-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UHMjHmsSF90LKFBF71EtmGEiwtPCGXuuO/yEz1xA77FFiUVGdbsxDYnkmgg/dQNe v5VfauhdfJtC2M9di0lBQw== 0000950172-04-002858.txt : 20041203 0000950172-04-002858.hdr.sgml : 20041203 20041202173612 ACCESSION NUMBER: 0000950172-04-002858 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20041202 ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041203 DATE AS OF CHANGE: 20041202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GNC CORP CENTRAL INDEX KEY: 0001273886 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-FOOD STORES [5400] IRS NUMBER: 721575170 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-116040 FILM NUMBER: 041181515 BUSINESS ADDRESS: STREET 1: 300 SIXTH AVENUE CITY: PITTSBURGH STATE: PA ZIP: 15222 BUSINESS PHONE: 4122884600 MAIL ADDRESS: STREET 1: 300 SIXTH AVENUE CITY: PITTSBURGH STATE: PA ZIP: 15222 FORMER COMPANY: FORMER CONFORMED NAME: GENERAL NUTRITION CENTERS HOLDING CO DATE OF NAME CHANGE: 20031218 8-K 1 la379379.txt 8-K =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________ FORM 8-K CURRENT REPORT _____________________ PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): DECEMBER 2, 2004 GNC CORPORATION (Exact Name of Registrant as Specified in its Charter) DELAWARE 333-116040 72-1575170 (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) Identification No.) 300 SIXTH AVENUE, PITTSBURGH, PENNSYLVANIA 15222 (Address of principal executive offices) (Zip Code) (412) 288-4600 (Registrant's telephone number, including area code) Not Applicable (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) =============================================================================== Item 5.02 Other Events. - --------- ------------- On December 2, 2004, Louis Mancini resigned his position as President and Chief Executive Officer of GNC Corporation ("GNC") and of our wholly owned subsidiary, General Nutrition Centers, Inc. ("Centers"). Mr. Mancini also resigned as a member of each company's board of directors. The board of directors of each company appointed Robert J. DiNicola as interim Chief Executive Officer and is currently conducting a search for a permanent replacement for Mr. Mancini. In connection with his appointment as interim Chief Executive Officer of Centers, Centers entered into an employment agreement with Mr. DiNicola. The term of the employment agreement expires on December 31, 2005, subject to one year extensions at the option of the company. Under the employment agreement, Mr. DiNicola will receive a base salary of $535,000 per year, with annual bonuses of 50% to 120% of his base salary based upon Centers' attainment of specified financial targets. In addition, Mr. DiNicola will be entitled to a success bonus of $1 million if, during the term of the agreement, Centers' completes an initial public offering or change of control transaction (in either case of a specified magnitude) and in certain other circumstances. Upon Mr. DiNicola's death or disability, he will be entitled to receive his base salary for the remaining term of the employment agreement and a pro rata bonus. In the event of a termination of Mr. DiNicola's employment without cause or for good reason (each, as defined in the employment agreement), he will be entitled to receive his base salary for 12 months and a pro rata bonus for the year in which he was terminated. In connection with his appointment as interim Chief Executive Officer of GNC, Mr. DiNicola received options to purchase 300,000 shares of GNC common stock at a per share exercise price of $6.00 per share. 150,000 of these options are immediately exercisable, and 150,000 of these options become exercisable after 1 year of employment. In the event of a change of control of GNC, all of Mr. DiNicola's options will become immediately exercisable. Item 9.01 Financial Statements and Exhibits. - --------- ---------------------------------- (c) Exhibits. Exhibit Number Description ---------------- ----------------------------------------------------------- 10.1 Employment Agreement, dated December 2, 2004, between General Nutrition Centers, Inc. and Robert J. DiNicola ---------------- ---------------------------------------------------------- 10.2 Stock Option Agreement, dated December 2, 2004, between GNC Corporation and Robert J. DiNicola ---------------- ----------------------------------------------------------- 99.1 Press Release of GNC Corporation, dated December 2, 2004 ---------------- ----------------------------------------------------------- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: December 2, 2004 GNC CORPORATION By: /s/ James M. Sander ------------------------- Name: James M. Sander Title: Senior Vice President, Chief Legal Officer and Secretary EX-99 2 la375648_11.txt EXHIBIT 10.1 - EMPLOYMENT AGREEMENT Exhibit 10.1 EMPLOYMENT AGREEMENT -------------------- THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of the 1st day of December, 2004 (the "Effective Date"), by and between General Nutrition Centers, Inc., a Delaware corporation (the "Company"), and Robert J. DiNicola (the "Executive"). WHEREAS, the Executive is currently a member of the Board of Directors of the Company (the "Board"); WHEREAS, the Company desires to employ the Executive on the terms and subject to the conditions set forth herein and the Executive has agreed to be so employed; and WHEREAS, the Board of Directors of GNC Corporation, a Delaware corporation ("GNC"), has appointed the Executive as Chairman of the Board of Directors of GNC. NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows: 1. Employment of Executive; Duties. 1.1 Title. During the "Employment Period" (as defined in Section 2 hereof), the Executive shall serve as Chairman of the Board and as interim Chief Executive Officer. 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 reasonably necessary to fulfill the duties and responsibilities of his position and shall render such services on the terms set forth herein. In addition, the Executive shall have such other executive and managerial powers and duties as may reasonably be assigned to him by the Board, commensurate with his serving as Chairman of the Board and interim Chief Executive Officer. Except for sick leave, reasonable vacations, and excused leaves of absence, the Executive shall, throughout the Employment Period, devote substantially all his working time, attention, knowledge, skills and efforts, to the duties and responsibilities of his positions in furtherance of the business affairs and activities of the Company and its subsidiaries and Affiliates (as defined herein). During the Employment Period, the Executive shall spend sufficient time at the Company's corporate headquarters in Pittsburgh, Pennsylvania as he and the Board shall deem necessary to discharge his responsibilities hereunder, and the Company shall provide the Executive with an appropriate office and secretarial support at such corporate headquarters. Notwithstanding the foregoing, the Company acknowledges that the Executive currently intends to reside in Texas and agrees that the Executive shall not be required to relocate to Pittsburgh, Pennsylvania or any other location. 2. Term of Employment. 2.1 Employment Period. The employment of the Executive hereunder shall commence as of the Effective Date and continue until the later to occur of (i) December 31, 2005, 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 December 15th, 2005, and on each December 15th thereafter, the Employment Period shall be extended for an additional one-year period unless the Company or the Executive notifies the other in writing by the applicable December 15th of its or his election, in its or his sole discretion, not to extend the Employment Period. 3. Compensation and General Benefits. 3.1 Base Salary. During the Employment Period the Company agrees to pay to the Executive an annual base salary (the "Base Salary") in an amount equal to Five Hundred Thirty-Five Thousand Dollars ($535,000) for his service as Chairman of the Board. The Executive shall not receive any additional compensation for his services as interim Chief Executive Officer. 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. 3.2 Bonuses. (a) Annual 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") based upon the Company's attainment of annual goals established by the Board or the Compensation Committee of the Board (the "Compensation Committee"), which are based on the Company's earnings before interest, taxes, depreciation and amortization ("EBITDA") and debt amortization goals. The Executive's target Annual Bonus shall be fifty percent (50%) of the Executive's Base Salary with a maximum of one hundred and twenty percent (120%) of the Executive's Base Salary if the Company exceeds the EBITDA and debt amortization goals based on levels to be determined by the Board or the Compensation Committee for the applicable year. Any Annual Bonus earned shall be payable in full within forty-five (45) days following the determination of the amount thereof and in accordance with the Company's normal payroll practices and procedures. Any Annual Bonus payable under this Section 3.2 shall not be payable unless the Executive is employed by the Company on the last day of the period to which such Annual Bonus relates. The Executive's Annual Bonus for the 2004 calendar year, if any, shall be prorated based on the Effective Date. (b) Success Bonus. In the event of the consummation of (i) an initial underwritten public offering of GNC common stock (the "Common Stock") or (ii) a Change of Control (as defined in Section 4.3(f)), in each case where GNC Investors LLC has received cash or other consideration representing at least a twenty-five percent (25%) internal rate of return on its investment in the Common Stock, the Executive shall be entitled to receive a one-time payment of a cash bonus in the amount of One Million Dollars ($1,000,000) (the "Success Bonus"), provided that the Executive is serving as Chairman of the Board at the time of consummation of any such transaction; provided, further that in the event the Executive is terminated without Cause or terminates for Good Reason (each as defined herein) (x) within thirty days prior to the consummation of such underwritten initial public offering of Common Stock or the signing of such Change of Control transaction or (y) between the signing and closing of such Change of Control transaction, the Executive shall be entitled to the Success Bonus. 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, including, but not limited to, all reasonable expenses incurred in connection with hotels, meals, transportation and the like while in Pittsburgh and first-class air travel to and from Pittsburgh for the Executive and his spouse as reasonably necessary during the Employment Period. 3.4 Fringe Benefits. Except for sick leave, vacation pay, Company -paid holidays, or as otherwise expressly set forth in this Agreement, the Executive shall not be entitled to participate in, or to receive benefits under, any benefit plans, arrangements or policies made available by the Company to any of its executives and key management employees or employees generally. In the event the Executive becomes entitled to any fringe benefits under this Section 3.4, the award of any such benefits 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. As of the Effective Date, pursuant to the GNC Corporation (f/k/a General Nutrition Centers Holding Company) 2003 Omnibus Stock Incentive Plan (the "Plan"), the Executive shall be granted an option to purchase a total of 300,000 shares of Common Stock, with a per share exercise price equal to $6.00 per share (the "Option") for the Executive's service as Chairman of the Board of Directors of GNC. The Option shall be an "incentive stock option" to the maximum extent permitted under applicable law and to the extent that the Option does not qualify as an "incentive stock option," it shall constitute a separate non-qualified stock option. The portion of the Option that constitutes an "incentive stock option" shall be transferable to the maximum extent permitted under applicable law, and the non-qualified stock option may be transferred to any "family member" as defined in Section (c)(3) of Rule 701 under the Securities Act of 1933, as amended. The Option shall, (i) with respect to one-half of the shares subject to the Option, be immediately vested and exercisable, and (ii) with respect to the remaining one-half of the shares subject to the Option, become vested and exercisable on the first anniversary of the Effective Date, subject to the Executive's continued employment as Chairman of the Board of Directors of GNC. Except as otherwise provided herein, the Option shall be subject to the terms and conditions of the Plan and the form of option agreement applicable for other senior executives of the Company approved by the Plan administrator. In the event of a Change of Control, all of the Executive's stock options granted pursuant to the Plan shall vest in full and become immediately exercisable, but in no event shall such options be exercisable following their expiration date. 4. Termination. 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; provided, however, that no such reduction shall be made for any benefits paid upon the Executive's death under the Company's life insurance policy), (i) the Executive's current Base Salary for the remainder of the Employment Period (without giving effect to any further extensions pursuant to Section 2.2 hereof) and (ii) a prorated share of the Annual Bonus pursuant to Section 3.2 hereof (based on the period of actual employment) that the Executive would have been entitled to had he worked the full year during which the termination occurred, assuming that all targets have been achieved (the "Pro-Rata Bonus"). The Pro-Rata 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. In addition, the Executive or his personal representative or guardian (as the case may be) shall also receive: (i) the Base Salary through the date of termination; (ii) any Annual Bonus earned but unpaid as of the date of termination for any previously completed fiscal year; (iii) reimbursement for any unreimbursed business expenses incurred by Executive in accordance with Company policy prior to the date of Executive's termination; and (iv) such amounts and benefits, if any, as to which Executive may be legally entitled under the employee benefit plans (including, without limitation, payment for accrued but unused vacation days) (collectively, the "Accrued Amounts"). (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 (which expense shall be paid 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 physician selected above determines are reasonably necessary 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 hereby agrees to provide the results of such examination to the Company as soon as reasonably practicable following such examination. All expenses incurred by the Executive under this subsection shall be paid by the Company. (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. 4.3 Termination by the Company Without Cause or by the Executive for Good Reason. (a) The Company may terminate Executive's employment without "Cause" (as defined below) and the Executive may resign for "Good Reason" (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) In the event the Executive's employment is terminated by the Company without "Cause" or by the Executive for "Good Reason," then, the Executive shall receive the Accrued Amounts and 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 in effect at the time of the termination) had the Executive remained in the employ of the Company for 12 months after such 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. (ii) 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)(vi) hereof. (iii) 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 one hundred eighty (180) day period following such date of termination. (c) If the Executive is entitled to payments and benefits under Section 4.3 (other than the Accrued Amounts), the Executive agrees to release the Company and its 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 by the Executive to be in form and substance mutually acceptable to the Executive and the Company (which acceptance shall not be unreasonably withheld or delayed). (d) Anything in this Agreement to the contrary notwithstanding, if it shall be determined that any payment, vesting, distribution, or transfer by the Company or any successor, or any Affiliate of the foregoing or by any other person or that any other event occurring with respect to the Executive and the Company for the Executive's benefit, whether paid or payable or distributed or distributable under the terms of this Agreement or otherwise (including under any employee benefit plan) (a "Payment") would be subject to or result in the imposition of the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") (and any regulations issued thereunder, any successor provision, and any similar provision of state or local income tax law) (collectively, the "Excise Tax"), then the amount of the Payment shall be reduced to the highest amount that may be paid by the Company or other entity without subjecting such Payment to the Excise Tax (the "Payment Reduction"). The Executive shall have the right, in his sole discretion, to designate those payments or benefits that shall be reduced or eliminated under the Payment Reduction to avoid the imposition of the Excise Tax. Notwithstanding the foregoing, the Payment Reduction shall not apply if the Executive would, on a net after-tax basis, receive less compensation than if the Payment were not so reduced. (i) Subject to the provisions of Section 4.3(d)(ii), all determinations required to be made under this Section 4.3(d), 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(d)(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(d) 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. (e) For purposes of this Agreement, "Cause" means the occurrence of any one or more of the following events, subject to the Executive's right to cure under Section 4.4(e): (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 substantial and willful failure to abide by or follow lawful directions of the Board; (iii) the Executive's being convicted of, or pleading guilty or nolo contendere to, any felony; (iv) theft, embezzlement, or fraud by the Executive in connection with the performance of his duties hereunder (other than good faith expense account disputes); (v) the Executive's engaging in any activity that gives rise to a material conflict of interest with the Company; or (vi) the misappropriation by the Executive of any material business opportunity of the Company. (f) For purposes of this Agreement, "Change of Control" shall be defined as set forth in Exhibit A, which is attached hereto. (g) For purposes of this Agreement, "Good Reason" means the occurrence of any one or more of the following events, subject to the Company's right to cure under Section 4.4(e): (i) any adverse change in the Executive's then position(s) or titles, or a diminution of his then duties, responsibilities or authority or the assignment to the Executive of duties or responsibilities that are adversely inconsistent with his then position(s); provided that Executive's removal from the position of interim Chief Executive Officer for any reason shall not constitute Good Reason; (ii) the Executive is required to relocate his current residence; (iii) any material breach by the Company of any provision of this Agreement; (iv) failure of any successor to the Company (whether direct or indirect and whether by merger, acquisition, consolidation or otherwise) to assume upon the assignee becoming such, the obligations of the Company hereunder; or (v) failure of GNC to grant the Executive the Option pursuant to Section 3.5. 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 voluntary resignation other than for Good Reason by the Executive, the following provisions shall apply: (b) The Executive shall be entitled to receive the Accrued Amounts, and 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) 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 in good faith by the Board) within thirty (30) days after the Executive's receipt of such notice. Before the Executive may resign for Good Reason pursuant to Section 4.4(a) above, the Executive shall deliver to the Board a written notice of the Executive's intent to resign for Good Reason, and the Company shall have a reasonable opportunity to cure any such acts or omissions (which are susceptible of cure as reasonably determined in good faith by the Executive) within thirty (30) days after the Board's receipt of such notice. 5. Confidentiality and Non-Competition. 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 in connection with the performance of the Executive's duties hereunder or as required by law, government process 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. Notwithstanding the foregoing, the Executive may retain his rolodex and similar address and telephone directories (whether in electronic or written format). (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 or manufacture nutritional supplements (a "Competitive Business"). (b) solicit, hire, or otherwise attempt to establish for any Person (other than clerical employees), any employment, agency, consulting or other business relationship with any Person who is or was an employee of the Company. (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"); (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 (which consent shall not be unreasonably withheld or delayed); 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; or (z) the Executive may provide services to a subsidiary, division or entity of a Competitive Business, provided that the subsidiary, division or entity that the Executive provides services to is not itself a Competitive Business. 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) 12 months after the termination of the Executive's employment hereunder 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, the applicable industry 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 NATIONAL RULES FOR THE RESOLUTION OF EMPLOYMENT DISPUTES 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. THE COSTS AND FEES OF THE ARBITRATION SHALL BE BORNE BY THE COMPANY AND THE ATTORNEYS' FEES SHALL BE PAID BY EACH PARTY. 6.2 Indemnification and Insurance. The Company shall indemnify the Executive pursuant to that certain Indemnification Agreement, by and between the Company and the Executive attached hereto as Exhibit B. The Company shall cover the Executive under directors and officers liability insurance both during and, while potential liability exists, after the Employment Period in the same amount and to the same extent as the Company covers its other officers and directors. 6.3 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. 6.4 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of New York, including without limitation Section 5-1401 of the New York General Obligations Law. 6.5 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. 6.6 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. 6.7 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. 6.8 Survival. The provisions of Sections 5 and 6 hereof shall survive the termination of this Agreement. 6.9 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. 300 Sixth Avenue Pittsburgh, PA 15222 Attn: Board of Directors with copies to (which shall not constitute notice) to: General Nutrition Centers, Inc. 300 Sixth Avenue Pittsburgh, PA 15222 Attn: James Sander, Esq. and Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue, Suite 3400 Los Angeles, California 90071-3144 Attention: Jeffrey Cohen, Esq. Telephone: (213) 687-5000 Facsimile: (213) 687-5600 If to the Executive, to: Robert DiNicola The most recent address of the Executive on file with the Company. with a copy to (which shall not constitute notice): Andrea S. Rattner, Esq. Proskauer Rose LLP 1585 Broadway New York, NY 10036 Telephone: (212) 969-3812 Facsimile: (212) 969-2900 or to such other address as one party may provide in writing to the other party from time to time. 6.10 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. 6.11 Captions. Paragraph headings are for convenience only and shall not be considered a part of this Agreement. 6.12 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. 6.13 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. 6.14 Stockholder Consent. For purposes of avoiding the Excise Tax, the effectiveness of this Agreement shall be subject to the approval of the stockholders of the Company in accordance with Section 280G(b)(5) of the Code and the regulations thereunder. As soon as reasonably practicable following such stockholder approval, the Company shall deliver to the Executive written notice confirming that such approval has been obtained, provided, however, that the Company's failure to deliver such notice shall not constitute Good Reason for termination. [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. By: /s/ - ------------------------------ -------------------------------- Name: Title: - ------------------------------ EXECUTIVE /s/ Robert DiNicola - ------------------------------ ------------------------------ Robert DiNicola 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. EX-99 3 la379250.txt EXHIBIT 10.2 - 2003 STOCK OPTION AGREEMENT Exhibit 10.2 GNC CORPORATION 2003 OMNIBUS STOCK INCENTIVE PLAN STOCK OPTION AGREEMENT This STOCK OPTION AGREEMENT (this "Option Agreement"), dated as of the 1st day of December, 2004 (the "Date of Grant"), by and between GNC Corporation, a Delaware corporation (the "Company"), and Robert J. DiNicola (the "Optionee"). Pursuant to the Company's 2003 Omnibus Stock Incentive Plan (the "Plan"), the Board of Directors of the Company (the "Board"), as the administrator of the Plan, has determined that the Optionee is to be granted an option (the "Option") to purchase shares of the Company's common stock, par value $0.01 per share (the "Common Stock"), on the terms and conditions set forth herein, and hereby grants such Option. It is intended that the Option constitute an "incentive stock option" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). In the event the Option exceeds the $100,000 rule of Section 422(d), the portion of this Option in excess of $100,000 shall be treated as a Non-Qualified Stock Option. Any capitalized terms not defined herein shall have their respective meanings set forth in the Plan. 1. Number of Shares. The Option entitles the Optionee to purchase 300,000 shares of the Company's Common Stock (the "Option Shares") at a price of $6.00 per share (the "Option Exercise Price"). 2. Option Term. The term of the Option and of this Option Agreement (the "Option Term") shall commence on the Date of Grant and, unless the Option is previously terminated pursuant to this Option Agreement, shall terminate upon the expiration of seven (7) years from the Date of Grant. Upon expiration of the Option Term, all rights of the Optionee hereunder shall terminate. 3. Conditions of Exercise. (a) Subject to Section 7 below, the Option shall vest and become exercisable as to fifty percent (50%) of the Option Shares on the Date of Grant and as to the remaining fifty percent (50%) on the anniversary of the Date of Grant; provided, however, that if a "Change of Control" occurs, the Option shall (i) become immediately vested and exercisable in full. For purposes of this Agreement, "Change of Control" shall have the meaning set forth on Exhibit A of Optionee's employment agreement with General Nutrition Centers, Inc. (the "Employment Agreement"). (b) Except as otherwise provided herein, the right of the Optionee or Transferee to purchase Option Shares with respect to which this Option has become exercisable may be exercised in whole or in part at any time or from time to time prior to expiration of the Option Term; provided however, the Option may not be exercised for a fraction of a share. 4. Adjustments. In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, stock split or similar change affecting the Common Stock, a substitution or proportionate adjustment shall be made in the kind, number and Option Exercise Price of shares of Common Stock subject to the unexercised portion of the Option, as may be determined by the Board in its sole discretion. 5. Transferability of Option and Shares. (a) Option. Except by will or under the laws of descent and distribution, the Participant shall not be permitted to sell, transfer, pledge or assign any Stock Option, and all Stock Options shall be exercisable, during the Participant's lifetime, only by the Participant; provided, however, the portion of the Option that constitutes an Incentive Stock Option shall be transferable to the maximum extent permitted under applicable law, and the portion of the Option that constitutes a Non-Qualified Stock Option may be transferred to any "family member" as defined in Section (c)(3) of Rule 701 under the Securities Act of 1933, as amended (each, a "Transferee"). (b) Shares. Holders of Shares acquired upon exercise of the Option may not sell, assign, transfer, exchange, mortgage, pledge, grant a security interest, gift or otherwise dispose of or encumber (including, without limitation, by operation of law), or agree to do any of the foregoing (each, a "Disposition") with respect to such Shares without the prior written consent of the Company; provided, however, that prior written consent of the Company shall not be required for a Disposition of Shares to the Company. 6. Method of Exercise of Option. Provided that the Optionee or Transferee, where required by the Administrator, executes a copy of the Stockholders Agreement dated December 5, 2003, as amended (the "Stockholders' Agreement"), the Option may be exercised by means of written notice of exercise to the Company in a form provided by the Company specifying the number of Option Shares to be purchased, accompanied by payment in full of the aggregate Option Exercise Price of the Common Stock as to which such Option shall be exercised and any applicable withholding taxes in cash or by check, or, at the discretion of the Administrator (i) by means of a cashless exercise procedure either through a broker, through withholding of shares of Common Stock otherwise issuable upon exercise of the Option in an amount sufficient to pay the aggregate Option Exercise Price of the Common Stock as to which such Option shall be exercised and the minimum statutory withholding taxes with respect thereto, (ii) in the form of unrestricted shares of Common Stock already owned by the Optionee which, (x) in the case of unrestricted shares of Common Stock acquired upon exercise of an option, have been owned by Optionee for more than six months on the date of surrender, and (y) have an aggregate Fair Market Value on the date of surrender equal to the aggregate Option Exercise Price of the Common Stock as to which such Option shall be exercised and the minimum statutory withholding taxes with respect thereto, or (iii) by any other means of exercise authorized from time to time in the Plan or by the Board. 7. Effect of Termination of Employment. Upon the termination of Optionee's employment or service with the Company or any Parent or Subsidiary, the Option shall immediately terminate as to any Option Shares that have not previously vested as of the date of such termination (the "Termination Date"). Any portion of the Option that has vested as of the Termination Date shall be exercisable in whole or in part for a period of ninety (90) days following the Termination Date; provided, however, that in the event of termination by reason of Optionee's death or Disability, termination of Optionee's employment by General Nutrition Centers, Inc. other than for Cause (as defined in the Employment Agreement) or termination of Optionee's employment with General Nutrition Centers, Inc. by Optionee for Good Reason (as defined in the Employee Agreement), such exercise period shall extend until the date that is 180 days from the Termination Date. Upon expiration of such ninety (90)-day or 180-day period, as applicable, any unexercised portion of the Option shall terminate in full. 8. Call Option. Upon termination of Optionee's employment or service with the Company for any reason, the Company shall have the right, but not the obligation, to repurchase all or any portion of the Option Shares acquired upon exercise of the Option in accordance with the terms and conditions set forth in this Section (the "Call Option") for a period of one hundred eighty (180) days (two hundred seventy (270) days in the event of Optionee's death or Disability) following the later of (i) the date of Optionee's termination of employment with the Company or (ii) the date of the acquisition of the Option Shares by Optionee or Optionee's estate, successors or beneficiaries, as applicable (the "Call Period"). (a) Right to Repurchase. In the event Optionee's employment or service with the Company or any Parent or Subsidiary is terminated for any reason, the Company shall have the right, but not the obligation, to repurchase all or any portion of the Option Shares previously acquired by Optionee through exercise of the Option. The purchase price for each Option Share shall be the Fair Market Value of an Option Share on the date the Company exercises the Call Option. (b) Exercise of Call Option. During the Call Period, the Company may at any time, and from time to time, by giving written notice (the "Notice") to any person or entity that owns any Option Shares issued upon exercise of the Option (each, a "Holder"), elect to purchase any or all of the Option Shares owned by such Holder, at the purchase price determined in accordance with subsection (a) above, as applicable. (c) Payment. Payment of the applicable purchase price (as determined in accordance with subsection (a) above) shall be made, at the option of the Company, in cash, by check, by cancellation of all or a portion of any outstanding indebtedness of the Holder to the Company, or by any combination thereof within thirty (30) days after receipt of the Notice or in the manner and at the times set forth in the Notice. (d) Termination of Call Option. In the event the Company becomes a Public Company, the Call Option shall immediately terminate as to any Option Shares issued upon exercise of the Option. 9. Investment Representation. The Optionee hereby represents and warrants to the Company that the Optionee, by reason of the Optionee's business or financial experience (or the business or financial experience of the Optionee's professional advisors who are unaffiliated with and who are not compensated by the Company or any affiliate or selling agent of the Company, directly or indirectly), has the capacity to protect the Optionee's own interests in connection with the transactions contemplated under this Option Agreement. 10. Notices. All notices and other communications under this Agreement shall be in writing and shall be given by facsimile or first class mail, certified or registered with return receipt requested, and shall be deemed to have been duly given three days after mailing or 24 hours after transmission by facsimile to the respective parties named below: If to the Company, to: General Nutrition Centers, Inc. 300 Sixth Avenue Pittsburgh, PA 15222 Attn: Board of Directors with a copy (which shall not constitute notice) to: Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue, Suite 3400 Los Angeles, California 90071-3144 Attention: Jeffrey Cohen, Esq. Telephone: (213) 687-5000 Facsimile: (213) 687-5600 If to the Optionee: Robert DiNicola The most recent address of the Optionee on file with the Company Either party hereto may change such party's address for notices by notice duly given pursuant hereto. 11. Securities Laws Requirements. The Option shall not be exercisable to any extent, and the Company shall not be obligated to transfer any Option Shares to the Optionee or any Transferee upon exercise of such Option, if such exercise, in the opinion of counsel for the Company, would violate the Securities Act (or any other federal or state statutes having similar requirements as may be in effect at that time). Further, the Company may require as a condition of transfer of any Option Shares pursuant to any exercise of the Option that the Optionee or Transferee furnish a written representation that he or she is purchasing or acquiring the Option Shares for investment and not with a view to resale or distribution to the public. The Optionee hereby represents and warrants that he or she understands that the Option Shares are "restricted securities," as defined in Rule 144 under the Securities Act, and that any resale of the Option Shares must be in compliance with the registration requirements of the Securities Act, or an exemption therefrom, and with the requirements of applicable state securities laws. Each certificate representing Option Shares shall bear the legend set forth below: THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE RESTRICTED SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES THEREUNDER, AND MAY NOT BE SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED IN THE ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM. THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND A CALL OPTION IN FAVOR OF THE ISSUER OR ITS ASSIGNEES(S). SUCH TRANSFER RESTRICTIONS AND CALL OPTION ARE BINDING ON TRANSFEREES OF THESE SHARES OF COMMON STOCK. Further, if the Company decides, in its sole discretion, that the listing or qualification of the Option Shares under any securities or other applicable law is necessary or desirable, the Option shall not be exercisable, in whole or in part, unless and until such listing or qualification, or a consent or approval with respect thereto, shall have been effected or obtained free of any conditions not acceptable to the Company. 12. No Obligation to Register Option Shares. The Company shall be under no obligation to register the Option Shares. 13. Protections Against Violations of Agreement. No purported sale, assignment, mortgage, hypothecation, transfer, pledge, encumbrance, gift, transfer in trust (voting or other) or other disposition of, or creation of a security interest in or lien on, any of the Option Shares by any holder thereof in violation of the provisions of this Agreement or the Certificate of Incorporation or the Bylaws of the Company, will be valid, and the Company will not transfer any of said Option Shares on its books nor will any of said Option Shares be entitled to vote, nor will any dividends be paid thereon, unless and until there has been full compliance with said provisions to the satisfaction of the Company. The foregoing restrictions are in addition to, and not in lieu of any other, remedies, legal or equitable, available to enforce said provisions. 14. Withholding Requirements. The Company's obligations under this Option Agreement shall be subject to all applicable tax and other withholding requirements, and the Company shall, to the extent permitted by law, have the right to deduct any withholding amounts from any payment or transfer of any kind otherwise due to the Optionee. 15. Successors and Assigns. All the terms and provisions of this Option Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto, including the Optionee's estate, successors and beneficiaries; provided, however, that, except as otherwise set forth herein, this Option Agreement may not be assigned by the Optionee without the prior written consent of the Company. 16. Failure to Enforce Not a Waiver. The failure of the Company or the Optionee to enforce at any time any provision of this Option Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof. 17. Governing Law. This Option Agreement shall be governed by and construed according to the laws of the State of New York without regard to its principles of conflict of laws. 18. Incorporation of Plan. The Plan is hereby incorporated by reference and made a part hereof, and the Option and this Option Agreement shall be subject to all terms and conditions of the Plan. 19. Amendments. This Option Agreement may be amended or modified at any time only by an instrument in writing signed by each of the parties hereto. 20. Rights as a Stockholder. Neither the Optionee nor any of the Optionee's successors in interest shall have any rights as a stockholder of the Company with respect to any shares of Common Stock subject to the Option until the date of issuance of a stock certificate for such shares of Common Stock. 21. Agreement Not a Contract of Employment. Neither the Plan, the granting of the Option, this Option Agreement nor any other action taken pursuant to the Plan shall constitute or be evidence of any agreement or understanding, express or implied, that the Optionee has a right to continue to provide services as an officer, Board member, employee, consultant or advisor of the Company or any Parent, Subsidiary or affiliate of the Company for any period of time or at any specific rate of compensation. 22. Authority of the Board. The Board shall have full authority to interpret and construe the terms of the Plan and this Option Agreement. The determination of the Board as to any such matter of interpretation or construction shall be final, binding and conclusive. 23. Dispute Resolution. The parties agree to use their reasonable best efforts to resolve any dispute regarding this agreement through good faith negotiations. A party hereto must give written notice of the substance of any dispute regarding this agreement to any other party to whom such dispute pertains. Any such dispute that cannot be resolved within thirty (30) calendar days of receipt of the required notice (or such other time period to which the parties may agree) will be submitted to an arbitrator selected by mutual agreement of the parties. In the event that, within fifty (50) days of the receipt of the required written notice, a single arbitrator has not been selected by mutual agreement of the parties, a panel of three arbitrators will be selected. Each party to the dispute will select one arbitrator and the two selected arbitrators will select one additional arbitrator. Except as the parties to the dispute may otherwise agree, such arbitration will be conducted in accordance with the then-existing rules for Commercial Arbitration of the American Arbitration Association. The decision of the arbitrator or arbitrators, or of a majority thereof, as the case may be, shall be made in writing and will be final and binding upon the parties hereto as to the questions submitted. The parties will abide by and comply with such decision, which may be entered as an enforceable judgment in a court of competent jurisdiction; provided, however, the arbitrator or arbitrators, as the case may be, shall not be empowered to award punitive damages. Unless the decision of the arbitrator or arbitrators, as the case may be, provides for a different allocation of costs and expenses determined by the arbitrators to be equitable under the circumstances, the prevailing party or parties in any arbitration under this agreement will be entitled to recover all reasonable fees (including, but not limited to, attorneys' fees and expert witness fees) and expenses incurred. 24. Market Stand-Off. In connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the Securities Act of 1933, as amended, for such period as the Company or its underwriters may request (such period not to exceed 180 days following the date of the applicable offering), the Optionee shall not, directly or indirectly, sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to, any Option Shares acquired under this Option Agreement without the prior written consent of the Company or its underwriters. 25. Stockholders' Agreement. The Optionee and any Transferee agrees that upon, and subject to, the occurrence of an event giving rise to a Drag-Along Right as defined under Section 5 of the Stockholders' Agreement, the Option shall become fully vested and exercisable immediately prior to the consummation of the sale related to such Drag-Along Right and shall terminate in full upon the consummation of such related sale if not previously exercised. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Option Agreement on the day and year first above written. GNC CORPORATION By: /s/ --------------------------- Name: --------------------------- Title: --------------------------- The undersigned hereby accepts and agrees to all the terms and provisions of the foregoing Option Agreement and to all the terms and provisions of the Plan, herein incorporated by reference. The Optionee: /s/ Robert DiNicola --------------------------- Address: --------------------------- --------------------------- --------------------------- EX-99 4 gnc1202.txt EXHIBIT 99.1 - GNC PRESS RELEASE Exhibit 99.1 GNC Live Well. Contact: Patrick Fitzgerald GNC Corporation (412) 402-7455 Patrick-Fitzgerald@GNC-HQ.com ----------------------------- Louis Mancini Resigns as President and Chief Executive Officer of GNC Pittsburgh PA, December 2, 2004: GNC Corporation (GNC) today announced that its President and Chief Executive Officer, Louis Mancini, announced his resignation in order to pursue personal interests. Mr. Robert J. DiNicola, who was recently appointed Executive Chairman of the Board, will now assume the position of Executive Chairman of the Board and interim CEO. "We wish to thank Lou for his many contributions during his career at GNC and we wish him well in his future endeavors," said Mr. DiNicola. A search for a new CEO is being conducted by Bob Kerson at Kerson Partners, a leading executive search firm specializing in the retail industry. The search will include both internal and external candidates. Mr. DiNicola will continue to serve as Executive Chairman of the Board upon completion of the search. Mr. DiNicola further commented, "In a short period of time we have made great progress towards developing both near and long term plans to help drive the business towards future success. I want to thank everyone in the organization for their dedication, hard work and ongoing support as we move forward into the new year." GNC is the largest global specialty retailer of nutritional supplements, which includes vitamin, mineral and herbal supplements, sports nutrition products, diet and energy products and specialty supplements. GNC has more than 4,900 retail locations throughout the United States, including more than 1,300 domestic franchise locations, more than 1,000 store-within-a-store locations under its strategic alliance with Rite Aid and more than 800 locations in more than 35 foreign markets including Canada and Mexico. # # # -----END PRIVACY-ENHANCED MESSAGE-----