc., a Delaware corporation and wholly owned subsidiary of Holdings
(“Centers,” and together with Holdings, referred to herein as “GNC”), and Xxxx X.
Xxxxxx (the “Executive”).
WHEREAS, the Company and the Executive have previously entered into the Employment Agreement;
and
WHEREAS, the Company and the Executive desire to amend the Employment Agreement in a manner
intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, effective as of January 1, 2009, the Employment Agreement is hereby amended as
follows:
1. The third sentence of Section 3.2 of the Employment Agreement is hereby amended in its
entirety as follows:
“Any Annual Bonus earned shall be payable in full no later than March
15 of the year following the year the bonus is earned, and in
accordance with Centers’ normal payroll practices and procedures.”
2. Section 4.2(b)(i) of the Employment Agreement is hereby amended in its entirety as follows:
“(i) Centers shall pay to the Executive, or to the Executive’s
guardian or personal representative, as the case may be, (A) any
accrued but unpaid Base Salary paid in accordance with Centers’ normal
payroll practices and procedures, (B) any accrued but unpaid Annual
Bonus, if any, with respect to the fiscal year prior to the year in
which termination occurs, paid in accordance with section 3.2 (the
“Accrued Bonus”), (C) a lump sum payment for any accrued but
unpaid Perquisites within 30 days of termination, (D) a lump sum
payment for any accrued vacation within 30 days of termination, and
(E) reimbursement of expenses in accordance with Section 3.3
(collectively, “Accrued Obligations”);”
3. Section 4.2(b)(ii) of the Employment Agreement is hereby amended in its entirety as follows:
“(ii) Centers shall pay to the Executive, or to the Executive’s
guardian or personal representative, as the case may be, a lump sum
payment equal to the sum of (x) the Executive’s current Base Salary
and (y) the annualized value of the Perquisites as determined in good
faith by the Accounting Firm (as defined in Section 4.3(f)(ii)) using
customary valuation methods, payable on the 30th day following the
date of termination.”
4. The parenthetical at the end of Section 4.2(b)(iii) of the Employment Agreement is hereby
amended in its entirety as follows:
“(any such bonus shall be payable no later than March 15 of the year
following the year the bonus is earned, and in accordance with
Centers’ normal payroll practices and procedures)”
5. Section 4.3(c) of the Employment Agreement is hereby amended in its entirety as follows:
“Following the Initial Employment Period, GNC may decline to renew this Agreement for
an additional Extension Period, in accordance with Section 2.2 hereof, for reasons
other than those that would otherwise constitute Cause, provided that the Executive
shall be required to continue to provide services hereunder through the end of the
Employment Period.”
6. Section 4.3(d)(i) of the Employment Agreement is hereby amended in its entirety as follows:
“(i) Centers shall pay the Executive the Accrued Obligations in
accordance with Section 4.2(b)(i).”
7. The last sentence of Section 4.3(d)(ii) is hereby amended in its entirety as follows:
“All payments pursuant to Sections 4.3(d)(i) and (ii) shall be made on
the 30th day following the date of termination.”
8. The second to last sentence of Section 4.3(d)(iii) of the Employment Agreement is hereby
amended in its entirety as follows.
“All payments pursuant to Sections 4.3(d)(iii) shall be made on the
30th day following the date of termination.”
9. The second to last sentence of Section 4.3(f)(i) of the Employment Agreement is hereby
amended in its entirety as follows.
“To the extent necessary to effect the Payment Reduction, Centers
shall reduce or eliminate the Payments by first reducing or
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eliminating the portion of the Payments which are not payable in cash
and then by reducing or eliminating cash payments, in each case in
reverse order beginning with payments or benefits which are to be paid
the farthest in time from the initial determination, subject to the
confirmation of the Accounting Firm (as defined herein) with respect
to the intended effect of such Payment Reduction.”
10. Section 4.3(h)(iv) of the Employment Agreement is hereby amended in its entirety as
follows:
“a material reduction in the Executive’s Base Salary;”
11. The following is hereby added to the end of the first sentence of Section 4.4(b):
“... in accordance with Section 4.2(b)(i).”
12. Section 4.6 of the Employment Agreement is hereby amended in its entirety as follows:
“4.6. Section 409A of the Code.
(a) Although GNC does not guarantee to the Executive any particular
tax treatment relating to the payments and benefits under this
Agreement, it is intended that such payments and benefits be exempt
from, or comply with, Section 409A of Code and the regulations and
guidance promulgated thereunder (collectively “Code Section
409A”), and all provisions of this Agreement shall be construed in
a manner consistent with the requirements for avoiding taxes or
penalties under Code Section 409A.
(b) A termination of employment shall not be deemed to have occurred
for purposes of any provision of this Agreement providing for the
payment of any amounts or benefits upon or following a termination of
employment unless such termination is also a “separation from service”
within the meaning of Code Section 409A and, for purposes of any such
provision of this Agreement, references to a “termination,”
“termination of employment” or like terms shall mean “separation from
service.”
(c) With regard to any provision herein that provides for
reimbursement of costs and expenses or in-kind benefits, except as
permitted by Code Section 409A, (i) the right to reimbursement or
in-kind benefits shall not be subject to liquidation or exchange for
another benefit; (ii) the amount of expenses eligible for
reimbursement, or in-kind benefits, provided during any taxable year
shall not affect the expenses eligible for reimbursement, or in-kind
benefits to be provided, in any other taxable year, provided,
that the foregoing clause (ii) shall not be violated with regard to
expenses reimbursed under any arrangement covered by Section 105(b) of
the
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Code solely because such expenses are subject to a limit related to
the period the arrangement is in effect; and (iii) such payments shall
be made on or before the last day of the Executive’s taxable year
following the taxable year in which the expense was incurred.
(d) Whenever a payment under this Agreement specifies a payment period
with reference to a number of days (e.g., “payment shall be
made within ten (10) days following the date of termination”), the
actual date of payment within the specified period shall be within the
sole discretion of Centers.
(e) If under this Agreement, an amount is to be paid in two or more
installments, for purposes of Code Section 409A, each installment
shall be treated as a separate payment.
(f) If the Executive is deemed on the date of termination of
employment to be a “specified employee”, within the meaning of that
term under Section 409A(a)(2)(B) of the Code and using the
identification methodology selected by GNC from time to time, or if
none, the default methodology, then:
(i) With regard to any payment, the providing of any benefit or any
distribution of equity that constitutes “deferred compensation”
subject to Code Section 409A, payable upon separation from service,
such payment, benefit or distribution shall not be made or provided
prior to the earlier of (i) the expiration of the six-month period
measured from the date of the Executive’s Separation from Service or
(ii) the date of the Executive’s death; and
(ii) On the first day of the seventh month following the date of the
Executive’s Separation from Service or, if earlier, on the date of
death, (x) all payments delayed pursuant to this Section 4.6 (whether
they would otherwise have been payable in a single sum or in
installments in the absence of such delay), together with interest
accrued thereon at the applicable federal rate, shall be paid or
reimbursed to the Executive in a lump sum, and any remaining payments
and benefits due under this Agreement shall be paid or provided in
accordance with the normal dates specified from them herein and (y)
all distributions of equity delayed pursuant to this Section 4.6 shall
be made to the Executive.
(g) In no event whatsoever shall GNC or any of their Affiliates be
liable for any additional tax, interest or penalties that may be
imposed on the Executive by Code Section 409A or any damages for
failing to comply with Code Section 409A other than for withholding
obligations or other obligations applicable to employers, if any,
under Code Section 409A.”
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[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the undersigned has caused this Amendment to be executed this
3rd day of March 2009.
| EXECUTIVE |
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| /s/ Xxxx X. Xxxxxx | ||||
| Name: | Xxxx X. Xxxxxx | |||
| GENERAL NUTRITION CENTERS, INC. |
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| By: | /s/ Xxxxxx X. Xxxxxxxxxxx, Xx. | |||
| Name: | Xxxxxx X. Xxxxxxxxxxx, Xx. | |||
| Title: | Senior Vice President, Chief Legal Officer | |||
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