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 Xxxxxx X. XxXxxxxx
(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.
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Board of Directors
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Optionee: Xxxxxx XxXxxxxx
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/
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Name:
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Title:
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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/ Xxxxxx XxXxxxxx
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Address:
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