SEPARATION AGREEMENT AND GENERAL RELEASE
EXHIBIT 10.1
SEPARATION AGREEMENT
AND GENERAL RELEASE
AND GENERAL RELEASE
This Separation Agreement and General Release (“Agreement”) is entered into as of this
10th day of November, 2005, by and among Xxxxx X. Xxxxxx (“Executive”), General Nutrition
Centers, Inc., a Delaware corporation (the “Company”), and GNC Corporation, a Delaware
corporation (“GNC” and, together with Executive and the Company, the “Parties”).
RECITALS
WHEREAS, Executive has been employed by the Company as President and Chief Executive Officer
pursuant to an Employment Agreement, dated as of May 27, 2005, by and between the Company and
Executive (the “Employment Agreement”); and
WHEREAS, the parties have mutually determined that Executive’s employment with the Company
shall end effective November 10, 2005 (the “Separation Date”), and, in connection with such
separation, the Parties have agreed to settle any and all related agreements between the Parties
and their affiliates in the manner set forth herein.
NOW THEREFORE, in consideration of the promises and mutual covenants contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are expressly
acknowledged, the Parties agree and promise as follows:
1. RESIGNATION. To the extent not already effected, Executive hereby resigns all of his
director, officer and other positions with the Company and each of its affiliates, effective as of
the Separation Date.
2. BENEFITS. With respect to any benefits or rights that Executive has accrued or earned as
of the Separation Date under any of the Company’s employee benefit plans, Executive shall be
entitled to such benefits pursuant to the terms of such plans, if any.
3. TERMINATION BENEFITS.
(a) In consideration of Executive’s release of claims and Executive’s other covenants and
agreements contained herein and provided that Executive has not exercised any revocation rights as
provided in Section 6 below, the Company shall continue to pay Executive his current base salary of
$550,000.00 through July 1, 2006. This amount shall be payable in accordance with the Company’s
payroll system in the same manner and at the same time as though Executive remained employed by the
Company (the “Salary Continuation”).
(b) The Company shall provide Executive the appropriate notice under the Consolidated Omnibus
Budget Reconciliation Act of 1986 (“COBRA”). Provided that Executive elects COBRA
continuation coverage for health, dental, and prescription coverage for Executive and his eligible
dependents, through July 1, 2006 (the “COBRA Reimbursed Period”), the Company shall
reimburse Executive for any monthly COBRA costs payable by Executive (as determined for Executive
or any similarly situated former employees electing COBRA continuation coverage) that exceed
$175.50. Executive shall be responsible for $175.50 per month of the cost of coverage under COBRA
during the COBRA Reimbursed Period. Executive shall be solely responsible for the cost of
continuing any coverage after the COBRA Reimbursed Period.
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(c) Following execution of this Agreement by Executive, the Company shall promptly reimburse
Executive for the sales commission, in an amount equal to $32,500, paid by Executive in connection
with the sale of Executive’s residence in Asheville, North Carolina, which reimbursement shall be
paid in 2005.
(d) The Company shall indemnify Executive for actual damages, if any, incurred by Executive
resulting from a claim or claims against Executive arising from any cancellation by Executive in
November 2005 of a sales contract for the sale of Executive’s residence in Charlotte, North
Carolina; provided, however, that (i) such indemnification obligation shall be limited to a maximum
of $45,000 and (ii) that any such award of damages against Executive must be evidenced by a
judgment or order rendered by a court of competent jurisdiction, as to which all rights of appeal
therefrom have been exhausted or lapsed, or the Company shall have waived such requirement in
writing or consented in writing to the settlement of any such claim or claims resulting in an
obligation of Executive to pay such damages, which consent shall not be unreasonably withheld. Any
such amount shall be paid in 2006, provided that if there is no final judgment, or settlement to
which the Company has consented, with respect to such a claim or claims on or before December 31,
2006, the Company shall have no obligation to pay any amount under this Section 3(d).
(e) The Company shall pay all costs and expenses arising from the early termination of that
certain Residential Lease Agreement, dated August 25, 2005, with respect to Executive’s residence
in Pittsburgh, Pennsylvania, which payment shall be made in 2005.
(f) Following execution of this Agreement by Executive, the Company shall promptly reimburse
Executive for his actual, reasonable expenses incurred in connection with relocating from
Pittsburgh, Pennsylvania to Charlotte, North Carolina, which reimbursement shall be paid in 2005.
(g) Effective upon execution of this Agreement, the “Restricted Period,” as defined in the
Employment Agreement, is, solely with respect to the Noncompetition covenant in Section 5.2(a) of
the Employment Agreement, hereby modified to mean the period ending on July 1, 2006.
(h) Executive acknowledges that, pursuant to the terms of the GNC Corporation 2003 Omnibus
Stock Incentive Plan Stock Option Agreement by and between Executive and GNC, none of the stock
options granted thereunder have vested as of the Separation Date and, therefore, are terminated in
all respects as of the Separation Date.
(i) Except as set forth in this Agreement and with respect to any vested benefits or rights
under any of the Company’s “employee benefit plans” within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), Executive
acknowledges and agrees that he is not entitled to receive any other compensation or benefits of
any sort including, without limitation, salary, vacation, bonuses, annual incentives, stock
options, short-term or long-term disability benefits, or health care coverage (except as provided
under applicable state or federal law) from the Company, its affiliates, or their respective
partners, principals, officers, directors, stockholders, managers, employees, agents,
representatives, or insurance companies, or their respective predecessors, successors or assigns at
any time.
4. RELEASE BY EXECUTIVE.
(a) Executive irrevocably and unconditionally releases, waives and discharges all Claims (as
defined in Section 4(b) below) that Executive may now have against any of the Released Parties (as
defined herein) as of the date hereof, except that Executive is not releasing (i) any Claim that
relates to Executive’s right to enforce this Agreement, (ii) any Claim for indemnification as an
officer,
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director or employee of the Company pursuant to the Company’s Certificate of Incorporation,
By-laws or applicable state law, (iii) any claim for indemnification pursuant to the
Indemnification Agreement, dated as of May 27, 2005, among GNC and Executive, or (iv) the Company’s
directors’ and officers’ liability insurance. For purposes of this Agreement, the “Released
Parties” are the Company and all related and affiliated entities (including corporations,
limited liability companies, partnerships, and joint ventures) and, with respect to each of the
Company and its affiliated entities, each of their respective predecessors and successors, past,
present and future employees, officers, directors, stockholders, owners, partners, members,
representatives, assigns, attorneys, agents, insurers, employee benefit programs (and the trustees,
administrators, fiduciaries, and insurers of such programs), and any other persons acting by,
through, under, or in concert with any of the foregoing identified Released Parties.
(b) Subject only to the exceptions noted in Section 4(a) above, Executive is voluntarily
releasing all claims, promises, causes of action, or similar rights of any type , whether known or
unknown, unforeseen, unanticipated, unsuspected or latent (“Claims”), that Executive may
have with respect to any Released Party. This release specifically extends to, without limitation,
claims or causes of action for wrongful termination, failure by the Company to provide notice of
termination pursuant to the Employment Agreement, impairment of ability to compete in the open
labor market, breach of an express or implied contract, breach of any collective bargaining
agreement, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, fraud,
misrepresentation, defamation, slander, infliction of emotional distress, disability, loss of
future earnings, and claims under the Pennsylvania constitution, the United States Constitution,
and applicable state and federal fair employment laws, federal equal employment opportunity laws,
and federal and state labor statutes and regulations, including, but not limited to, the Civil
Rights Act of 1964, as amended, the Fair Labor Standards Act, as amended, the National Labor
Relations Act, as amended, the Labor-Management Relations Act, as amended, the Worker Retraining
and Notification Act of 1988, as amended, the Americans with Disabilities Act of 1990, as amended,
the Rehabilitation Act of 1973, as amended, ERISA, and the Age Discrimination in Employment Act of
1967, as amended.
(c) Executive understands that Executive is releasing Claims of which Executive may not be
aware. This is Executive’s knowing and voluntary intent, even though Executive recognizes that
someday Executive might learn that some or all of the facts that Executive currently believes to be
true are untrue and even though Executive might then regret having signed this Agreement.
Nevertheless, Executive is assuming that risk and Executive agrees that this Agreement shall remain
effective in all respects in any such case. It is further understood and agreed that Executive is
waiving all rights under any statute or common law principle which otherwise limits application of
a general release to claims which the releasing party does not know or suspect to exist in his
favor at the time of signing the release which, if known by him, would have materially affected his
settlement with the party being released/releasee. Executive understands the significance of doing
so.
(d) Neither Executive nor his heirs, agents, representatives or attorneys have filed or caused
to be filed any lawsuit, with respect to any Claim that Executive is releasing in this Agreement.
(e) Executive acknowledges and represents that neither GNC nor the Company has provided any
tax advice to him in connection with this Agreement and that he has been advised by GNC and the
Company to seek tax advice from his own tax advisors regarding this Agreement and payments that may
be made to Executive pursuant to this Agreement, including specifically, the application of the
provisions of Section 409A of the Internal Revenue Code of 1986, as amended to such payments.
5. RELEASE BY THE COMPANY. The Company, for itself and on behalf of its current and former
parent, subsidiary, affiliated and related corporations, firms, associations, partnerships, and
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entities, their successors and assigns, and the current and former owners, shareholders, directors,
officers,
employees, agents, attorneys, representatives, and insurers of said corporations, firms,
associations, partnerships, and entities, and their guardians, successors, assigns, heirs,
executors, and administrators hereby irrevocably and unconditionally releases, waives and
discharges Executive from any and all Claims for any actions or omissions whatsoever, (a)
including, but in no way limited to, Claims arising under the Employment Agreement and (b)
excluding any Claims arising under this Agreement.
6. REVIEW AND REVOCATION PERIOD. Executive acknowledges that: (a) the consideration provided
pursuant to this Agreement is in addition to any consideration that he would otherwise be entitled
to receive; (b) he has been provided a full and ample opportunity to review this Agreement,
including a period of at least twenty-one (21) days within which to consider it; (c) to the extent
that Executive takes less than twenty-one (21) days to consider this Agreement prior to execution,
he acknowledges that he had sufficient time to consider this Agreement with counsel and that he
expressly, voluntarily and knowingly waives any additional time; and (d) Executive is aware of his
right to revoke this Agreement at any time within the seven (7) day period following the date on
which he signs the Agreement and that the Agreement shall not become effective or enforceable until
the seven (7) day revocation period expires (the “Revocation Expiration Date”). Any such
revocation must be in writing, must specifically revoke this Agreement, and must be received by the
Chairman of the Board of Directors of GNC no later than 5:00 p.m. Eastern Standard Time on the
Revocation Expiration Date. Executive further understands that he shall relinquish any right he has
to the benefits set forth in this Agreement if he exercises his right to revoke it.
7. RETURN OF THE COMPANY’S DOCUMENTS AND PROPERTY.
(a) Executive agrees to return all records, documents, proposals, notes, lists, files, and any
and all other materials including, without limitation, computerized and/or electronic information
that refers, relates or otherwise pertains to the Company, its affiliates, and/or their respective
partners, principals, officers, directors, stockholders, managers, employees, agents,
representatives, or insurance companies, or their respective predecessors, successors or assigns at
any time. In addition, Executive shall return to the Company all property or equipment that he has
been issued during the course of his employment or which he otherwise currently possesses,
including, without limitation, keys, business credit cards, identification badges, or any similar
items issued or provided by the Company and/or its affiliates. At Executive’s expense, Executive
shall deliver to the Company at its main offices on or before the date hereof all of the Company’s
records, documents, proposals, notes, lists, files and materials and property and equipment that
are in his possession. Executive is not authorized to retain any copies of any such records,
documents, proposals, notes, lists, files or materials. Nor is he authorized to retain any other of
the Company’s or its affiliates’ property or equipment.
(b) Executive shall promptly provide the Company with a written reconciliation of all charges
by Executive on credit cards issued or provided by the Company and/or its affiliates, which charges
have not previously been paid by Executive as personal charges or established as business expenses
paid or to be paid by the Company and/or its affiliates. Executive shall promptly reimburse the
Company for any personal charges.
(c) The Company may offset any amounts due the Company and/or its affiliates from Employee
against the final payment of base salary owed to Employee or the Salary Continuation.
8. CONFIDENTIALITY/INTELLECTUAL PROPERTY. Executive acknowledges and agrees that he is subject
to the terms and conditions of the Confidentiality/Intellectual Property provisions set forth in
Section 5.1 of the Employment Agreement and agrees to continue to be bound by those terms and
conditions in accordance therewith. Executive further acknowledges and agrees that he has an
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obligation not to disclose any attorney work product and/or attorney-client communications of
which he is aware and/or had access to .
9. NONCOMPETITION; NONSOLICITATION. Executive acknowledges and agrees that, as modified
pursuant to Section 3(g) of this Agreement, he is subject to the terms and conditions of the
Noncompetition and Nonsolicitation provisions contained in Sections 5.2, 5.3, and 5.4 of the
Employment Agreement, and agrees to continue to be bound by those terms and conditions in
accordance therewith, (a) through July 1, 2006 with respect to the Noncompetition covenant in
Section 5.2(a) of the Employment Agreement and related provisions and (b) through November 10, 2006
with respect to the Nonsolicitation covenant in Section 5.2(b) of the Employment Agreement and
related provisions. Executive expressly agrees not to call on or solicit vendors, customers, or
franchisees of the Company during the Restricted Period, which is defined as the period ending on
the first anniversary of Separation Date. Provided that Executive remains in compliance with
Sections 5.2, 5.3, and 5.4 of the Employment Agreement, Executive shall be permitted to contact
those corporations, partnerships, limited liability companies or persons that are not covered by
Section 5.2 of the Employment Agreement without Executive or any of such entity’s breaching any
agreement with the Company and GNC.
10. COOPERATION BY EXECUTIVE. During the Salary Continuation, Executive will reasonably
cooperate in all reasonable respects with the Company and its affiliates in connection with any and
all existing or future litigation, actions or proceedings (whether civil, criminal, administrative,
regulatory, or otherwise) brought by or against the Company or any of its affiliates, to the extent
the Company reasonably deems Executive’s cooperation necessary. Executive shall be reimbursed for
all reasonable out-of-pocket expenses incurred by his as a result of such cooperation.
11. NON-ADMISSION OF LIABILITY. Nothing in this Agreement shall be construed as an admission
of liability by Executive or the Released Parties; rather, Executive and the Released Parties are
resolving all matters arising out of their employer-employee relationship and all other
relationships between Executive and the Released Parties, as to which the Released Parties and
Executive each deny any liability.
12. NON-DISPARAGEMENT. Except as otherwise required by law, Executive will not make, publish,
or disseminate any derogatory statements or comments about any of the Company or GNC or their
respective officers and directors; or take any action which a reasonable person would expect would
impair the good will, business reputation, or good name of any of them; and the officers and
directors of the Released Parties will not make, publish, or disseminate any derogatory statements
or comments about the Executive; or take any action which a reasonable person would expect would
impair his good will, business reputation, or good name.
13. ARBITRATION. Except as is necessary for any of the Released Parties or Executive to
enforce its or his rights under this Agreement through injunctive relief or specific performance,
the Parties agree that any disputes based upon, relating to, or arising out of this Agreement,
and/or Executive’s employment relationship with the Company and the termination of that
relationship, shall be submitted to binding arbitration pursuant to the terms of Section 6.1 of the
Employment Agreement, except that any such arbitration will be held in Pittsburgh, Pennsylvania.
14. BINDING EFFECT. This Agreement shall be binding and inure to the benefit of the Parties
and their respective heirs, administrators, representatives, executors, successors, and assigns.
15. SEVERABILITY. While the provisions contained in this Agreement are considered by the
Parties to be reasonable in all circumstances, it is recognized that some provisions may fail for
technical reasons. Accordingly, it is hereby agreed and declared that if any one or more of such
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provisions shall, either by itself or themselves or taken with others, be adjudged to be
invalid as exceeding what is reasonable in all circumstances for the protection of the interests of
the Company, but would be valid if any particular restrictions or provisions were deleted or
restricted or limited in a particular manner, then said provisions shall apply with any such
deletions, restrictions, limitations, reductions, curtailments, or modifications as may be
necessary to make them valid and effective, and the remaining provisions shall be unaffected
thereby.
16. ENTIRE AGREEMENT; MODIFICATION. This Agreement constitutes the entire understanding among
the Parties with respect to the matters set forth herein, except that Executive acknowledges that
he has continuing obligations to the Company under in Sections 5.1, 5.2, 5.3, 5.4, 5.5, and 6.1 of
the Employment Agreement (and as provided in Sections 3(g), 8, 9, and 13 of this Agreement) and may
not be modified without the express written consent of the Parties. Except as specified herein,
this Agreement supersedes all prior written and/or oral and all contemporaneous oral agreements,
understandings and negotiations regarding the subject matter hereof.
17. INTERPRETATION; GOVERNING LAW. This Agreement shall be construed as a whole according to
its fair meaning and shall not be construed strictly for or against either Party. Any uncertainty
or ambiguity shall not be construed against the drafter. Captions are intended solely for
convenience of reference and shall not be used in the interpretation of this Agreement. This
Agreement shall be governed by and construed and enforced pursuant to the laws of the State of New
York applicable to contracts made and entirely to be performed therein without regard to rules
relating to conflicts of law.
18. VOLUNTARY AGREEMENT; NO INDUCEMENTS. Each Party to this Agreement acknowledges and
represents that he or it (a) has fully and carefully read this Agreement prior to signing it, (b)
has been, or has had the opportunity to be, advised by independent legal counsel of his or its own
choice as to the legal effect and meaning of each of the terms and conditions of this Agreement,
and (c) is signing and entering into this Agreement as a free and voluntary act without duress or
undue pressure or influence of any kind or nature whatsoever and has not relied on any promises,
representations or warranties regarding the subject matter hereof other than as set forth in this
Agreement.
19. WITHHOLDING. Any payments provided for under this Agreement shall be paid net of any
applicable withholding required under federal, state or local law and any additional withholding to
which the Executive has agreed.
20. COUNTERPARTS. This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original and all of which together shall constitute but 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.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written
above.
EXECUTIVE
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
GENERAL NUTRITION CENTERS, INC.
| By: | /s/ Xxxxxx X. XxXxxxxx |
| Name: | Xxxxxx X. XxXxxxxx |
| Title: | Chairman of the Board |
