Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of the
15th day of December, 2004 (the "Effective Date"), by and between General
Nutrition Centers, Inc., a Delaware corporation (the "Company"), and XXXXX
XXXXXXX (the "Executive").
WHEREAS, the Company desires to employ Executive on the terms and
subject to the conditions set forth herein and the Executive has agreed to be
so employed.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
o Employment of Executive; Duties.
o Title. During the "Employment Period" (as defined in Section 2 hereof),
the Executive shall serve as the Executive Vice President and Chief
Administrative Officer of the Company. The Executive shall have the
normal duties, responsibilities and authority commensurate with such
positions. During the Employment Period, in his capacity as Executive
Vice President and Chief Administrative Officer of the Company, the
Executive shall report directly to the Board of Directors of the Company
(the "Board").
o Duties. During the Employment Period, the Executive shall do and perform
all services and acts necessary or advisable to fulfill the duties and
responsibilities of his positions and shall render such services on the
terms set forth herein. In addition, the Executive shall have such other
executive and managerial powers and duties as may reasonably be assigned
to him by the Board, commensurate with his serving as Executive Vice
President and Chief Administrative Officer. Except for sick leave,
reasonable vacations, and excused leaves of absence, the Executive shall,
throughout the Employment Period, devote substantially all his working
time, attention, knowledge and skills faithfully and to the best of his
ability, to the duties and responsibilities of his positions in
furtherance of the business affairs and activities of the Company, and
its subsidiaries and affiliates and, except where the Company provides
its written consent otherwise, shall maintain his principal residence
within 75 miles of the principal office of the Company as of the
Effective Date. The Executive shall at all times be subject to, observe
and carry out such rules, regulations, policies, directions, and
restrictions as the Board may from time to time reasonably establish for
senior executive officers of the Company.
o Term of Employment.
o Employment Period. The employment of the Executive hereunder shall
continue until the later to occur of (i) December 31, 2006, or (ii) the
applicable expiration date of any extension of this Agreement as provided
in Section 2.2 hereof, unless terminated earlier in accordance with the
provisions of this Agreement (the "Employment Period").
o Extension. On December 15, 2005, and on each December 15th thereafter,
the Employment Period shall be extended for an additional one-year period
unless the Company or the Executive notifies the other in writing prior
to such date of its or his election, in its or his sole discretion, not
to extend the Employment Period.
o Compensation and General Benefits.
o Base Salary.
o During the Employment Period, the Company agrees to pay to the Executive
an annual base salary in an amount equal to Three Hundred Fifty Thousand
Dollars ($350,000) (such base salary, as adjusted from time to time
pursuant to Section 3.1(b), is referred to herein as the "Base Salary").
The Executive's Base Salary, less amounts required to be withheld under
applicable law, shall be payable in equal installments in accordance with
the practice of the Company in effect from time to time for the payment
of salaries to officers of the Company, but in no event less frequently
than monthly.
o The Board or the Compensation Committee established by the Board (the
"Compensation Committee") shall review the Executive's performance on an
annual basis and, based on such review, may increase Executive's Base
Salary, as it, acting in its sole discretion, shall determine to be
reasonable and appropriate.
o Bonus. With respect to the 2005 calendar year and with respect to each
calendar year that commences during the Employment Period, the Executive
shall be eligible to receive from the Company an annual performance bonus
(the "Annual Bonus") based upon the Company's attainment of annual goals
established by the Board or the Compensation Committee. Executive's
target Annual Bonus shall be forty percent (40%) of Executive's Base
Salary with a maximum of one hundred percent (100%) of Executive's Base
Salary if the Company exceeds the annual goal determined by the Board or
the Compensation Committee for the applicable year. Any Annual Bonus
earned shall be payable in full within forty-five (45) days following the
determination of the amount thereof and in accordance with the Company's
normal payroll practices and procedures. Any Annual Bonus payable under
this Section 3.2 shall not be payable unless the Executive is employed by
the Company on the last day of the period to which such Annual Bonus
relates.
o Expenses. During the Employment Period, in addition to any amounts to
which the Executive may be entitled pursuant to the other provisions of
this Section 3.3 or elsewhere herein, the Executive shall be entitled to
receive prompt reimbursement from the Company for all reasonable and
necessary expenses incurred by him in performing his duties hereunder on
behalf of the Company, subject to, and consistent with, the Company's
policies for expense payment and reimbursement, in effect from time to
time.
o Fringe Benefits. During the Employment Period, in addition to any amounts
to which the Executive may be entitled pursuant to the other provisions
of this Section 3 or elsewhere herein, the Executive shall be entitled to
participate in, and to receive benefits under, any benefit plans,
arrangements or policies made available by the Company to its executives
and key management employees generally, subject to and on a basis
consistent with the terms, conditions and overall administration of each
such plan, arrangement or policy. The award of any additional fringe
benefits under this Section 3.4 shall be separate and distinct from the
right of the Executive to receive the Annual Bonus payment from the
Company described in Section 3.2.
o Stock Options. Subject to Section 4 below and the approval of the
Administrator of the Plan (as defined therein), Executive shall be
eligible to participate in and be granted awards under the GNC
Corporation 2003 Omnibus Stock Incentive Plan (the "Plan"). The
Administrator may grant additional options to purchase Common Stock to
the Executive, pursuant to the terms of the Plan. Except as otherwise
provided, the option shall be subject to the terms and conditions of the
Plan and the form of option agreement approved by the Administrator. In
the event of a Change of Control (as defined in Section 4.3(h) below),
all of Executive's stock options granted pursuant to the Plan shall vest
in full and become immediately exercisable, but in no event shall such
options be exercisable following their expiration date.
o Termination.
o General. The employment of the Executive hereunder (and the Employment
Period) shall terminate as provided in Section 2, unless earlier
terminated in accordance with the provisions of this Section 4.
o Death or Disability of the Executive.
o The employment of the Executive hereunder (and the Employment Period)
shall terminate upon (i) the death of the Executive, and (ii) at the
option of the Company, upon not less than fifteen (15) days' prior
written notice to the Executive or his personal representative or
guardian, if the Executive suffers a "Total Disability" (as defined in
Section 4.2(b) below). Upon termination for death or Total Disability,
the Company shall pay to the Executive, guardian or personal
representative, as the case may be (reduced by any benefits paid or
payable to the Executive, his beneficiaries or estate under any
Company-sponsored disability benefit plan; provided, however, that no
such reduction shall be made for any benefits paid upon the Executive's
death under the Company's life insurance policy), (i) the Executive's
current Base Salary for the remainder of the Employment Period (without
giving effect to any further extensions pursuant to Section 2.2 hereof)
and (ii) a prorated share of the Annual Bonus pursuant to Section 3.2
hereof (based on the period of actual employment) that the Executive
would have been entitled to had he worked the full year during which the
termination occurred, provided that bonus targets are met for the year of
such termination. The bonus shall be payable in full within forty-five
(45) days following the determination of the amount thereof and in
accordance with the Company's normal payroll practices and procedures.
o For purposes of this Agreement, "Total Disability" shall mean (i) if the
Executive is subject to a legal decree of incompetency (the date of such
decree being deemed the date on which such disability occurred), (ii) the
written determination by a physician selected by the Company that,
because of a medically determinable disease, injury or other physical or
mental disability, the Executive is unable substantially to perform, with
or without reasonable accommodation, the material duties of the Executive
required hereby, and that such disability has lasted for one hundred
twenty days (120) days during the immediately preceding twelve (12) month
period or is, as of the date of determination, reasonably expected to
last six (6) months or longer after the date of determination, in each
case based upon medically available reliable information, or (iii)
Executive's qualifying for benefits under the Company's long-term
disability coverage, if any.
o In conjunction with determining mental and/or physical disability for
purposes of this Agreement, the Executive hereby consents to (i) any
examinations that the Board determines are relevant to a determination of
whether he is mentally and/or physically disabled, or required by the
Company physician, (ii) furnish such medical information as may be
reasonably requested, and (iii) waive any applicable physician patient
privilege that may arise because of such examination.
o With respect to outstanding stock options and other equity based awards
held by the Executive as of the date of termination, (i) any such options
that are not vested or exercisable as of such date of termination shall
immediately expire and any such equity based awards that are not vested
as of such date of termination shall immediately be forfeited, and (ii)
any such options that are vested and exercisable as of such date of
termination shall expire immediately following the expiration of the one
hundred eighty (180) day period following such date of termination.
o With respect to any shares of Common Stock held by the Executive that are
vested as of the date of termination (or issued pursuant to the exercise
of options following such date of termination pursuant to Section 4.2(d)
hereof), for the two hundred seventy (270) day period following such date
of termination, the Company (or its designee) shall have the right to
purchase from the Executive or his beneficiary, as applicable, and the
Executive or his beneficiary hereby agrees to sell any or all such shares
to the Company (or the Company's designee) for an amount equal to the
product of (x) the per share current fair market value of a share of
Common Stock (as determined by the Board in good faith) and (y) the
number of shares so purchased. Executive (or his beneficiary) shall have
the right to request, in writing, that the Board obtain a fairness
opinion from a nationally recognized accounting firm or investment bank
chosen by the Company, to review the Board's fair market value
determination of the Common Stock. If such fairness opinion validates the
fair market determination of the Board, the gross purchase price paid to
the Executive for such shares under this Section 4.2(e), shall be reduced
by 10% excluding such other tax or withholding as may be required by
applicable law.
o Termination by the Company Without Cause or Resignation by the Executive
For Good Reason.
o The Company may terminate Executive's employment without "Cause" (as
defined below), and thereby terminate Executive's employment (and the
Employment Period) under this Agreement at any time upon not less than
thirty (30) days' prior written notice.
o The Executive may resign, and thereby terminate his employment (and the
Employment Period), at any time for "Good Reason" (as defined below),
upon not less than thirty (30) days' prior written notice to the Company
specifying in reasonable detail the reason therefor; provided, however,
that the Company shall have a reasonable opportunity to cure any such
"Good Reason " (to the extent possible) within thirty (30) days after the
Company's receipt of such notice.
o In the event the Executive's employment is terminated (i) by the Company
without "Cause," or (ii) by the Executive for "Good Reason" then, subject
to Section 4.3(d) hereof, the following provisions shall apply:
o The Company shall continue to pay the Executive the Base Salary to which
the Executive would have been entitled pursuant to Section 3.1 hereof (at
the Base Salary rate during the year of termination) had the Executive
remained in the employ of the Company until the expiration of the
Employment Period without giving effect to any further extensions
pursuant to Section 2.2 hereof, with all such amounts payable in
accordance with the Company's payroll system in the same manner and at
the same time as though the Executive remained employed by the Company.
o If such termination occurs upon or within six (6) months following a
Change of Control (as defined below), the Company shall continue to pay
the Executive the Base Salary to which the Executive would have been
entitled pursuant to Section 3.1 hereof (at the Base Salary rate during
the year of termination) for a two (2) year period following such date of
termination, with all such amounts payable in accordance with the
Company's payroll system in the same manner and at the same time as
though the Executive remained employed by the Company, subject to Section
4.3(c)(vii) hereof.
o The Company shall pay to the Executive a prorated share of the Annual
Bonus pursuant to Section 3.2 hereof (based on the period of actual
employment) that the Executive would have been entitled to had he worked
the full year during which the termination occurred, provided that bonus
targets are met for the year of such termination. The bonus shall be
payable in full within forty-five (45) days following the determination
of the amount thereof and in accordance with the Company's normal payroll
practices and procedures, subject to Section 4.3(c)(vii) hereof.
o Unless prohibited by law or, with respect to any insured benefit, the
terms of the applicable insurance contract, the Executive shall (A)
continue to participate in, and be covered under, the Company's group
like, disability, sickness, accident and health insurance programs on the
same basis as other executives of the Company and (B) continue to be
entitled to the perquisites available to the Executive immediately
preceding his date of termination as provided in the Perquisite Policy
for Senior Executives (as such policy may be amended by the Board of
Directors of the Company from time to time), in each case (x) through to
the expiration of the Employment Period, or, (y) in the event that
Executive's Base Salary is being paid pursuant to clause (ii) of this
Section 4.3(c), for the two (2) year period the Executive is entitled to
such payment, without giving effect to any further extensions pursuant to
Section 2.2 hereof.
o With respect to outstanding options and other equity based awards held by
the Executive as of the date of termination, (x) any such options that
are not vested or exercisable as of such date of termination shall
immediately expire and any such equity based awards that are not vested
as of such date of termination shall immediately be forfeited, and (y)
any such options that are vested and exercisable as of such date of
termination shall expire immediately following the expiration of the
ninety (90)-day period following such date of termination.
o With respect to any shares of Common Stock held by the Executive that are
vested as of the date of termination (or issued pursuant to the exercise
of options following such date of termination pursuant to Section
4.3(c)(v) hereof), for the one hundred eighty (180)-day period following
such date of termination, the Company (or its designee) shall have the
right to purchase from the Executive and the Executive hereby agrees to
sell any or all such shares to the Company (or the Company's designee)
for an amount equal to the product of (x) the per share current fair
market value of a share of Common Stock (as determined by the Board in
good faith) and (y) the number of shares so purchased. Executive shall
have the right to request, in writing, that the Board obtain a fairness
opinion from a nationally recognized accounting firm or investment bank
chosen by the Company, to review the Board's fair market value
determination of the Common Stock. If such fairness opinion validates the
fair market determination of the Board, the gross purchase price paid to
the Executive for such shares under this Section 4.3(c)(vi), shall be
reduced by 10% excluding such other tax or withholding as may be required
by applicable law.
o With respect to the amounts payable to the Executive under clauses (ii)
and (iii) of this Section 4.3 following a Change of Control, the
Executive may elect to receive the present value of such amounts in a
lump sum based on a present value discount rate equal to six percent (6%)
per year. Such election must be made in writing by the Executive within
fifteen (15) days of his date of termination.
o The Executive agrees to release the Company and its respective
Affiliates, officers, directors, stockholders, employees, agents,
representatives, and successors from and against any and all claims that
the Executive may have against any such person relating to the
Executive's employment by the Company and the termination thereof, such
release to be in form and substance reasonably satisfactory to the
Company.
o Anything in this Agreement to the contrary notwithstanding, if it shall
be determined that any payment, vesting, distribution, or transfer by the
Company or any successor, or any Affiliate of the foregoing or by any
other person or that any other event occurring with respect to the
Executive and the Company for the Executive's benefit, whether paid or
payable or distributed or distributable under the terms of this Agreement
or otherwise (including under any employee benefit plan) (a "Payment")
would be subject to or result in the imposition of the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended (and any
regulations issued thereunder, any successor provision, and any similar
provision of state or local income tax law) (collectively, the "Excise
Tax"), then the amount of the Payment shall be reduced to the highest
amount that may be paid by the Company or other entity without subjecting
such Payment to the Excise Tax (the "Payment Reduction"). The Executive
shall have the right, in his sole discretion, to designate those payments
or benefits that shall be reduced or eliminated under the Payment
Reduction to avoid the imposition of the Excise Tax. Notwithstanding the
foregoing, the Payment Reduction shall not apply if the Executive would,
on a net after-tax basis, receive less compensation than if the Payment
were not so reduced.
o Subject to the provisions of Section 4.3(e)(ii), all determinations
required to be made under this Section 4.3(e), including whether and when
a Payment is subject to Section 4999 and the assumptions to be utilized
in arriving at such determination and in determining an appropriate
Payment Reduction, shall be made by PricewaterhouseCoopers LLP, or any
other nationally recognized accounting firm that shall be the Company's
outside auditors at the time of such determination (the "Accounting
Firm"), which Accounting Firm shall provide detailed supporting
calculations to the Executive and the Company within fifteen (15)
business days of the receipt of notice from the Company or the Executive
that there will be a Payment that the person giving notice believes may
be subject to the Excise Tax. All fees and expenses of the Accounting
Firm shall be borne by the Company. Any determination by the Accounting
Firm shall be binding upon the Company and the Executive in determining
whether a Payment Reduction is required and the amount thereof (subject
to Sections 4.3(e)(ii) and (iii)), in the absence of material
mathematical or legal error.
o As a result of uncertainty in the application of Section 4999 that may
exist at the time of the initial determination by the Accounting Firm, it
may be possible that in making the calculations required to be made
hereunder, the Accounting Firm shall determine that a Payment Reduction
need not be made that properly should be made (an "Overpayment") or that
a Payment Reduction not properly needed to be made should be made (an
"Underpayment"). If, within seventy-five (75) days after the Accounting
Firm's initial determination under the preceding clause (i), the
Accounting Firm shall determine that an Overpayment was made, any such
Overpayment shall be treated for all purposes, to the extent practicable
and subject to applicable law, as a loan to the Executive with interest
at the applicable Federal rate provided for in Section 1274(d) of the
Code and shall be repaid by the Executive to the Company within
thirty-five (35) days after the Executive receives notice of the
Accounting Firm's determination; provided, however, that the amount to be
repaid by the Executive to the Company either as a loan or otherwise as a
lump sum payment (where a loan is not practicable or permitted by law)
shall be reduced to the extent that any portion of the Overpayment to be
repaid will not be offset by a corresponding reduction in tax by reason
of such repayment of the Overpayment. If the Accounting Firm shall
determine that an Underpayment was made, any such Underpayment shall be
due and payable by the Company to the Executive within thirty-five (35)
days after the Company receives notice of the Accounting Firm's
determination.
o The Executive shall give written notice to the Company of any claim by
the IRS that, if successful, would require the payment by the Executive
of an Excise Tax, such notice to be provided within fifteen (15) days
after the Executive shall have received written notice of such claim. The
Executive shall cooperate with the Company in determining whether to
contest or pay such claim and shall not pay such claim without the
written consent of the Company, which shall not be unreasonably withheld,
conditioned or delayed.
o This Section 4.3(e) shall remain in full force and effect following the
termination of the Executive's employment for any reason until the
expiration of the statute of limitations on the assessment of taxes
applicable to the Executive for all periods in which the Executive may
incur a liability for taxes (including Excise Taxes), interest or
penalties arising out of the operation of this Agreement.
o For purposes of this Agreement, the Executive would be entitled to
terminate his employment for "Good Reason" if without the Executive's
prior written consent:
o The Company fails to comply with any material obligation imposed by this
Agreement;
o The Company assigns to the Executive duties or responsibilities that are
materially inconsistent with the Executive's positions, duties,
responsibilities, titles and offices in effect on the Effective Date;
o The Company effects a reduction in the Executive's Base Salary; or
o The Company requires the Executive to be based (excluding regular travel
responsibilities) at any office or location more than 75 miles from the
principal office of the Company on the Effective Date.
o For purposes of this Agreement, "Cause" means the occurrence of any one
or more of the following events:
o a material failure by the Executive to comply with any material
obligation imposed by this Agreement (including, without limitation, any
violation of Sections 5.1 or 5.2 hereof);
o the Executive's being convicted of, or pleading guilty or nolo contendere
to, or being indicted for any felony;
o theft, embezzlement, or fraud by the Executive in connection with the
performance of his duties hereunder;
o the Executive's engaging in any activity that gives rise to a material
conflict of interest with the Company that is not be cured following ten
(10) days' written notice and a demand to cure such conflict; or
o the misappropriation by the Executive of any material business
opportunity of the Company.
o For purposes of this Agreement, "Change of Control" shall be defined as
set forth in Exhibit A, which is attached hereto.
o Termination For Cause and Voluntary Resignation Other Than For Good
Reason.
o The Company may, upon action of the Board, terminate the employment of
the Executive (and the Employment Period) at any time for "Cause" and the
Executive may voluntarily resign and thereby terminate his employment
(and the Employment Period) under this Agreement at any time upon not
less than thirty (30) days' prior written notice. Upon termination by the
Company for Cause or resignation by the Executive other than for Good
Reason, the following provisions shall apply:
o The Executive shall be entitled to receive all amounts of earned but
unpaid Base Salary and benefits accrued through the date of such
termination. Except as provided below, all other rights of the Executive
(and all obligations of the Company) hereunder shall terminate as of the
date of such termination.
o With respect to outstanding options and other equity based awards held by
the Executive as of the date of termination, (i) any such options that
are not vested or exercisable as of such date of termination shall
immediately expire and any such equity based awards that are not vested
as of such date of termination shall immediately be forfeited, and (ii)
any such options that are vested and exercisable as of such date of
termination shall expire immediately following the expiration of the
ninety (90)-day period following such date of termination.
o With respect to any shares of Common Stock held by the Executive that are
vested as of the date of termination (or issued pursuant to the exercise
of options following such date of termination pursuant to Section 4.4(c)
hereof), for the one hundred eighty (180)-day period following such date
of termination, the Company (or its designee) shall have the right to
purchase from the Executive and the Executive hereby agrees to sell any
or all such shares to the Company (or the Company's designee) for an
amount equal to the product of (x) the per share current fair market
value of a share of Common Stock (as determined by the Board in good
faith) and (y) the number of shares so purchased. Executive shall have
the right to request, in writing, that the Board obtain a fairness
opinion from a nationally recognized accounting firm or investment bank
chosen by the Company, to review the Board's fair market value
determination of the Common Stock. If such fairness opinion validates the
fair market determination of the Board, the gross purchase price paid to
the Executive for such shares under this Section 4.4(d), shall be reduced
by 10% excluding such other tax or withholding as may be required by
applicable law.
o Before the Company may terminate the Executive for Cause pursuant to
Section 4.4(a) above, the Board shall deliver to the Executive a written
notice of the Company's intent to terminate the Executive for Cause, and
the Executive shall have been given a reasonable opportunity to cure any
such acts or omissions (which are susceptible of cure as reasonably
determined by the Board) within thirty (30) days after the Executive's
receipt of such notice.
o Confidentiality and Non-Competition.
o Confidentiality; Intellectual Property.
o The Executive recognizes that the Company's business interests require a
confidential relationship between the Company and the Executive and the
fullest practical protection and confidential treatment of all "Trade
Secrets or Confidential or Proprietary Information" (as defined in
Section 5.3 hereof). Accordingly, the Executive agrees that, except as
required by law or court order, the Executive will keep confidential and
will not disclose to anyone (other than the Company or any Persons
designated by the Company), or publish, utter, exploit, make use of (or
aid others in publishing, uttering, exploiting or using), or otherwise
"Misappropriate" (as defined in Section 5.3 hereof) any Trade Secrets or
Confidential or Proprietary Information at any time. The Executive's
obligations hereunder shall continue during the Employment Period and
thereafter for so long as such Trade Secrets or Confidential or
Proprietary Information remain Trade Secrets or Confidential or
Proprietary Information.
o The Executive acknowledges and agrees that:
o the Executive occupies a unique position within the Company, and he is
and will be intimately involved in the development and/or implementation
of Trade Secrets or Confidential or Proprietary Information;
o in the event the Executive breaches Section 5.1 hereof with respect to
any Trade Secrets or Confidential or Proprietary Information, such breach
shall be deemed to be a Misappropriation of such Trade Secrets or
Confidential or Proprietary Information; and
o any Misappropriation of Trade Secrets or Confidential or Proprietary
Information will result in immediate and irreparable harm to the Company.
o The Executive acknowledges and agrees that all ideas, inventions,
marketing, sales and business plans, formulae, designs, pricing, studies,
programs, reviews and related materials, strategies and products, whether
domestic or foreign, developed by him during the Employment Period,
including, without limitation, any process, operation, technique,
product, improvement or development which may be patentable or
copyrightable, are and will be the property of the Company, and that he
will do, at the Company's request and cost, whatever is reasonably
necessary to secure the rights thereto by patent, copyright or otherwise
to the Company.
o Upon termination or expiration of the Employment Period and at any other
time upon request, the Executive further agrees to surrender to the
Company all documents, writings, notes, business, marketing or strategic
plans, financial information, customer, distributor and supplier lists,
manuals, illustrations, models, and other such materials (collectively,
"Company Documents") produced by the Executive or coming into his
possession by or through employment with the Company during the
Employment Period, within the scope of such employment, and agrees that
all Company Documents are at all times the Company's property, provided
that the Executive may maintain a copy of any Company Documents that are
not Trade Secrets or Confidential or Proprietary Information.
o During the Employment Period, the Executive represents and agrees that he
will not use or disclose any confidential or proprietary information or
trade secrets of others, including but not limited to former employers,
and that he will not bring onto the premises of the Company such
confidential or proprietary information or trade secrets of such others,
unless consented to in writing by said others, and then only with the
prior written authorization of the Company.
o Noncompetition and Nonsolicitation. During the Employment Period and
until the end of the Restricted Period (as defined below), the Executive
agrees that the Executive will not, directly or indirectly, on the
Executive's own behalf or as a partner, owner, officer, director,
stockholder, member, employee, agent or consultant of any other Person
within the United States of America or in any other country or territory
in which the businesses of the Company are conducted:
o own, manage, operate, control, be employed by, provide services as a
consultant to, or participate in the ownership, management, operation, or
control of, any enterprise that engages in, owns or operates businesses
that market, sell, distribute, manufacture or otherwise are involved in
the nutritional supplements industry.
o solicit, hire, or otherwise attempt to establish for any Person, any
employment, agency, consulting or other business relationship with any
Person who is or was an employee of the Company or any of its Affiliates.
o The parties hereto acknowledge and agree that, notwithstanding anything
in Section 5.2(a) hereof, (x) the Executive may own or hold, solely as
passive investments, securities of Persons engaged in any business that
would otherwise be included in Section 5.2(a) as long as with respect to
each such investment, the securities held by the Executive do not exceed
five percent (5%) of the outstanding securities of such Person and, such
securities are publicly traded and registered under Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"); and (y)
the Executive may serve on the board of directors (or other comparable
position) or as an officer of any entity at the request of the Board;
provided, however, that in the case of investments otherwise permitted
under clause (x) above, the Executive shall not be permitted to, directly
or indirectly, participate in, or attempt to influence, the management,
direction or policies of (other than through the exercise of any voting
rights held by the Executive in connection with such securities), or lend
his name to, any such Person.
o The Executive acknowledges and agrees that, for purposes of this Section
5.2, an act by his spouse, ancestor, lineal descendant, lineal
descendant's spouse, sibling, or other member of his immediate family
will be treated as an indirect act by the Executive.
o Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:
o An "Affiliate" of any Person shall mean any other Person, whether now or
hereafter existing, directly or indirectly controlling or controlled by,
or under direct or indirect common control with, such specified Person.
For purposes hereof, "control" or any other form thereof, when used with
respect to any Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise.
o "Misappropriate", or any form thereof, means:
o the acquisition of any Trade Secret or Confidential or Proprietary
Information by a Person who knows or has reason to know that the Trade
Secret or Confidential or Proprietary Information was acquired by theft,
bribery, misrepresentation, breach or inducement of a breach of a duty to
maintain secrecy, or espionage through electronic or other means (each,
an "Improper Means"); or
o the disclosure or use of any Trade Secret or Confidential or Proprietary
Information without the express consent of the Company by a Person who
(x) used Improper Means to acquire knowledge of the Trade Secret or
Confidential or Proprietary Information; or (y) at the time of disclosure
or use, knew or had reason to know that his or her knowledge of the Trade
Secret or Confidential or Proprietary Information was (i) derived from or
through a Person who had utilized Improper Means to acquire it, (ii)
acquired under circumstances giving rise to a duty to maintain its
secrecy or limit its use, or (iii) derived from or through a Person who
owed a duty to the Company to maintain its secrecy or limit its use; or
(z) before a material change of his or her position, knew or had reason
to know that it was a Trade Secret or Confidential or Proprietary
Information and that knowledge of it had been acquired by accident or
mistake.
o "Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, business trust,
joint-stock company, estate, trust, unincorporated organization, or
government or other agency or political subdivision thereof, or any other
legal or commercial entity.
o "Restricted Period" shall mean the longer of (i) the first anniversary of
the date of termination of employment or (ii) the period during which the
Executive is receiving payments from the Company pursuant to Section 4
hereof.
o "Trade Secrets or Confidential or Proprietary Information" shall mean:
o any and all information, formulae, patterns, compilations, programs,
devices, methods, techniques, processes, know how, plans (marketing,
business, strategic or otherwise), arrangements, pricing and other data
(collectively, "Information") that (a) derives independent economic
value, actual or potential, from not being generally known to the public
or to other Persons who can obtain economic value from its disclosure or
use, and (b) is the subject of efforts by the Company that are reasonable
under the circumstances to maintain its secrecy; or
o any and all other Information (i) unique to the Company which has a
significant business purpose and is not known or generally available from
sources outside of such Persons or typical of industry practice, or (ii)
the disclosure of which would have a material adverse effect on the
business of the Company.
o Remedies. The Executive acknowledges and agrees that if the Executive
breaches any of the provisions of Section 5 hereof, the Company may
suffer immediate and irreparable harm for which monetary damages alone
will not be a sufficient remedy, and that, in addition to all other
remedies that the Company may have, the Company shall be entitled to seek
injunctive relief, specific performance or any other form of equitable
relief to remedy a breach or threatened breach of this Agreement
(including, without limitation, any actual or threatened
Misappropriation) by the Executive and to enforce the provisions of this
Agreement. The Executive and the Company each agrees (i) to submit to the
jurisdiction of any competent court where the Company may choose to seek
equitable relief, (ii) to waive any and all defenses the Executive may
have on the grounds of lack of jurisdiction of such court; and (iii) that
neither party shall be required to post any bond, undertaking, or other
financial deposit or guarantee in seeking or obtaining such equitable
relief. The existence of this right shall not preclude or otherwise limit
the applicability or exercise of any other rights and remedies which the
Company may have at law or in equity.
o Interpretation; Severability.
o The Executive has carefully considered the possible effects on the
Executive of the covenants not to compete, the confidentiality
provisions, and the other obligations contained in this Agreement, and
the Executive recognizes that the Company has made every effort to limit
the restrictions placed upon the Executive to those that are reasonable
and necessary to protect the Company's legitimate business interests.
o The Executive acknowledges and agrees that the restrictive covenants set
forth in this Agreement are reasonable and necessary in order to protect
the Company's valid business interests. It is the intention of the
parties hereto that the covenants, provisions and agreements contained
herein shall be enforceable to the fullest extent allowed by law. If any
covenant, provision, or agreement contained herein is found by a court
having jurisdiction to be unreasonable in duration, scope or character of
restrictions, or otherwise to be unenforceable, such covenant, provision
or agreement shall not be rendered unenforceable thereby, but rather the
duration, scope or character of restrictions of such covenant, provision
or agreement shall be deemed reduced or modified with retroactive effect
to render such covenant, provision or agreement reasonable or otherwise
enforceable (as the case may be), and such covenant, provision or
agreement shall be enforced as modified. If the court having jurisdiction
will not review the covenant, provision or agreement, the parties hereto
shall mutually agree to a revision having an effect as close as permitted
by applicable law to the provision declared unenforceable. The parties
hereto agree that if a court having jurisdiction determines, despite the
express intent of the parties hereto, that any portion of the covenants,
provisions or agreements contained herein are not enforceable, the
remaining covenants, provisions and agreements herein shall be valid and
enforceable. Moreover, to the extent that any provision is declared
unenforceable, the Company shall have any and all rights under applicable
statutes or common law to enforce its rights with respect to any and all
Trade Secrets or Confidential or Proprietary Information or unfair
competition by the Executive.
o Miscellaneous.
o ARBITRATION. SUBJECT TO THE RIGHTS UNDER SECTION 5.4 TO SEEK INJUNCTIVE
OR OTHER EQUITABLE RELIEF AS SPECIFIED IN THIS AGREEMENT, ANY DISPUTE
BETWEEN THE PARTIES HERETO ARISING UNDER OR RELATING TO THIS AGREEMENT OR
THE EXECUTIVE'S EMPLOYMENT BY THE COMPANY (INCLUDING, BUT NOT LIMITED TO,
THE AMOUNT OF DAMAGES, THE NATURE OF THE EXECUTIVE'S TERMINATION OR THE
CALCULATION OF ANY BONUS OR OTHER AMOUNT OR BENEFIT DUE) SHALL BE
RESOLVED IN ACCORDANCE WITH THE PROCEDURES OF THE AMERICAN ARBITRATION
ASSOCIATION, PROVIDED, HOWEVER, THAT THE PARTIES AGREE THAT ANY
ARBITRATOR OR ARBITRATORS SELECTED OR APPOINTED TO HEAR THE ARBITRATION
SHALL BE EITHER A RETIRED JUDGE OF THE CIRCUIT OR APPELLATE COURTS OF NEW
YORK OR A PRACTICING ATTORNEY WITH AT LEAST FIFTEEN (15) YEARS OF
EXPERIENCE IN MATTERS REASONABLY RELATED TO THE ISSUE OR ISSUES IN
DISPUTE. ANY RESULTING HEARING SHALL BE HELD IN THE NEW YORK AREA. THE
RESOLUTION OF ANY DISPUTE ACHIEVED THROUGH SUCH ARBITRATION SHALL BE
BINDING AND ENFORCEABLE BY A COURT OF COMPETENT JURISDICTION. COSTS AND
FEES INCURRED IN CONNECTION WITH SUCH ARBITRATION SHALL BE BORNE BY THE
PARTIES AS DETERMINED BY THE ARBITRATION.
o Entire Agreement; Waiver. This Agreement contains the entire agreement
between the Executive and the Company with respect to the subject matter
hereof, and supersedes any and all prior understandings or agreements,
whether written or oral. No modification or addition hereto or waiver or
cancellation of any provision hereof shall be valid except by a writing
signed by the party to be charged therewith. No delay on the part of any
party to this Agreement in exercising any right or privilege provided
hereunder or by law shall impair, prejudice or constitute a waiver of
such right or privilege.
o Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of New York, without regard to principles of
conflict of laws.
o Successors and Assigns; Binding Agreement. The rights and obligations of
the parties under this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, personal representatives,
successors and permitted assigns. This Agreement is a personal contract,
and, except as specifically set forth herein, the rights and interests of
the Executive herein may not be sold, transferred, assigned, pledged or
hypothecated by any party without the prior written consent of the
others. As used herein, the term "successor" as it relates to the
Company, shall include, but not be limited to, any successor by way of
merger, consolidation, or sale of all or substantially all of such
Person's assets or equity interests.
o Representation by Counsel. Each of the parties hereto acknowledges that
(i) it or he has read this Agreement in its entirety and understands all
of its terms and conditions, (ii) it or he has had the opportunity to
consult with any individuals of its or his choice regarding its or his
agreement to the provisions contained herein, including legal counsel of
its or his choice, and any decision not to was his or its alone, and
(iii) it or he is entering into this Agreement of its or his own free
will, without coercion from any source.
o Interpretation. The parties and their respective legal counsel actively
participated in the negotiation and drafting of this Agreement, and in
the event of any ambiguity or mistake herein, or any dispute among the
parties with respect to the provisions hereto, no provision of this
Agreement shall be construed unfavorably against any of the parties on
the ground that he, it, or his or its counsel was the drafter thereof.
o Survival. The provisions of Sections 5 and 6 hereof shall survive the
termination of this Agreement.
o Notices. All notices and communications hereunder shall be in writing and
shall be deemed properly given and effective when received, if sent by
facsimile or telecopy, or by postage prepaid by registered or certified
mail, return receipt requested, or by other delivery service which
provides evidence of delivery, as follows:
If to the Company, to:
General Nutrition Centers, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Board of Directors
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Executive, to:
Xxxxx Xxxxxxx
0000 Xxxx Xxx Xxxxx
Xxxxx Xx. Xxxxx, XX 00000
or to such other address as one party may provide in writing to the other
party from time to time.
o Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
o Captions. Paragraph headings are for convenience only and shall not be
considered a part of this Agreement.
o No Third Party Beneficiary Rights. Except as otherwise provided in this
Agreement, no entity shall have any right to enforce any provision of
this Agreement, even if indirectly benefited by it.
o Withholding. Any payments provided for hereunder shall be paid net of any
applicable withholding required under Federal, state or local law and any
additional withholding to which Executive has agreed.
[THIS SPACE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have duly executed this Agreement,
intending it as a document under seal, as of the date first above written.
WITNESS/
ATTEST: GENERAL NUTRITION CENTERS, INC.
/s/ Xxxxx Xxxxxx By: /s/ Xxxxxx XxXxxxxx
-------------------------------- ----------------------------------
Name: Xxxxxx XxXxxxxx
Title: Chairman
EXECUTIVE
/s/ Xxxxx Xxxxxx /s/ Xxxxx Xxxxxxx
-------------------------------- ----------------------------------
Xxxxx Xxxxxxx
EXHIBIT A
"Change of Control" means:
(1) any event occurs the result of which is that any "Person," as
such term is used in Sections 13(d) and 14(d) of the Exchange Act, other
than one or more Permitted Holders or their Related Parties, becomes the
beneficial owner, as defined in Rules l3d-3 and l3d-5 under the Exchange
Act (except that a Person shall be deemed to have "beneficial ownership"
of all shares that any such Person has the right to acquire within one
year) directly or indirectly, of more than 50% of the Voting Stock of GNC
or any successor company, including, without limitation, through a merger
or consolidation or purchase of Voting Stock of GNC; provided that the
Permitted Holders or their Related Parties do not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors; provided further that the
transfer of 100% of the Voting Stock of GNC to a Person that has an
ownership structure identical to that of GNC prior to such transfer, such
that GNC becomes a wholly owned Subsidiary of such Person, shall not be
treated as a Change of Control for purposes of the indenture;
(2) after an initial public offering of Capital Stock of GNC, during
any period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors, together with any new
directors whose election by such Board of Directors or whose nomination
for election by the stockholders of GNC was approved by a vote of a
majority of the directors of GNC then still in office who were either
directors at the beginning of such period or whose election or nomination
for election was previously so approved, cease for any reason to
constitute a majority of the Board of Directors then in office;
(3) the sale, lease, transfer, conveyance or other disposition, in
one or a series of related transactions other than a merger or
consolidation, of all or substantially all of the assets of GNC and its
Subsidiaries taken as a whole to any Person or group of related Persons
other than a Permitted Holder or a Related Party of a Permitted Holder; or
(4) the adoption of a plan relating to the liquidation or dissolution
of GNC.
For purposes of this definition, the following terms shall have the meanings
set forth below:
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Apollo" means Apollo Management V, L.P. and its Affiliates or any
entity controlled thereby or any of the partners thereof.
"Board of Directors" means the Board of Directors of GNC or any
committee thereof duly authorized to act on behalf of such Board.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of
or interests in, however designated, equity of such Person, including any
Preferred Stock, but excluding any debt securities convertible into such
equity.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Permitted Holder" means Apollo.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock" as applied to the Capital Stock of any corporation
means Capital Stock of any class or classes, however designated, that is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Related Party" means:
(1) any controlling stockholder, 80% (or more) owned Subsidiary, or
immediate family member (in the case of an individual) of any Permitted
Holder; or
(2) any trust, corporation, partnership, limited liability company or
other entity, the beneficiaries, stockholders, partners, members, owners or
Persons beneficially holding an 80% or more controlling interest of which
consist of any one or more Permitted Holders and/or such other Persons
referred to in the immediately preceding clause (1).
"Subsidiary" means, with respect to any specified Person:
(1) any corporation, association or other business entity of which
more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency and after
giving effect to any voting agreement or stockholders' agreement that
effectively transfers voting power) to vote in the election of directors,
managers or trustees of the corporation, association or other business
entity is at the time owned or controlled, directly or indirectly, by
that Person or one or more of the other Subsidiaries of that Person (or a
combination thereof); and
(2) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or
(b) the only general partners of which are that Person or one or more
Subsidiaries of that Person (or any combination thereof).
"Voting Stock" of an entity means all classes of Capital Stock of
such entity then outstanding and normally entitled to vote in the election of
directors or all interests in such entity with the ability to control the
management or actions of such entity.
