EXHIBIT 10.3
SEPARATION AGREEMENT
AND GENERAL RELEASE
This Separation Agreement and General Release ("Agreement") is entered
into as of this 1st day of December, 2004, by and between ▇▇▇▇▇ ▇▇▇▇▇▇▇
("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 of the Company pursuant to the Employment Agreement,
dated December 25, 2003, as amended through September 27, 2004 (the "Employment
Agreement"); and
WHEREAS, Executive and the Company have agreed to terminate
Executive's employment with the Company effective November 30, 2004, and, in
connection with such termination, 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. TERMINATION. Pursuant to this Agreement, Executive's employment with
Company is terminated effective as of November 30, 2004 (the
"Separation Date"). To the extent not already effected, Executive
hereby resigns all of his director, officer and other positions with
the Company and each its affiliates, effective as of the Separation
Date.
2. PAYMENT OF ACCRUED BUT UNPAID BENEFITS.
(a) As soon as practicable following the Separation Date, the
Company shall pay to Executive an amount equal to the sum of
(i) Executive's accrued but unpaid salary through the
Separation Date, (ii) Executive's accrued but unpaid vacation
pay determined as of the Separation Date, and (iii) any
unpaid expense reimbursements due to Executive (subject,
however, to Executive's obligation to provide adequate
documentation of such expenses in the normal course).
(b) With respect to any benefits or rights that Executive has
accrued or earned under any of the Company's employee benefit
plans, Executive shall be entitled to such benefits pursuant
to the terms of such plans.
3. SETTLEMENT OF OPTIONS AND OTHER EQUITY BASED AWARDS.
(a) Executive acknowledges (i) that Schedule 1 sets forth a
correct and accurate detail of all options to purchase GNC's
or any of its affiliates' common stock and any other equity
based compensatory awards with respect to GNC's or any of its
affiliates' common stock (including information regarding the
vesting, exercisability and expiration term of such options
and awards) as of the Separation Date, (ii) that any such
unvested options and awards shall immediately expire and be
forfeited as of the Separation Date pursuant to their terms;
and (iii) that any such vested options and awards shall
expire pursuant to their terms.
(b) The Executive acknowledges that GNC and Executive entered
into Stock Subscription Agreement, dated December 5, 2003,
pursuant to which Executive purchased 100,000 shares of GNC's
common stock (the "Purchased Shares") and that pursuant to
Section 4.3(c)(vi) of the Employment Agreement, for the one
hundred eighty (180)-day period following the Separation
Date, the Company (or its designee) has the right to purchase
from Executive and Executive has agreed to sell to the
Company (or its designee) any or all of such Purchased Shares
for an amount equal to the product of (x) the per share
current fair market value of a share of GNC common stock (as
determined by the Board of Directors of the Company (the
"Board") in good faith) and (y) the number of shares so
purchased (the "Share Repurchase Option").
(c) By this Agreement, GNC (as the Company's designee) hereby
exercises its Share Repurchase Option with respect to all of
the Purchased Shares at a repurchase price equal to $6.00 per
share (which Executive acknowledges is the fair market value
of GNC's common stock as of the date hereof and hereby waives
his right to request that the Board obtain a fairness
opinion), effective as of the first day following the
Separation Date, which amount shall be payable as soon as
practicable following the date hereof as follows:
(i) $371,213.11 ($600,000 - (ii) $228,786.89) shall be
paid by the Company in cash to Executive;
(ii) $228,786.89 ($225,000 + accrued interest of
$3,786.89) which is the amount payable by Executive
as of the Separation Date to GNC Lenders, LLC, a
Delaware limited liability company ("GNC Lenders"),
under the terms of the Full Recourse Secured
Promissory Note and Security Agreement, dated
December 5, 2003 (the "Promissory Note"), shall be
paid by the Company by wire transfer of same-day
funds to an account(s) designated by GNC Lenders in
repayment of all amounts due and owing from
Executive to GNC Lenders.
4. 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,
(i) the Company shall pay Executive an amount equal to
$568,750, which represents Executive's base salary
for the period December 1, 2004 through December 31,
2005, which 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")
and
(ii) unless prohibited by law or, with respect to any
insured benefit, the terms of the applicable
insurance contract, through December 31, 2005,
Executive shall be permitted
(1) to 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 and
(2) to continue to be entitled to the perquisites
provided from time to time to similarly
situated officers during the term of this
Agreement under the Perquisite Policy for
Senior Executives as such policy may be
amended by the Board of Directors of the
Company from time to time (the "Benefits
Continuation").
(b) In addition, provided that Executive has not exercised any
revocation rights as provided in Section 6 below, the Company
shall pay to Executive a prorated share of his fiscal year
2004 annual bonus, if any, that Executive would have been
entitled to receive had he been employed by the Company
through December 31, 2004, provided that bonus targets are
met for fiscal year 2004. This 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 (the "Pro Rated
Bonus" and, together with the Salary Continuation and the
Benefits Continuation, the "Termination Benefits").
(c) 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.
5. COMPLETE RELEASE.
(a) Executive irrevocably and unconditionally releases, waives
and discharges all Claims (as defined in Section 5(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 charge,
claim or action based upon rights that may arise, in the
future, after Executive executes this Agreement, under the
Age Discrimination in Employment Act of 1967, as amended by
the Older Workers Benefit Protection Act ("ADEA"), or (iii)
any Claim for the failure of the Company to provide to
Executive any vested benefits or right under any of its
"employee benefit plans" (if any) in which Executive is
vested. 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 5(a) above,
Executive is voluntarily releasing all claims, promises,
causes of action, or similar rights of any type that
Executive may have, whether known or unknown, unforeseen,
unanticipated, unsuspected or latent ("Claims"), 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,
complaint, or charge with respect to any Claim that Executive
is releasing in this Agreement. Except as prohibited by law
or public policy, Executive promises never (i) to file or
prosecute a lawsuit or complaint based on the Claims released
by Executive in this Agreement, or (ii) to seek any damages,
remedies, or other relief for Executive personally (any right
to which Executive hereby waives) by filing or prosecuting a
claim or charge with any administrative, judicial, or other
governmental body, or in any arbitration proceeding with
respect to any Claim released by Executive in this Agreement.
Executive promises to request any governmental body or
arbitration tribunal assuming jurisdiction of any such
lawsuit, complaint, or charge to withdraw from the matter or
dismiss the matter against any and all Released Parties with
prejudice against Executive. Executive has not assigned or
transferred any Claim that Executive is releasing, nor has
Executive purported to do so.
6. REVIEW AND REVOCATION PERIOD. Executive acknowledges that: (i) the
consideration provided pursuant to this Agreement is in addition to
any consideration that he would otherwise be entitled to receive; (ii)
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; (iii) 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 (iv) 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. Pacific Standard
Time on the Revocation Expiration Date. Executive further understands
that he shall relinquish any right he has to the benefits set forth in
Section 2a. above if he exercises his right to revoke it.
7. RETURN OF THE COMPANY'S DOCUMENTS AND PROPERTY. 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. 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.
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.
9. NONCOMPETITION; NONSOLICITATION. Executive acknowledges and agrees
that he is subject to the terms and conditions of the Noncompetition
and Nonsolicitation provisions contained in Section 5.2 of the
Employment Agreement and agrees to continue to be bound by those terms
and conditions in accordance therewith. Provided that Executive
remains in compliance with Section 5.2 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. For the period commencing on the Separation
Date and ending on December 31, 2005, Executive will 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 him 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. CONFIDENTIALITY. Executive covenants and agrees that neither he nor
his attorneys or representatives shall reveal to anyone, except
Executive's spouse, accountants for income tax and audit purposes, and
attorneys for purposes of the enforcement of this Agreement, any of
the terms of this Agreement, except as may be mutually agreed upon in
writing or otherwise required by law or court order.
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.
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 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 and may not be modified without the express written consent of
the Parties; provided, however, in the event the Company subsequently
determines that Executive's employment could have been terminated
pursuant to Section 4.4(a) of the Employment Agreement, the Company,
without limiting any other recourse it may pursue, shall have the
right to terminate its obligations to make further payments pursuant
to this Agreement. 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.
IN WITNESS WHEREOF, the Parties have set their hand as of the date
first written above.
EXECUTIVE
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
GENERAL NUTRITION CENTERS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
Its: --------------------------------
GNC CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Its: ---------------------------------
SCHEDULE 1
OPTIONS VESTED
Original Grant 443,000 0