AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit 10.1
Execution Copy
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is entered into on
December 8, 2006 (the “Execution Date”), to be effective for all purposes as of November
19, 2006 (the “Effective Date”), by and between General Nutrition Centers, Inc., a Delaware
corporation (the “Company”) and indirect wholly owned subsidiary of GNC Parent Corporation,
a Delaware corporation (“GNC”), and Xxxxxx X. Xxxxxxxxx (the “Executive”).
WHEREAS, the Company and the Executive entered in an Employment Agreement on November 23,
2005, effective as of November 14, 2005 (the “Original Employment Agreement”); and
WHEREAS, the Company and the Executive now desire to amend certain provisions of the Original
Employment Agreement and restate the Original Employment Agreement, as so amended, effective as of
the Effective Date.
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:
1. Employment of Executive; Duties.
1.1 Title. During the Employment Period (as defined in Section 2 hereof), the
Executive shall serve as President and Chief Executive Officer of each of the Company, GNC
Corporation, a Delaware corporation and sole stockholder of the Company, and of GNC. The Executive
shall have the normal duties, responsibilities and authority commensurate with such positions.
1.2 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 the
Executive’s position 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 the Executive by the Board of Directors of the Company (the “Board”),
commensurate with the Executive serving as President and Chief Executive Officer. The Company may
adjust the duties and responsibilities of the Executive as President and Chief Executive Officer,
notwithstanding the specific title set forth in Section 1.1 hereof, based upon the Company’s needs
from time to time. Except for sick leave, reasonable vacations and excused leaves of absence, the
Executive shall, throughout the Employment Period, devote substantially all the Executive’s working
time, attention, knowledge and skills faithfully, and to the best of the Executive’s ability, to
the duties and responsibilities of the Executive’s positions in furtherance of the business affairs
and activities of the Company and its subsidiaries and Affiliates (as defined in Section 5.4(a)
hereof) and, except where the Company provides its written consent otherwise, shall maintain the
Executive’s 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, comply with, observe and carry out (a) the Company’s rules, regulations, policies
and codes of ethics and/or conduct applicable to its employees generally and in effect from time to
time and (b) such rules, regulations, policies, codes of ethics and/or conduct, directions and
restrictions as the Board may from time to time reasonably establish or approve for senior
executive officers of the Company.
2. Term of Employment.
2.1 Employment Period. The employment of the Executive hereunder shall continue until
December 31, 2008 (the “Initial Employment Period”), unless terminated earlier in
accordance with the provisions of Section 4 of this Agreement.
2.2 Extension. Unless terminated earlier in accordance with the provisions of Section
4 of this Agreement, the employment of the Executive hereunder shall continue after the end of the
Initial Employment Period for additional one (1)-year periods (each an “Extension Period”
and, together with the Initial Employment Period, the “Employment Period”), unless the
Company or the Executive notifies the other in writing not less than one (1) year prior to the end
of the Initial Employment Period, or the end of the applicable Extension Period, of its or the
Executive’s election, in its or the Executive’s sole discretion, not to extend the Employment
Period.
3. Compensation and General Benefits.
3.1 Base Salary.
(a) During the Employment Period, the Company agrees to pay to the Executive an annual base
salary in an amount equal to $750,000 (such base salary, as may be 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 Company’s normal payroll practices and procedures in effect
from time to time for the payment of salaries to officers of the Company, but in no event less
frequently than monthly.
(b) 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 change the Base Salary, as it, acting in its sole discretion, shall determine to be
reasonable and appropriate.
3.2 Bonus.
(a) Annual Bonus. With respect to the 2006 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 Compensation Committee. The
Executive’s target Annual Bonus shall be fifty percent (50%) of the Executive’s Base Salary with a
maximum of one hundred and twenty percent (120%) of the 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
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full as soon as reasonably practicable following the determination thereof, but in no event
later than May 15 of the following year, and in accordance with the Company’s normal payroll
practices and procedures. Except as otherwise expressly provided in Section 4 hereof, any Annual
Bonus (or portion thereof) 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.
(b) Success Bonus. In the event of the consummation of (i) an initial underwritten
public offering of shares of Common Stock, par value $0.01 per share, of GNC (the “Common
Stock”), with gross proceeds of not less than $200,000,000, or (ii) a Change of Control (as
defined in Exhibit A attached hereto), the Executive shall be entitled to receive a one-time
payment of a cash bonus in the amount of Five Hundred Thousand Dollars ($500,000) (the “Success
Bonus”), provided that the Executive is serving as President and Chief Executive Officer at the
time of consummation of any such transaction; provided, further that in the event the Executive is
terminated without Cause or terminates for Good Reason (each as defined herein) (x) within thirty
(30) days prior to the consummation of such underwritten initial public offering of Common Stock or
the signing of such Change of Control transaction or (y) between the signing and closing of such
Change of Control transaction, the Executive shall be entitled to the Success Bonus. Any Success
Bonus shall be payable as soon as reasonably practicable after the determination thereof, but in no
event later than ten (10) days after the effective date of such public offering or Change of
Control.
3.3 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 or elsewhere herein,
the Executive shall be entitled to receive reimbursement from the Company for all reasonable and
necessary expenses incurred by the Executive in performing the Executive’s 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.
3.4 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, (a) any
benefit plans, arrangements or policies made available by the Company to its employees generally,
subject to and on a basis consistent with the terms, conditions and overall administration of each
such plan, arrangement or policy and (b) without limiting the foregoing, the benefits set forth on
Exhibit B attached hereto.
3.5 Stock Options. During the Employment Period and subject to the approval of the
Compensation Committee and the GNC Compensation Committee, or other Committee under the Plan (as
defined therein), the Executive shall be eligible to participate in and be granted awards under the
GNC Parent Corporation 2006 Stock Incentive Plan (the “Plan”). In the event of a Change of
Control (as defined in Exhibit A attached hereto), all of the Executive’s stock options granted or
assumed by GNC shall vest in full and become immediately exercisable, but in no event shall such
options be exercisable following their expiration date.
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4. Termination.
4.1 General. The employment of the Executive hereunder (and the Employment Period)
shall terminate as provided in Section 2 hereof, unless earlier terminated in accordance with the
provisions of this Section 4.
4.2 Death or Disability of the Executive.
(a) 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 the Executive’s personal representative or
guardian, if the Executive suffers a “Total Disability” (as defined in Section 4.2(b) hereof).
Upon termination for death or Total Disability, subject to reduction by any benefits paid or
payable to the Executive, the Executive’s beneficiaries or estate under any Company-sponsored
disability benefit plan program or policy for the period following such date of termination;
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, (A) the Company shall pay to the
Executive, guardian or personal representative, as the case may be, the Executive’s current Base
Salary for the remainder of the Employment Period in effect immediately prior to the date of
termination and (B) the Company shall also pay to the Executive, guardian or personal
representative, as the case may be, 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 the Executive worked the full year during which the termination occurred, provided that bonus
targets are met for the year of such termination. Any bonus shall be payable as soon as reasonably
practicable following the determination thereof, but in no event later than May 15 of the following
year, and in accordance with the Company’s normal payroll practices and procedures.
(b) Subject to the last sentence of this Section 4.2(b), 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 ninety (90) consecutive days or
any one hundred twenty (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. In
conjunction with determining mental and/or physical disability for purposes of this Agreement, the
Executive hereby consents to (x) any examinations that the Board or the Compensation Committee
determines are relevant to a determination of whether the Executive is mentally and/or physically
disabled or are required by the Company physician, (y) furnish such medical information as may be
reasonably requested and (z) waive any applicable physician patient privilege that may arise
because of such examination. Notwithstanding anything to the contrary in this Section 4.2(b),
Total Disability shall have the definition of “Disabled” contained in Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”), in any instance
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in which amounts are paid under this Agreement as a result of Executive’s Total Disability and
such amounts are treated as deferred compensation under Section 409A of the Code.
(c) With respect to outstanding stock options and other equity-based awards held by the
Executive as of the date of termination pursuant to this Section 4.2, (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.
(d) With respect to any shares of Common Stock held by the Executive that are vested as of the
date of termination pursuant to this Section 4.2 (or issued pursuant to the exercise of options
following such date of termination pursuant to Section 4.2(c) 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 the Executive’s beneficiary, as applicable, and the
Executive or the Executive’s 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 (i) the per share current
fair market value of a share of Common Stock (as determined by the Board in good faith) and (ii)
the number of shares so purchased. The Executive (or the Executive’s 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(d), shall be reduced by ten percent (10%), excluding such other tax or withholding
as may be required by applicable law. If such fairness opinion determines that the fair market
value is greater than the Board’s fair market valuation determination of the Common Stock, the
gross purchase price paid to the Executive for such shares under this Section 4.2(d) shall be based
on (x) the fair market value set forth in such fairness opinion, (y) if such fairness opinion only
sets forth a range of fair market value, any price within such range, as determined by the Company,
or (z) if no fair market value or range is set forth in such fairness opinion, at a price greater
than the Board’s fair market value determination, as determined by the Company.
4.3 Termination by the Company Without Cause or Resignation by the Executive For Good
Reason.
(a) The Company may terminate the Executive’s employment without “Cause” (as defined in
Section 4.3(g)), and thereby terminate the Executive’s employment (and the Employment Period) under
this Agreement at any time with no requirement for notice to the Executive.
(b) The Executive may resign, and thereby terminate the Executive’s employment (and the
Employment Period), at any time for “Good Reason” (as defined in Section 4.3(f) hereof), upon not
less than sixty (60) days’ prior written notice to the Company specifying in reasonable detail the
reason therefore; provided, however, that the Company shall have a reasonable
opportunity to cure any such Good Reason (to the extent
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possible) within thirty (30) days after the Company’s receipt of such notice; and provided
further that, if the Company is not seeking to cure, the Company shall not be obligated to
allow the Executive to continue working during such period and may, in its sole discretion,
accelerate such termination of employment (and the Employment Period) to any date during such
period.
(i) Executive may not terminate employment under this Agreement for Good Reason regarding any
of the Company’s acts or omissions of which Executive had actual notice for sixty (60) days or more
prior to giving notice of termination for Good Reason.
(ii) A determination of whether the Executive legitimately has Good Reason for termination of
the Executive’s employment under this Agreement, and of whether the Company has effectively cured
and thus eliminated the grounds for such Good Reason, shall be made only by the Chairman of the
Board of the Company (the “Chairman of the Board”), within the Chairman of the Board’s sole
judgment and discretion, acting in good faith after having met with the Company’s Vice President of
Human Resources.
(c) In the event the Executive’s employment is terminated pursuant to this Section 4.3, then,
subject to Section 4.3(d) hereof, the following provisions shall apply:
(i) 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 in effect immediately prior to the date of termination, with all such amounts
payable in accordance with the Company’s normal payroll practices and procedures in the same manner
and at the same time as though the Executive remained employed by the Company.
(ii) If such termination occurs upon or within six (6) months following a Change of Control
(as defined in Exhibit A attached hereto), the Company shall 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 the greater of (A) the period set forth in Section
4.3(c)(i) hereof or (B) a two (2)-year period following such date of termination, with all such
amounts payable in accordance with the Company’s normal payroll practices and procedures in the
same manner and at the same time as though the Executive remained employed by the Company.
(iii) In the event the Executive’s employment is terminated pursuant to this Section 4.3
without Cause, and if the Company has previously effected reductions in the Executive’s Base Salary
and the base salary of all executives at the same level as the Executive, which reductions were
substantially similar, then the Base Salary rate for purposes of Section 4.3(c)(i) or (ii) hereof
shall be the Base Salary rate in effect immediately prior to such reductions.
(iv) 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
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employment) that the Executive would have been entitled to had the Executive 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 as soon as reasonably practicable following the
determination thereof, but in no event later than May 15 of the following year, and in accordance
with the Company’s normal payroll practices and procedures.
(v) If the Executive elects continuation coverage (with respect to the Executive’s coverage
and/or any eligible dependent coverage) under the Consolidated Omnibus Budget Reconciliation Act of
1986 (“COBRA Continuation Coverage”) with respect to the Company’s group health insurance
plan, the Executive shall be responsible for payment of the monthly cost of COBRA Continuation
Coverage. Unless prohibited by law, the Company shall reimburse the Executive for any portion of
the monthly cost of COBRA Continuation Coverage that exceeds the amount of the monthly health
insurance premium (with respect to the Executive’s coverage and/or any eligible dependent coverage)
payable by the Executive immediately prior to the date of Executive’s termination, such
reimbursements to continue (A) through the expiration of the Employment Period in effect
immediately prior to the date of termination or (B) in the event that Executive’s Base Salary is
being paid pursuant to Section 4.3(c)(ii), for the period set forth therein. The Company shall pay
the reimbursements on a monthly basis in accordance with the Company’s normal payroll practices and
procedures.
(vi) With respect to outstanding options and other equity-based awards held by the Executive
as of the date of termination pursuant to this Section 4.3, (A) 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 (B) 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.
(vii) With respect to any shares of Common Stock held by the Executive that are vested as of
the date of termination pursuant to this Section 4.3 (or issued pursuant to the exercise of options
following such date of termination pursuant to Section 4.3(c)(vi) 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 (A)
the per share current fair market value of a share of Common Stock (as determined by the Board in
good faith) and (B) the number of shares so purchased. The 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)(vii), shall be reduced by ten percent (10%), excluding such other tax or
withholding as may be required by applicable law. If such fairness opinion determines that the
fair market value is greater than the Board’s fair market valuation determination of the Common
Stock, the gross purchase price paid to the Executive for such shares under this Section
4.3(c)(vii) shall be based on (x) the fair market value set forth in such fairness opinion, (y) if
such fairness opinion only sets forth a range of fair market value, any price within such range, as
determined by the Company or (z) if no fair market value or
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range is set forth in such fairness opinion, at a price greater than the Board’s fair market
value determination, as determined by the Company.
(viii) The Executive shall continue to be entitled to the perquisites available to the
Executive immediately preceding the Executive’s date of termination as provided in the Perquisite
Policy for Senior Executives (as such policy may be amended by the Board from time to time), in
each case (A) through the expiration of the Employment Period in effect immediately prior to the
date of termination or (B) in the event that Executive’s Base Salary is being paid pursuant to
Section 4.3(c)(ii), for the period set forth therein.
(d) As a condition precedent to the Executive’s right to receive the benefits set forth in
Section 4.3(c) hereof, the Executive agrees to execute a release of the Company and its respective
Affiliates, officers, directors, stockholders, employees, agents, insurers, representatives and
successors from and against any and all claims that the Executive may have against any such Person
(as defined in Section 5.4(f) hereof) 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.
(e) 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 (the “Code”) (and
any regulations or guidance promulgated or 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 any such Payment to the Excise Tax (the “Payment
Reduction”). The Executive shall have the right to designate those payments or benefits that
shall be reduced or eliminated under the Payment Reduction to avoid the imposition of the Excise
Tax, subject to the confirmation of the Accounting Firm (as defined herein) with respect to the
intended effect thereof. 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.
(i) 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
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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.
(ii) 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 Section
4.3(e)(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.
(iii) 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.
(iv) 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.
(f) For purposes of this Agreement, the Executive would be entitled to terminate the
Executive’s employment for “Good Reason” if without the Executive’s prior written consent:
(i) the Company fails to comply with any material obligation imposed by this Agreement;
(ii) the Company changes the Executive’s position from that of President and Chief Executive
Officer; provided, however, that a change in the Executive’s duties or
responsibilities without a change in the Executive’s position as President and Chief Executive
Officer shall not constitute Good Reason;
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(iii) the Company effects a reduction in the Executive’s Base Salary, unless all executives at
the same level as the Executive receive a substantially similar reduction in base salary; or
(iv) 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.
(g) For purposes of this Agreement, “Cause” means the occurrence of any one or more of
the following events, and the Company shall have the sole discretion to determine the existence of
Cause:
(i) a failure by the Executive to comply with any obligation under this Agreement;
(ii) the Executive’s being indicted for (A) any felony or (B) any misdemeanor that causes or
is likely to cause harm or embarrassment to the Company or any of its Affiliates, in the reasonable
judgment of the Board;
(iii) theft, embezzlement or fraud by the Executive in connection with the performance of the
Executive’s duties hereunder;
(iv) the Executive’s engaging in any activity that gives rise to a material conflict with the
Company or any of its Affiliates;
(v) the misappropriation by the Executive of any material business opportunity of the Company
or any of its Affiliates;
(vi) any failure to comply with, observe or carry out the Company’s rules, regulations,
policies and codes of ethics and/or conduct applicable to its employees generally and in effect
from time to time, including (without limitation) those regarding conflicts, potential conflicts of
interest or the appearance of a conflict of interest
(vii) any failure to comply with, observe or carry out the rules, regulations, policies,
directions, codes of ethics and/or conduct and restrictions established or approved by the Board
from time to time for senior executive officers of the Company, including (without limitation)
those regarding conflicts, potential conflicts of interest or the appearance of a conflict of
interest;
(viii) substance abuse or use of illegal drugs that, in the reasonable judgment of the Board,
(A) impairs the Executive’s performance of the Executive’s duties hereunder or (B) causes or is
likely to cause harm or embarrassment to the Company or any of its Affiliates; and
(ix) engagement in conduct that Executive knows or should know is injurious to the Company or
any of its Affiliates.
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4.4 Termination For Cause, Voluntary Resignation Other Than For Good Reason or Election
Not to Extend the Employment Period.
(a) (i) The Company may, upon action of the Board, terminate the employment of the Executive
(and the Employment Period) at any time for “Cause,” (ii) the Executive may voluntarily resign
other than for Good Reason and thereby terminate the Executive’s employment (and the Employment
Period) under this Agreement at any time upon not less than thirty (30)-days’ prior written notice
or (iii) either the Company or the Executive may elect not to extend or further extend the
Employment Period pursuant to Section 2.2 hereof.
(b) The following provisions shall apply upon termination by the Company for Cause, by the
Executive as the result of resignation for other than for Good Reason, or by the Company or the
Executive at the end of the Employment Period as the result of an election not to extend or further
extend the Employment Period:
(i) 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.
(ii) With respect to outstanding options and other equity-based awards held by the Executive
as of the date of termination pursuant to this Section 4.4, (A) 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 (B) 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.
(iii) With respect to any shares of Common Stock held by the Executive that are vested as of
the date of termination pursuant to this Section 4.4 (or issued pursuant to the exercise of options
following such date of termination pursuant to Section 4.4(b)(ii) 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 (A)
the per share current fair market value of a share of Common Stock (as determined by the Board in
good faith) and (B) the number of shares so purchased. The 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(b)(iii), shall be reduced by ten percent (10%), excluding such other tax or
withholding as may be required by applicable law. If such fairness opinion determines that the
fair market value is greater than the Board’s fair market valuation determination of the Common
Stock, the gross purchase price paid to the Executive for such shares under this Section
4.4(b)(iii) shall be based on (x) the fair market value set forth in such fairness opinion, (y) if
such fairness opinion only sets forth a range of fair market value, any price within such range, as
determined by the Company or (z) if no fair market value or
11
range is set forth in such fairness opinion, at a price greater than the Board’s fair market
value determination, as determined by the Company.
(c) Before the Company may terminate the Executive for Cause pursuant to Section 4.4(a)(i),
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.
4.5 Resignation from Officer Positions. Upon the termination of the Executive’s
employment for any reason (unless otherwise agreed in writing by the Company and the Executive),
the Executive will be deemed to have resigned, without any further action by the Executive, from
any and all officer and/or director positions that the Executive, immediately prior to such
termination, (a) held with the Company or any of its Affiliates and (b) held with any other
entities at the direction of, or as a result of the Executive’s affiliation with, the Company or
any of its Affiliates. If for any reason this Section 4.5 is deemed to be insufficient to
effectuate such resignations, then Executive will, upon the Company’s request, execute any
documents or instruments that the Company may deem necessary or desirable to effectuate such
resignations. In addition, the Executive hereby designates the Secretary or any Assistant
Secretary of the Company and of any Affiliate to execute any such documents or instruments as the
Executive’s attorney-in-fact to effectuate such resignations if execution by the Secretary or any
Assistant Secretary of the Company or Affiliate is deemed by the Company or the Affiliate to be a
more expedient means to effectuate such resignation or resignations.
4.6 Section 409A of the Code. Notwithstanding anything to the contrary in this
Agreement, the parties mutually desire to avoid adverse tax consequences associated with the
application of Section 409A of the Code to this Agreement and agree to cooperate fully and take
appropriate reasonable actions to avoid any such consequences under Section 409A of the Code,
including delaying payments and reforming the form of the Agreement if such action would reduce or
eliminate taxes and/or interest payable as a result of Section 409A of the Code. In this regard,
notwithstanding anything to the contrary in this Section 4, to the extent necessary to comply with
Section 409A of the Code, any payment required under this Section 4 shall be deferred for a period
of six (6) months, regardless of the circumstances giving rise to or the basis for such payment.
5. Confidentiality, Work Product and Non-Competition and Non-Solicitation.
5.1 Confidentiality.
(a) In connection with the Executive’s employment with the Company, the Company promises to
provide the Executive with access to “Confidential Information” (as defined in Section 5.4(d)
hereof) in support of the Executive’s employment duties. 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 Confidential
Information. At all times, both during and after the
12
Employment Period, the Executive shall not directly or indirectly: (i) appropriate, download,
print, copy, remove, use, disclose, divulge, communicate or otherwise “Misappropriate” (as defined
in Section 5.4(e) hereof) any Confidential Information, including, without limitation, originals or
copies of any Confidential Information, in any media or format, except for the Company’s
benefit within the course and scope of the Executive’s employment or with the prior written consent
of the Chairman of the Board or (ii) take or encourage any action that would circumvent, interfere
with or otherwise diminish the value or benefit of the Confidential Information to any of the
Company Parties (as defined in Section 5.4(b) hereof).
(b) All Confidential Information, and all other information and property affecting or relating
to the business of the Company Parties within the Executive’s possession, custody or control,
regardless of form or format, shall remain, at all times, the property of the respective Company
Parties, the appropriation, use and/or disclosure of which is governed and restricted by this
Agreement.
(c) The Executive acknowledges and agrees that:
(i) the Executive occupies a unique position within the Company, and the Executive is and will
be intimately involved in the development and/or implementation of Confidential Information;
(ii) in the event the Executive breaches this Section 5.1 with respect to any Confidential
Information, such breach shall be deemed to be a Misappropriation of such Confidential Information;
and
(iii) any Misappropriation of Confidential Information will result in immediate and
irreparable harm to the Company.
(d) Upon receipt of any formal or informal request, by legal process or otherwise, seeking the
Executive’s direct or indirect disclosure or production of any Confidential Information to any
Person, the Executive shall promptly and timely notify the Company and provide a description and,
if applicable, hand deliver a copy of such request to the Company. The Executive irrevocably
nominates and appoints the Company as the Executive’s true and lawful attorney-in-fact to act in
the Executive’s name, place and stead to perform any act that the Executive might perform to defend
and protect against any disclosure of Confidential Information.
(e) At any time the Company may request, during or after the Employment Period, the Executive
shall deliver to the Company all originals and copies of Confidential Information and all other
information and property affecting or relating to the business of the Company Parties within the
Executive’s possession, custody or control, regardless of form or format, including, without
limitation any Confidential Information produced by the Executive. Both during and after the
Employment Period, the Company shall have the right of reasonable access to review, inspect, copy
and/or confiscate any Confidential Information within the Executive’s possession, custody or
control.
(f) Upon termination or expiration of this Agreement, the Executive shall immediately return
to the Company all Confidential Information, and all other
13
information and property affecting or relating to the business of the Company Parties, within
the Executive’s possession, custody or control, regardless of form or format, without the necessity
of a prior Company request.
(g) During the Employment Period, the Executive represents and agrees that the Executive will
not use or disclose any confidential or proprietary information or trade secrets of others,
including but not limited to former employers, and that the Executive will not bring onto the
premises of the Company or access 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.
5.2 Work Product/Intellectual Property.
(a) Assignment. The Executive hereby assigns to the Company all right, title and
interest to all “Work Product” (as defined in Section 5.4(h) hereof) that (i) relates to any of the
Company Parties’ actual or anticipated business, research and development or existing or future
products or services, or (ii) is conceived, reduced to practice, developed or made using any
equipment, supplies, facilities, assets, information or resources of any of the Company Parties
(including, without limitation, any intellectual property rights).
(b) Disclosure. The Executive shall promptly disclose Work Product to the Chairman of
the Board and perform all actions reasonably requested by the Company (whether during or after the
Employment Period) to establish and confirm the ownership and proprietary interest of any of the
Company Parties in any Work Product (including, without limitation, the execution of assignments,
consents, powers of attorney, applications and other instruments). The Executive shall not file
any patent or copyright applications related to any Work Product except with the written consent of
the Chairman of the Board.
5.3 Non-Competition and Non-Solicitation.
(a) In consideration of the Confidential Information being provided to the Executive as stated
in Section 5.1 hereof, and other good and valuable new consideration as stated in this Agreement,
including, without limitation, employment and/or continued employment with the Company, and the
business relationships, Company goodwill, work experience, client, customer and/or vendor
relationships and other fruits of employment that the Executive will have the opportunity to
obtain, use and develop under this Agreement, the Executive agrees to the restrictive covenants
stated in this Section 5.3.
(b) During the Employment Period and until the end of the Restricted Period (as defined in
Section 5.4(g) hereof), the Executive agrees that the Executive will not, directly or indirectly,
on the Executive’s own behalf or on the behalf 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:
(i) engage in a Competing Business (as defined in Section 5.4(g) hereof), including, without
limitation, by owning, managing, operating,
14
controlling, being employed by, providing services as a consultant or independent contractor
to or participating in the ownership, management, operation or control of any Competing Business;
(ii) induce or attempt to induce any customer, vendor, supplier, licensor or other Person in a
business relationship with any Company Party, for or with which the Executive or employees working
under the Executive’s supervision had any direct or indirect responsibility or contact during the
Employment Period, (A) to do business with a Competing Business or (B) to cease, restrict,
terminate or otherwise reduce business with the Company for the benefit of a Competing Business,
regardless of whether the Executive initiates contact; or
(iii) (A) solicit, recruit, persuade, influence or induce, or attempt to solicit, recruit,
persuade, influence or induce anyone employed or otherwise retained by any of the Company Parties
(including any independent contractor or consultant), to cease or leave their employment or
contractual or consulting relationship with any Company Party, regardless of whether the Executive
initiates contact for such purposes or (B) hire, employ or otherwise attempt to establish, for any
Person, any employment, agency, consulting, independent contractor or other business relationship
with any Person who is or was employed or otherwise retained by any of the Company Parties
(including any independent contractor or consultant).
(c) The parties hereto acknowledge and agree that, notwithstanding anything in Section
5.3(b)(i) hereof, (i) the Executive may own or hold, solely as passive investments, securities of
Persons engaged in any business that would otherwise be included in Section 5.3(b)(i), 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 (ii) 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 (i) 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 the Executive’s name to,
any such Person.
(d) The Executive acknowledges and agrees that, for purposes of this Section 5.3, indirect
acts by the Executive shall include, without limitation, an act by the Executive’s spouse,
ancestor, lineal descendant, lineal descendant’s spouse, sibling or other member of the Executive’s
immediate family.
(e) The Executive acknowledges that (i) the restrictive covenants contained in this Section
5.3 hereof are ancillary to and part of an otherwise enforceable agreement, such being the
agreements concerning Confidential Information and other consideration as stated in this Agreement,
(ii) at the time that these restrictive covenants are made, the limitations as to time, geographic
scope and activity to be restrained, as described herein, are reasonable and do not impose a
greater restraint than necessary to protect the good will and other legitimate business interests
of the Company, including without limitation, Confidential Information (including trade secrets),
client, customer and/or vendor relationships,
15
client and/or customer goodwill and business productivity, (iii) in the event of termination
of the Executive’s employment, the Executive’s experiences and capabilities are such that the
Executive can obtain gainful employment without violating this Agreement and without the Executive
incurring undue hardship, (iv) based on the relevant benefits and other new consideration provided
for in this Agreement, including, without limitation, the disclosure and use of Confidential
Information, the restrictive covenants of this Section 5.3, as applicable according to their terms,
shall remain in full force and effect even in the event of the Executive’s involuntary termination
from employment, with or without Cause and (v) the Executive has carefully read this Agreement and
has given careful consideration to the restraints imposed upon the Executive by this Agreement and
consents to the terms of the restrictive covenants in this Section 5.3, with the knowledge that
this Agreement may be terminated at any time in accordance with the provisions hereof.
5.4 Definitions. For purposes of this Agreement, the following terms shall have the
following meanings:
(a) An “Affiliate” of any specified Person means 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; and the terms “controlling” and “controlled” shall have
meanings correlative to the foregoing.
(b) “Company Parties” means the Company, and its direct and indirect parents,
subsidiaries and Affiliates, and their successors in interest.
(c) “Competing Business” means any business that competes with any of the Company
Parties, including, without limitation, any enterprise that engages in, owns or operates businesses
that market, sell, distribute, manufacture or otherwise are involved in the nutritional supplements
industry.
(d) Confidential Information.
(i) Definition. “Confidential Information” means any and all material,
information, ideas, inventions, formulae, patterns, compilations, programs, devices, methods,
techniques, processes, know how, plans (marketing, business, strategic, technical or otherwise),
arrangements, pricing and other data of or relating to any of the Company Parties (as well as their
customers and/or vendors) that is confidential, proprietary or trade secret (A) by its nature, (B)
based on how it is treated or designated by a Company Party, (C) because the disclosure of which
would have a material adverse effect on the business or planned business of any of the Company
Parties and/or (D) as a matter of law.
(ii) Exclusions. Confidential Information does not include material, data, and/or
information (A) that any Company Party has voluntarily placed in the public domain, (B) that has
been lawfully and independently developed and publicly disclosed by third parties, (C) that
constitutes the general non-specialized knowledge and skills
16
gained by the Executive during the Employment Period or (D) that otherwise enters the public
domain through lawful means; provided, however, that the unauthorized
appropriation, use or disclosure of Confidential Information by the Executive, directly or
indirectly, shall not affect the protection and relief afforded by this Agreement regarding such
information.
(iii) Inclusions. Confidential Information includes, without limitation, the following
information (including without limitation, compilations or collections of information) relating or
belonging to any Company Party (as well as their clients, customers and/or vendors) and created,
prepared, accessed, used or reviewed by the Executive during or after the Employment Period: (1)
product and manufacturing information, such as ingredients, combinations of ingredients and
manufacturing processes; (2) scientific and technical information, such as research and
development, tests and test results, formulae and formulations, studies and analysis; (3) financial
and cost information, such as operating and production costs, costs of goods sold, costs of
supplies and manufacturing materials, non-public financial statements and reports, profit and loss
information, margin information and financial performance information; (4) customer related
information, such as customer related contracts, engagement and scope of work letters, proposals
and presentations, customer-related contacts, lists, identities and prospects, practices, plans,
histories, requirements and needs, price information and formulae and information concerning client
or customer products, services, businesses or equipment specifications; (5) vendor and supplier
related information, such as the identities, practices, history or services of any vendors or
suppliers and vendor or supplier contacts; (6) sales, marketing and price information, such as
marketing and sales programs and related data, sales and marketing strategies and plans, sales and
marketing procedures and processes, pricing methods, practices and techniques and pricing schedules
and lists; (7) database, software and other computer related information, such as computer
programs, data, compilations of information and records, software and computer files, presentation
software and computer-stored or backed-up information including, but not limited to, e-mails,
databases, word processed documents, spreadsheets, notes, schedules, task lists, images and video;
(8) employee-related information, such as lists or directories identifying employees,
representatives and contractors, and information regarding the competencies (knowledge, skill,
experience), compensation and needs of employees, representatives and contractors and training
methods; and (9) business- and operation-related information, such as operating methods,
procedures, techniques, practices and processes, information about acquisitions, corporate or
business opportunities, information about partners and potential investors, strategies, projections
and related documents, contracts and licenses and business records, files, equipment, notebooks,
documents, memoranda, reports, notes, sample books, correspondence, lists and other written and
graphic business records.
(e) “Misappropriate”, or any form thereof, means:
(i) the acquisition of any Confidential Information by a Person who knows or has reason to
know that the Confidential 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
(ii) the disclosure or use of any Confidential Information without the express consent of the
Company by a Person who (A) used Improper
17
Means to acquire knowledge of the Confidential Information, (B) at the time of disclosure or
use, knew or had reason to know that his or her knowledge of the Confidential Information was (x)
derived from or through a Person who had utilized Improper Means to acquire it, (y) acquired under
circumstances giving rise to a duty to maintain its secrecy or limit its use or (z) derived from or
through a Person who owed a duty to the Company to maintain its secrecy or limit its use or (C)
before a material change of his or her position, knew or had reason to know that it was
Confidential Information and that knowledge of it had been acquired by accident or mistake.
(f) “Person” means any individual, corporation, partnership, limited liability
company, joint venture, association, business trust, joint-stock company, estate, trust,
unincorporated organization, government or other agency or political subdivision thereof or any
other legal or commercial entity.
(g) “Restricted Period” means the longer of (i) twelve (12) months after the date of
termination of employment (the Executive’s last day of work for the Company) or (ii) the period
during which the Executive is receiving payments from the Company pursuant to Section 4 hereof.
(h) “Work Product” means all patents and patent applications, all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings, reports, creative
works, discoveries, software, computer programs, modifications, enhancements, know-how,
formulations, concepts and ideas, and all similar or related information (in each case whether or
not patentable), all copyrights and copyrightable works, all trade secrets, confidential
information, and all other intellectual property and intellectual property rights that are
conceived, reduced to practice, developed or made by the Executive either alone or with others in
the course of employment with the Company (including employment prior to the date of this
Agreement).
5.5 Remedies. Because the Executive’s services are unique and because the Executive
has access to Confidential Information, 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. The restrictive
covenants stated in Section 5 hereof are without prejudice to the Company’s rights and causes of
action at law.
5.6 Interpretation; Severability.
(a) 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.
(b) 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
18
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 Confidential Information or unfair competition by the Executive.
6. Miscellaneous.
6.1 Public Statements.
(a) Media Nondisclosure. The Executive agrees that during the Employment Period or at
any time thereafter, except as may be authorized in writing by the Company, the Executive will not
directly or indirectly disclose or release to the Media any information concerning or relating to
any aspect of the Executive’s employment or termination from employment with the Company and/or any
aspect of any dispute that is the subject of this Agreement. For the purposes of this Agreement,
the term “Media” includes, without limitation, any news organization, station, publication,
show, website, web log (blog), bulletin board, chat room and/or program (past, present and/or
future), whether published through the means of print, radio, television and/or the Internet or
otherwise, and any member, representative, agent and/or employee of the same.
(b) Non-Disparagement. The Executive agrees that during the Employment Period or at
any time thereafter, the Executive will not make any statements, comments or communications in any
form, oral, written or electronic to any Media or any customer, client or supplier of the Company
or any of its Affiliates, which would constitute libel, slander or disparagement of the Company or
any of its Affiliates, including, without limitation, any such statements, comments or
communications that criticize, ridicule or are derogatory to the Company or any of its Affiliates;
provided, however, that the terms of this Section 6.1(b) shall not apply to
communications between the Executive and, as applicable, the Executive’s attorneys or other persons
with whom communications would be subject to a claim of privilege existing under common law,
statute or rule of procedure. The Executive further agrees that the Executive will not in any way
solicit any such statements, comments or communications from others.
6.2 ARBITRATION. SUBJECT TO THE RIGHTS UNDER SECTION 6.3 HEREOF TO SEEK INJUNCTIVE OR
OTHER EQUITABLE RELIEF, AND SUBJECT FURTHER TO THE RIGHT OF THE COMPANY TO OPT OUT OF ARBITRATION
AS STATED IN SECTION 6.2(b) HEREOF, BINDING ARBITRATION
19
SHALL BE THE EXCLUSIVE REMEDY FOR ANY AND ALL DISPUTES, CLAIMS OR CONTROVERSIES, WHETHER
STATUTORY, CONTRACTUAL OR OTHERWISE, BETWEEN THE PARTIES HERETO ARISING UNDER OR RELATING TO THIS
AGREEMENT OR THE EXECUTIVE’S EMPLOYMENT BY OR TERMINATION FROM THE COMPANY (INCLUDING, BUT NOT
LIMITED TO, THE AMOUNT OF DAMAGES, OR THE CALCULATION OF ANY BONUS OR OTHER AMOUNT OR BENEFIT DUE)
(COLLECTIVELY, “DISPUTES”). THE PARTIES EACH WAIVE THE RIGHT TO A JURY TRIAL AND WAIVE THE
RIGHT TO ADJUDICATE THEIR DISPUTES UNDER THIS AGREEMENT OUTSIDE THE ARBITRATION FORUM PROVIDED FOR
IN THIS AGREEMENT, EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT.
(a) Mediation First. In the event either party provides a notice of arbitration of
any Dispute to the other party, the parties shall promptly proceed to make a good-faith effort to
settle the Dispute by agreement, in a full-day, non-binding mediation with a mediator selected from
a panel of mediators of JAMS. The mediation will be governed by JAMS mediation procedures in
effect at the time of the mediation. The parties shall equally bear the costs for mediation,
including the mediator’s fees; provided, however, that the parties shall each bear
their own individual costs and attorneys’ fees for mediation. If for any reason JAMS cannot serve
as the mediation administrator, the Company may select an alternative mediation administrator, such
as the American Arbitration Association (“AAA”), to serve under the terms of this
Agreement. The Executive may, but is not required to, be represented by counsel in mediation. Any
mediators proposed for the panel provided for in this Section 6.2(a) must be available to serve in
the Agreed Venue.
(b) Company Opt-Out.
(i) In the event that the parties fail to settle the Dispute at the mediation
required by Section 6.2(a) of this Agreement, the Company shall have thirty (30)
days after the conclusion of the full-day mediation to opt out of arbitration. The
Company may do so only by written notice provided to the Executive and JAMS.
Providing such notice within the time requirements of this Agreement will render
Section 6.2 of this Agreement and its subparts (the “Arbitration Provision”)
otherwise inapplicable and of no effect as to all parties to this Agreement, but
only with regard to the Dispute raised in the notice of arbitration sent pursuant to
Section 6.2(a) above.
(ii) It is the intention of the parties hereto that the terms of the
Arbitration Provision shall be enforceable to the fullest extent allowed by law.
However, if any terms of the Arbitration Provision (including, without limitation,
the terms of the Section 6.2(b)(i) Company Opt-Out) are adjudicated to be invalid,
illegal or unenforceable, then the parties hereby stipulate and agree that (A) the
adjudicating authority may and hereby is requested to modify the effect and/or
interpret such terms so that they become valid, legal and enforceable and are as
like the original terms as possible; (B) such terms will not affect any other terms
of the Arbitration Provision or this Agreement; (C) if for any reason the terms in
question cannot be modified or interpreted in accordance with this
20
subsection, then the Arbitration Provision will be reformed, construed and
enforced as if such terms never had been contained herein and/or have been severed
herefrom; (D) such invalidity, illegality or unenforceability will not take effect
in any other jurisdiction absent a separate adjudication to that effect; and (E) the
remainder of this Agreement shall continue in full force and effect.
(c) Procedure Generally. In the event that the parties fail to settle at the
mediation required by this Agreement, and the Company does not exercise its right to opt out of
arbitration as provided in Section 6.2(b) above, the parties agree to submit the Dispute to a
single arbitrator selected from a panel of JAMS arbitrators. The arbitration will be governed by
the JAMS Comprehensive Arbitration Rules and Procedures in effect at the time the arbitration is
commenced, subject to the terms and modifications of this Agreement. If for any reason JAMS cannot
serve as the arbitration administrator or cannot fulfill the panel requirements of the Arbitration
Provision, the Company may select an alternative arbitration administrator, such as AAA, to serve
under the terms of this Agreement.
(d) Arbitrator Selection. To select the arbitrator, the parties shall make their
respective strikes from a panel of former federal court judges and magistrates, to the extent
available from JAMS (the “First Panel”). If the parties cannot agree upon an arbitrator
from the First Panel or if such a panel is not available from JAMS, then the parties will next make
their respective strikes from a panel of former Pennsylvania state court trial and appellate
judges, to the extent available from JAMS (the “Second Panel”). Any arbitrators proposed
for the First and Second Panels provided for in this Section 6.2(d) must be available to serve in
the Agreed Venue. If the parties cannot agree upon an arbitrator from the Second Panel or if such
a panel is not available from JAMS, then the parties will next make their respective strikes from
the panel of all other JAMS arbitrators available to serve in the Agreed Venue.
(e) VENUE. THE PARTIES STIPULATE AND AGREE THAT THE EXCLUSIVE VENUE OF ANY SUCH
ARBITRATION PROCEEDING (AND OF ANY OTHER PROCEEDING, INCLUDING ANY COURT PROCEEDING, UNDER THIS
AGREEMENT) SHALL BE ALLEGHENY COUNTY, PENNSYLVANIA (THE “AGREED VENUE”).
(f) Authority and Decision. The arbitrator shall have the authority to award the same
damages and other relief that a court could award. The arbitrator shall issue a reasoned award
explaining the decision and any damages awarded. The arbitrator’s decision will be final and
binding upon the parties and enforceable by a court of competent jurisdiction. The parties will
abide by and perform any award rendered by the arbitrator. In rendering the award, the arbitrator
shall state the reasons therefor, including (without limitation) any computations of actual damages
or offsets, if applicable.
(g) Fees and Costs. In the event of arbitration under the terms of this Agreement,
the fees charged by JAMS or other arbitration administrator and the arbitrator shall be borne by
the parties as determined by the arbitrator, except for any initial registration fee, which the
parties shall bear equally. Otherwise, the parties shall each bear their own costs, expenses and
attorneys’ fees incurred in arbitration; provided, however, that the prevailing
party shall be entitled to recover and have awarded its attorneys’ fees, court costs, arbitration
expenses,
21
and its portion of the fees and costs charged by JAMS or other arbitration administrator,
regardless of which party initiated the proceedings, in addition to any other relief to which it
may be entitled. The Executive may, but is not required to, be represented by counsel in
arbitration.
(h) Limited Scope. The following are excluded from binding arbitration under this
Agreement: claims for workers’ compensation benefits or unemployment benefits; replevin; and
claims for which a binding arbitration agreement is invalid as a matter of law.
6.3 Injunctive Relief. The parties hereto may seek injunctive relief in arbitration;
provided, however, that as an exception to the arbitration agreement set forth in
Section 6.2 hereof, the parties, in addition to all other available remedies, shall each have the
right to initiate an action in any court of competent jurisdiction in order to request injunctive
or other equitable relief regarding the terms of Sections 5 or 6.2 hereof. The exclusive venue of
any such proceeding shall be in the Agreed Venue. The parties agree (a) to submit to the
jurisdiction of any competent court in the Agreed Venue, (b) to waive any and all defenses the
Executive may have on the grounds of lack of jurisdiction of such court and (c) that neither party
shall be required to post any bond, undertaking or other financial deposit or guarantee in seeking
or obtaining such equitable relief. Evidence adduced in any such proceeding for an injunction may
be used in arbitration as well. The existence of this right shall not preclude or otherwise limit
the applicability or exercise of any other rights and remedies that a party hereto may have at law
or in equity.
6.4 Settlement of Existing Rights. In exchange for the other terms of this Agreement,
the Executive acknowledges and agrees that: (a) the Executive’s entry into this Agreement is a
condition of employment and/or continued employment with the Company, as applicable; (b) except as
otherwise provided herein, this Agreement will replace any existing employment agreement between
the parties and thereby act as a novation, if applicable; (c) the Executive is being provided with
access to Confidential Information, including, without limitation, proprietary trade secrets of one
or more Company Parties, to which the Executive has not previously had access; (d) all Company
inventions and intellectual property developed by the Executive during any past employment with the
Company and all goodwill developed with the Company’s clients, customers and other business
contacts by the Executive during any past employment with Company, as applicable, is the exclusive
property of the Company; and (e) all Confidential Information and/or specialized training accessed,
created, received or utilized by the Executive during any past employment with Company, as
applicable, will be subject to the restrictions on Confidential Information described in this
Agreement, whether previously so agreed or not.
6.5 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.
22
6.6 Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania, without regard to principles of conflict of
laws.
6.7 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.
6.8 Representation by Counsel; Independent Judgment. Each of the parties hereto
acknowledges that (a) it or the Executive has read this Agreement in its entirety and understands
all of its terms and conditions, (b) it or the Executive has had the opportunity to consult with
any individuals of its or the Executive’s choice regarding its or the Executive’s agreement to the
provisions contained herein, including legal counsel of its or the Executive’s choice, and any
decision not to was the Executive’s or its alone and (c) it or the Executive is entering into this
Agreement of its or the Executive’s own free will, without coercion from any source, based upon its
or the Executive’s own independent judgment.
6.9 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 the Executive, it, or the Executive’s or its counsel was the drafter thereof.
6.10 Survival. The provisions of Sections 4.3(e), 5 and 6 hereof shall survive the
termination of this Agreement.
6.11 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:
with a copy (which shall not constitute notice) to:
Gardere Xxxxx Xxxxxx LLP
23
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-mail: xxxxxxxxx@xxxxxxx.xxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-mail: xxxxxxxxx@xxxxxxx.xxx
If to the Executive, to:
Xxxxxx X. Xxxxxxxxx
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
or to such other address as one party may provide in writing to the other party from time to time.
6.12 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. Facsimile transmission of any signed original document or retransmission of any signed
facsimile transmission will be deemed the same as delivery of an original. At the request of any
party, the parties will confirm facsimile transmission by signing a duplicate original document.
6.13 Captions. Paragraph headings are for convenience only and shall not be
considered a part of this Agreement.
6.14 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.
6.15 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
24
IN WITNESS WHEREOF, the parties have duly executed this Agreement, intending it as a document
under seal, on the Execution Date to be effective for all purposes as of the Effective Date.
| WITNESS/ATTEST: | GENERAL NUTRITION CENTERS, INC. | |||||
/s/
Xxxxxx X. Xxxxxxxx
|
By: | /s/ Xxxxxx X. XxXxxxxx | ||||
| Name: Xxxxxx X. XxXxxxxx | ||||||
| Title: Executive Chairman of the Board | ||||||
| EXECUTIVE | ||||||
/s/
Xxxxxx Xxxxxxx
|
/s/ Xxxxxx Xxxxxxxxx | |||||
| Name: Xxxxxx X. Xxxxxxxxx | ||||||
25
EXHIBIT A
Definition of Change of Control
“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 GNC 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;
(2) after an initial public offering of Capital Stock of GNC, during any period of two (2)
consecutive years, individuals who at the beginning of such period constituted the GNC Board of
Directors, together with any new directors whose election by such GNC 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 GNC 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:
An “Affiliate” of any specified Person means 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; and the terms “controlling” and “controlled” shall 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.
A-1
“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.
“GNC” means GNC Parent Corporation, a Delaware corporation.
“GNC Board of Directors” means the Board of Directors of GNC or any committee thereof duly
authorized to act on behalf of such Board of Directors.
“Permitted Holder” means Apollo.
“Person” means any individual, corporation, partnership, limited liability company, joint
venture, association, business trust, joint-stock company, estate, trust, unincorporated
organization, government or other agency or political subdivision thereof or any other legal or
commercial 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
A-2
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.
Notwithstanding anything to the contrary in this Exhibit A, the definition of Change of
Control shall be interpreted consistently with the definition of “Change of Control” contained in
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and regulations
and guidance issued by the Internal Revenue Service under Section 409A of the Code, including IRS
Notice 2005-1.
A-3
EXHIBIT B
Fringe Benefits
| 1. | Health insurance in accordance with the Company’s health insurance plan or program in effect from time to time. | |
| 2. | Prescription drug coverage in accordance with the Company’s health insurance plan or program, or separate prescription drug coverage plan or program, in effect from time to time. | |
| 3. | Dental insurance in accordance with the Company’s dental insurance plan or program in effect from time to time. | |
| 4. | Long-term disability insurance in accordance with the Company’s long-term disability insurance plan or program in effect from time to time. | |
| 5. | Short-term disability insurance in accordance with the Company’s short-term insurance plan or program in effect from time to time. | |
| 6. | Life insurance coverage in amount equal to one (1) times Base Salary. | |
| 7. | Automobile allowance in an annual amount equal to $11,500, which shall be paid in 26 equal bi-weekly installments each year in accordance with the Company’s normal payroll practices and procedures in effect from time to time. | |
| 8. | Professional Assistance with an annual value in an amount equal to $10,500, which shall be paid in 26 equal bi-weekly installments each year in accordance with the Company’s normal payroll practices and procedures in effect from time to time. | |
| 9. | A supplemental retirement allowance in an annual amount equal to $10,000, which shall be paid in 26 equal bi-weekly installments each year in accordance with the Company’s normal payroll practices and procedures in effect from time to time. | |
| 10. | A financial planning and tax preparation allowance in an amount equal to $8,000 per year, which shall be paid in 26 equal bi-weekly installments each year in accordance with the Company’s normal payroll practices and procedures in effect from time to time. | |
| 11. | A downtown Pittsburgh parking Gold Lease with an annual value in an amount equal to $3,300. | |
| 12. | An executive medical allowance in an annual amount equal to $6,000, which shall be paid in 26 equal bi-weekly installments each year in accordance with the Company’s normal payroll practices and procedures in effect from time to time. | |
| 13. | Allowance for Country Club dues and expenses incurred for business reasons in an annual amount equal to $10,000. |
B-1
