Exhibit 10.1
s
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of the
5th day of December, 2003 (the "Effective Date"), by and between General
Nutrition Centers, Inc., a Delaware corporation (the "Company"), and Xxxxxx
Xxxxxxxx (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:
1. Employment of Executive; Duties.
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1.1 Title. During the "Employment Period" (as defined in Section 2
hereof), the Executive shall serve as Senior Vice President of Finance and
Corporate Controller of the Company. 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 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, commensurate with his serving as Senior Vice President of Finance and
Corporate Controller. 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.
2. Term of Employment.
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2.1 Employment Period. The employment of the Executive hereunder
shall continue until the later to occur of (i) December 31, 2004, 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").
2.2 Extension. On October 31, 2004, and on each October 31st
thereafter, the Employment Period shall be extended for an additional one-year
period unless the Company or the Executive notifies the other in writing at
least 30 days prior to such date of its or his election, in its or his sole
discretion, not to extend the Employment Period.
3. Compensation and General Benefits.
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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 $185,800.96 (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.
(b) The Board of Directors of the Company (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.
3.2 Bonus. With respect to the 2004 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") in an amount to be determined by the Compensation
Committee in the exercise of its discretion 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.
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 3.3 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.
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, 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.
3.5 Stock Options. Subject to Section 4 below and the approval of
the Compensation Committee, Executive shall be eligible to participate in and
be granted awards under the General Nutrition Centers, Inc. 2003 Omnibus Stock
Incentive Plan (the "Plan").
4. Termination.
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4.1 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.
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 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 program or policy
for the period following such date of termination), (i) the Executive's current
Base Salary for the longer of the remainder of the Employment Period or twelve
(12) months, (without giving effect to any further extensions pursuant to
Section 2.2 hereof) and (ii) subject to the discretion of the Compensation
Committee, 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.
(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 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.
(c) In conjunction with determining mental and/or physical
disability for purposes of this Agreement, the Executive hereby consents to (i)
any examinations that the Compensation Committee 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.
(d) 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.
(e) 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.
4.3 Termination by the Company Without Cause or Resignation by the
Executive For Good Reason.
(a) 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.
(b) 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 therefore; 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.
(c) 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:
(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 longer of the
expiration of the Employment Period or twelve (12) months, 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.
(ii) 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 one (1) 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.
(iii) Subject to the discretion of the Compensation
Committee, 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.
(iv) Unless prohibited by law or, with respect to any
insured benefit, the terms of the applicable insurance contract, the Executive
shall continue to participate in, and be covered under, the Company's group
life, disability, sickness, accident and health insurance programs on the same
basis as other executives of the Company (A) through the expiration of the
Employment Period, or, (B) in the event that Executive's Base Salary is being
paid pursuant to clause (ii) of this Section 4.3(c), for the one (1) year
period the Executive is entitled to such payment, without giving effect to any
further extensions pursuant to Section 2.2 hereof.
(v) 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.
(vi) 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.
(vii) 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.
(d) 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.
(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 (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.
(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 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 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.
(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 his 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 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;
(iii) The Company effects a reduction in the Executive's 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 on the Effective Date.
(g) For purposes of this Agreement, "Cause" means the occurrence
of any one or more of the following events:
(i) 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);
(ii) the Executive's being convicted of, or pleading guilty
or nolo contendere to, or being indicted for any felony;
(iii) theft, embezzlement, or fraud by the Executive in
connection with the performance of his duties hereunder;
(iv) 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
(v) the misappropriation by the Executive of any material
business opportunity of the Company.
(h) For purposes of this Agreement, "Change of Control" shall be
defined as set forth in Exhibit A, which is attached hereto.
4.4 Termination For Cause and Voluntary Resignation Other Than
For Good Reason.
(a) 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:
(b) 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.
(c) 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.
(d) 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.
(e) 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.
5. Confidentiality and Non-Competition.
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5.1 Confidentiality; Intellectual Property.
(a) 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.
(b) The Executive acknowledges and agrees that:
(i) 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;
(ii) 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
(iii) any Misappropriation of Trade Secrets or Confidential
or Proprietary Information will result in immediate and irreparable harm to the
Company.
(c) 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.
(d) 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.
(e) 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.
5.2 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:
(a) 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.
(b) 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.
(c) 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.
(d) 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.
5.3 Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
(a) 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.
(b) "Misappropriate", or any form thereof, means:
(i) 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
(ii) 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.
(c) "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.
(d) "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.
(e) "Trade Secrets or Confidential or Proprietary Information"
shall mean:
(i) 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
(ii) 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.
5.4 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.
5.5 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
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.
6. Miscellaneous.
-------------
6.1 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.
6.2 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.
6.3 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.
6.4 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.
6.5 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.
6.6 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.
6.7 Survival. The provisions of Sections 5 and 6 hereof shall
survive the termination of this Agreement.
6.8 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:
Xxxxxx Xxxxxxxx
000 Xxxxx Xxxx
Xxxxxx, XX 00000
or to such other address as one party may provide in writing to the other party
from time to time.
6.9 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.
6.10 Captions. Paragraph headings are for convenience only and
shall not be considered a part of this Agreement.
6.11 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.
6.12 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.
Xxxxxx X. Xxxxx /s/Xxxxx Xxxxxxx
____________________________ By:____________________________
Name: Xxxxx Xxxxxxx
Title:President and
Chief Executive Officer
EXECUTIVE
Xxxxxx X. Xxxxx /s/Xxxxxx Xxxxxxxx
____________________________ _______________________________
Xxxxxx Xxxxxxxx
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.
