Document:

EX-10.1

 

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

          THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of the 27th day of
May, 2005, by and between General Nutrition Centers, Inc., a Delaware corporation (the “Company”),
and Bruce E. Barkus (the “Executive”).

          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.

          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 President and Chief Executive Officer of the Company and of GNC
Corporation, a Delaware corporation and parent of the Company (“GNC”). The Executive shall have
the normal duties, responsibilities and authority commensurate with such positions. During the
Employment Period, in his capacity as President and Chief Executive Officer of the Company, the
Executive shall report directly to the Board of Directors of the Company (the “Board”).

               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 President and 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 be based at the corporate headquarters in Pittsburgh,
Pennsylvania and shall devote substantially all of his time, attention, knowledge and skills,
faithfully and to the best of his abilities to the duties and responsibilities of his positions in
furtherance of the business affairs and activities of the Company, GNC and their subsidiaries and
Affiliates. Executive shall at all times be subject to, observe and carry out such rules,
regulations, policies, directions and restrictions as the Board may from time to time reasonably
establish for senior executive officers of the Company.

          2. Term of Employment. 

               2.1 Employment Period. The employment of the Executive hereunder shall commence as of
June 6, 2005 (the “Effective Date”) and continue until the later to occur of (i) December 31, 2007,
and (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, 2006, 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.

                    (a) During the Employment Period, the Company agrees to pay to the Executive an annual base
salary in an amount equal to Five Hundred Fifty Thousand Dollars ($550,000) (such base salary, as
adjusted from time to time pursuant to Section 3.1(b), is referred to herein as the “Base Salary”).
The Executive’s Base Salary, less amounts required to be withheld under applicable law, shall be
payable in equal installments in accordance with the practice of the Company in effect from time to
time for the payment of salaries to officers of the Company, but in no event less frequently than
monthly.

                    (b) The Board or the Compensation Committee established by the Board (the “Compensation
Committee”) shall review the Executive’s performance on an annual basis and, based on such review,
may increase Executive’s Base Salary, as it, acting in its sole discretion, shall determine to be
reasonable and appropriate.

               3.2 Bonuses.

                    (a) Signing Bonus. Following execution of this Agreement and commencement of his
duties hereunder, Executive shall be entitled to a signing bonus of $100,000, payable by the
Company on the date Executive receives his first installment of his Base Salary.

                    (b) Annual Bonus. With respect to the 2005 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 Compensation Committee, which are based on the
Company’s comparable stores sales, earnings before interest, taxes, depreciation and amortization
(“EBITDA”) and cash flow. 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 comparable stores sales, EBITDA and cash flow 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 2005 calendar year, if any, shall be prorated based
on the Effective Date.

               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

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from the Company for all reasonable and necessary expenses incurred by him in performing his
duties hereunder on behalf of the Company (including, without limitation, reasonable and customary
expenses incurred by Executive in connection with his relocation to Pittsburgh, Pennsylvania),
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. During the Employment Period, in addition to any amounts to
which the Executive may be entitled pursuant to the other provisions of this Section 3 or elsewhere
herein, the Executive shall be entitled to participate in, and to receive benefits under, any
benefit plans, arrangements or policies made available by the Company to its executives and key
management employees generally, subject to and on a basis consistent with the terms, conditions and
overall administration of each such plan, arrangement or policy. The award of any additional
fringe benefits under this Section 3.4 shall be separate and distinct from the right of the
Executive to receive the Annual Bonus payment from the Company described in Section 3.2. Without
limiting the generality of the foregoing, the Executive shall be entitled to directors’ and
officers’ insurance coverage, including tail coverage, that is not less favorable than that
obtained by the Company for other directors and officers during the Employment Period.

               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 400,000 shares of Common Stock, par
value $0.01 per share (the “Common Stock”), with a per share exercise price equal to $6.00 per
share (the “Option”) for the Executive’s service as President and Chief Executive Officer of GNC.
The Option shall have a term of 7 years from the date of grant. 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 Option shall become vested and exercisable in equal installments
of 25% on each anniversary of the Effective Date, subject to the Executive’s continued employment
with 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 (as defined in
Exhibit A), 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.

               3.6 Expiration Payment. If Executive is employed on the last day of the Employment
Period (including any extension thereof under Section 2.2 and excluding any early termination
thereof pursuant to Section 4), Executive shall receive the Executive’s current Base Salary for one
additional year, with such amount 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.

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          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 lesser of (A) the
remainder of the Employment Period (without giving effect to any further extensions pursuant to
Section 2.2 hereof), and (B) one year, 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, if the targets are
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.

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                    (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, and (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.

                    (e) With respect to any shares of Common Stock held by the Executive that are vested as of the
date of termination (or issued pursuant to the exercise of options following such date of
termination pursuant to Section 4.2(d) hereof), for the two hundred seventy (270) day period
following such date of termination, the Company (or its designee) shall have the right to purchase
from the Executive or his beneficiary, as applicable, and the Executive or his beneficiary hereby
agrees to sell any or all such shares to the Company (or the Company’s designee) for an amount
equal to the product of (x) the per share current fair market value of a share of Common Stock (as
determined by the Board in good faith) and (y) the number of shares so purchased. Executive (or
his beneficiary) shall have the right to request, in writing, that the Board obtain a fairness
opinion from a nationally recognized accounting firm or investment bank chosen by the Company
(which firm shall not have been retained by the Company (other than for the purpose of rendering
one or more fairness opinions pursuant to similar provisions in other employment agreements) during
the preceding 24 months), to review the Board’s fair market value determination of the Common
Stock. If such fairness opinion validates the fair market determination of the Board, the gross
purchase price paid to the Executive for such shares under this Section 4.2(e), shall be reduced by
10% excluding such other tax or withholding as may be required by applicable law. If the fairness
opinion determines that the range of fair market value is greater than the fair market value
determined by the Board, the Company shall have the option during the 270-day period following the
issuance of such fairness opinion to purchase Executive’s Common Stock at any price within the
range of fair market value determined in such opinion (or if no such range is indicated, at a price
greater than the original fair market value determined by the Board, subject in such case, to the
right of the Executive to request another fairness opinion under the provisions of this clause
(e)).

               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

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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 the greater of (A)
the remainder of the Employment Period (without giving effect to any further extensions pursuant to
Section 2.2 hereof), and (B) the first anniversary of the date of termination, with all such
amounts payable in accordance with the Company’s payroll system in the same manner and at the same
time as though the Executive remained employed by the Company.

                         (ii) The Company shall pay to the Executive a Pro Rata 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.

                         (iii) Unless prohibited by law or, with respect to any insured benefit, the terms of the
applicable insurance contract, the Executive shall continue to participate in, and be covered
under, the Company’s group life, disability, sickness, accident and health insurance programs on
the same basis as other executives of the Company through the expiration of the Employment Period,
without giving effect to any further extensions pursuant to Section 2.2 hereof.

                         (iv) With respect to outstanding options and other equity based awards held by the Executive
as of the date of termination, (x) any such options that are not vested or exercisable as of such
date of termination shall immediately expire and any such equity based awards that are not vested
as of such date of termination shall immediately be forfeited, and (y) any such options that are
vested and exercisable as of such date of termination shall expire immediately following the
expiration of the ninety (90)-day period following such date of termination.

                         (v) Notwithstanding the foregoing, if Executive’s employment is terminated pursuant to this
Section 4.3 after a Change of Control and at the time of such termination there is more than 12
full months remaining in the Employment Term (without giving effect to any further extensions
pursuant to Section 2.2 hereof), at Executive’s election (delivered to the Company in writing not
more than 30 days following the date of termination), the present value of the payments due to
Executive under Section 4.3(b)(i) hereof shall be paid to Executive in a lump sum. Such present
value shall be determined by the

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Company based upon a 6% discount rate, and shall be payable not later than 30 days following
the Company’s receipt of Executives election.

                    (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 substantially similar to Exhibit A hereto.

                    (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

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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) With respect to any shares of Common Stock held by the Executive that are vested as of the
date of termination (or issued pursuant to the exercise of options following such date of
termination pursuant to Section 4.3(b)(iii) hereof), for the one hundred eighty (180)-day period
following such date of termination, the Company (or its designee) shall have the right to purchase
from the Executive and the Executive hereby agrees to sell any or all such shares to the Company
(or the Company’s designee) for an amount equal to the product of (x) the per share current fair
market value of a share of Common Stock (as determined by the Board in good faith) and (y) the
number of shares so purchased. Executive shall have the right to request, in writing, that the
Board obtain a fairness opinion from a nationally recognized accounting firm or investment bank
chosen by the Company, to review the Board’s fair market value determination of the Common Stock.
If such fairness opinion validates the fair market determination of the Board, the gross purchase
price paid to the Executive for such shares under this Section 4.3(e), shall be reduced by 10%
excluding such other tax or withholding as may be required by applicable law. If the fairness
opinion determines that the range of fair market value is greater than the fair market value
determined by the Board, the Company shall have the option during the 270-day period following the
issuance of such fairness opinion to purchase Executive’s Common Stock at any price within the
range of fair market value determined in such opinion (or if no such range is indicated, at a price
greater than the

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original fair market value determined by the Board, subject in such case, to the right of the
Executive to request another fairness opinion under the provisions of this clause (e)).

                    (f) For purposes of this Agreement, the Executive would be entitled to terminate his
employment for “Good Reason” if without the Executive’s prior written consent:

                         (i) The Company fails to comply with any material obligation imposed by this Agreement;

                         (ii) The Company assigns to the Executive duties or responsibilities that are materially
inconsistent with the Executive’s positions, duties, titles, responsibilities and offices in effect
on the Effective Date;

                         (iii) The Company effects a reduction in the Executive’s title from that of President and
Chief Executive Officer of the Company;

                         (iv) The Company effects a reduction in the Executive’s Base Salary; or

                         (v) The Company requires the Executive to be based (excluding regular travel responsibilities)
at any office or location more than 75 miles from the principal office of the Company on the
Effective Date.

                    (g) For purposes of this Agreement, “Cause” means the occurrence of any one or more of the
following events:

                         (i) a material failure by the Executive to comply with any material obligation imposed by this
Agreement (including, without limitation, any violation of Sections 5.1 or 5.2 hereof);

                         (ii) the Executive’s being convicted of, or pleading guilty or nolo contendere to, or being
indicted for any felony;

                         (iii) theft, embezzlement, or fraud by the Executive in connection with the performance of his
duties hereunder;

                         (iv) the Executive’s engaging in any activity that gives rise to a material conflict of
interest with the Company or any of its subsidiaries or Affiliates that is not cured following ten
(10) days’ written notice and a demand to cure such conflict; or

                         (v) the misappropriation by the Executive of any material business opportunity of the Company
or any of its subsidiaries or Affiliates.

                    (h) For purposes of this Agreement, “Change of Control” shall be defined as set forth in
Exhibit A, which is attached hereto.

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               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) With respect to any shares of Common Stock held by the Executive that are vested as of the
date of termination (or issued pursuant to the exercise of options following such date of
termination pursuant to Section 4.4(c) hereof), for the one hundred eighty (180)-day period
following such date of termination, the Company (or its designee) shall have the right to purchase
from the Executive and the Executive hereby agrees to sell any or all such shares to the Company
(or the Company’s designee) for an amount equal to the product of (x) the per share current fair
market value of a share of Common Stock (as determined by the Board in good faith) and (y) the
number of shares so purchased. Executive shall have the right to request, in writing, that the
Board obtain a fairness opinion from a nationally recognized accounting firm or investment bank
chosen by the Company, to review the Board’s fair market value determination of the Common Stock.
If such fairness opinion validates the fair market determination of the Board, the gross purchase
price paid to the Executive for such shares under this Section 4.4(d), shall be reduced by 10%
excluding such other tax or withholding as may be required by applicable law. If the fairness
opinion determines that the range of fair market value is greater than the fair market value
determined by the Board, the Company shall have the option during the 270-day period following the
issuance of such fairness opinion to purchase Executive’s Common Stock at any price within the
range of fair market value determined in such opinion (or if no such range is indicated, at a price
greater than the original fair market value determined by the Board, subject in such case, to the
right of the Executive to request another fairness opinion under the provisions of this clause
(d)).

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          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 as required by law
or court order, the Executive will keep confidential and will not disclose to anyone (other than
the Company or any Persons designated by the Company), or publish, utter, exploit, make use of (or
aid others in publishing, uttering, exploiting or using), or otherwise “Misappropriate” (as defined
in Section 5.3 hereof) any Trade Secrets or Confidential or Proprietary Information at any time.
The Executive’s obligations hereunder shall continue during the Employment Period and thereafter
for so long as such Trade Secrets or Confidential or Proprietary Information remain Trade Secrets
or Confidential or Proprietary Information.

                    (b) The Executive acknowledges and agrees that:

                         (i) the Executive occupies a unique position within the Company, and he is and will be
intimately involved in the development and/or implementation of Trade Secrets or Confidential or
Proprietary Information;

                         (ii) in the event the Executive breaches Section 5.1 hereof with respect to any Trade Secrets
or Confidential or Proprietary Information, such breach shall be deemed to be a Misappropriation of
such Trade Secrets or Confidential or Proprietary Information; and

                         (iii) any Misappropriation of Trade Secrets or Confidential or Proprietary Information will
result in immediate and irreparable harm to the Company.

                    (c) The Executive acknowledges and agrees that all ideas, inventions, marketing, sales and
business plans, formulae, designs, pricing, studies, programs, reviews and related materials,
strategies and products, whether domestic or foreign, developed by him during the Employment
Period, including, without limitation, any process, operation, technique, product, improvement or
development which may be patentable or copyrightable, are and will be the property of the Company,
and that he will do, at the Company’s request and cost, whatever is reasonably necessary to secure
the rights thereto by patent, copyright or otherwise to the Company.

                    (d) Upon termination or expiration of the Employment Period and at any other time upon
request, the Executive further agrees to surrender to the Company all documents, writings, notes,
business, marketing or strategic plans, financial information, customer, distributor and supplier
lists, manuals, illustrations, models, and other such materials (collectively, “Company Documents”)
produced by the Executive or coming into his possession by or through employment with the Company
during the Employment Period, within the scope of such employment, and agrees that all Company
Documents are at all times the Company’s

11

 

property, provided that the Executive may maintain a copy of any Company Documents that are
not Trade Secrets or Confidential or Proprietary Information.

                    (e) During the Employment Period, the Executive represents and agrees that he will not use or
disclose any confidential or proprietary information or trade secrets of others, including but not
limited to former employers, and that he will not bring onto the premises of the Company such
confidential or proprietary information or trade secrets of such others, unless consented to in
writing by said others, and then only with the prior written authorization of the Company.

               5.2 Noncompetition and Nonsolicitation. During the Employment Period and until the
end of the Restricted Period (as defined below), the Executive agrees that the Executive will not,
directly or indirectly, on the Executive’s own behalf or as a partner, owner, officer, director,
stockholder, member, employee, agent or consultant of any other Person within the United States of
America or in any other country or territory in which the businesses of the Company are conducted:

                    (a) own, manage, operate, control, be employed by, provide services as a consultant to, or
participate in the ownership, management, operation, or control of, any enterprise that engages in,
owns or operates businesses that market, sell, distribute, manufacture or otherwise are involved in
the nutritional supplements industry; provided, that if less than 10% of the revenues, net income
or cash flow from operations of such enterprise are generated from the marketing, sale,
distribution, manufacture or other involvement with nutritional supplements, this provision shall
not be deemed to be violated unless Executive’s principal function at such enterprise relates to
its nutritional supplements business.

                    (b) solicit, hire, or otherwise attempt to establish for any Person, any employment, agency,
consulting or other business relationship with any Person who is or was an employee of the Company
or any of its Affiliates.

                    (c) The parties hereto acknowledge and agree that, notwithstanding anything in Section 5.2(a)
hereof, (x) the Executive may own or hold, solely as passive investments, securities of Persons
engaged in any business that would otherwise be included in Section 5.2(a) as long as with respect
to each such investment, the securities held by the Executive do not exceed five percent (5%) of
the outstanding securities of such Person and, such securities are publicly traded and registered
under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and (y)
the Executive may serve on the board of directors (or other comparable position) or as an officer
of any entity at the request of the Board; provided, however, that in the case of
investments otherwise permitted under clause (x) above, the Executive shall not be permitted to,
directly or indirectly, participate in, or attempt to influence, the management, direction or
policies of (other than through the exercise of any voting rights held by the Executive in
connection with such securities), or lend his name to, any such Person.

                    (d) The Executive acknowledges and agrees that, for purposes of this Section 5.2, an act by
his spouse, ancestor, lineal descendant, lineal descendant’s spouse,

12

 

sibling, or other member of his immediate family will be treated as an indirect act by the
Executive.

               5.3 Definitions. For purposes of this Agreement, the following terms shall have the
following meanings:

                    (a) An “Affiliate” of any Person shall mean any other Person, whether now or hereafter
existing, directly or indirectly controlling or controlled by, or under direct or indirect common
control with, such specified Person. For purposes hereof, “control” or any other form thereof,
when used with respect to any Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting securities, by contract or
otherwise.

                    (b) “Misappropriate”, or any form thereof, means:

                         (i) the acquisition of any Trade Secret or Confidential or Proprietary Information by a Person
who knows or has reason to know that the Trade Secret or Confidential or Proprietary Information
was acquired by theft, bribery, misrepresentation, breach or inducement of a breach of a duty to
maintain secrecy, or espionage through electronic or other means (each, an “Improper Means”); or

                         (ii) the disclosure or use of any Trade Secret or Confidential or Proprietary Information
without the express consent of the Company by a Person who (x) used Improper Means to acquire
knowledge of the Trade Secret or Confidential or Proprietary Information; or (y) at the time of
disclosure or use, knew or had reason to know that his or her knowledge of the Trade Secret or
Confidential or Proprietary Information was (i) derived from or through a Person who had utilized
Improper Means to acquire it, (ii) acquired under circumstances giving rise to a duty to maintain
its secrecy or limit its use, or (iii) derived from or through a Person who owed a duty to the
Company to maintain its secrecy or limit its use; or (z) before a material change of his or her
position, knew or had reason to know that it was a Trade Secret or Confidential or Proprietary
Information and that knowledge of it had been acquired by accident or mistake.

                    (c) “Person” means any individual, corporation, partnership, limited liability company, joint
venture, association, business trust, joint-stock company, estate, trust, unincorporated
organization, or government or other agency or political subdivision thereof, or any other legal or
commercial entity.

                    (d) “Restricted Period” shall mean the longer of (i) the first anniversary of the date of
termination of employment or (ii) the period during which the Executive is receiving payments from
the Company pursuant to Section 4 hereof.

                    (e) “Trade Secrets or Confidential or Proprietary Information” shall mean:

                         (i) any and all information, formulae, patterns, compilations, programs, devices, methods,
techniques, processes, know how, plans (marketing, business, strategic or otherwise), arrangements,
pricing and other data (collectively,

13

 

“Information”) that (a) derives independent economic value, actual or potential, from not
being generally known to the public or to other Persons who can obtain economic value from its
disclosure or use, and (b) is the subject of efforts by the Company or any of its subsidiaries or
Affiliates that are reasonable under the circumstances to maintain its secrecy; or

                         (ii) any and all other Information (i) unique to the Company or any of its subsidiaries or
Affiliates 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 or any of its subsidiaries or
Affiliates.

               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

14

 

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. Notwithstanding anything to the contrary, if the Board determines
that, as the result of the application of Section 409A of the Code, the Executive or the Company is
likely to suffer tax consequences that are adverse to the tax consequences that the Board intended
at the Effective Time, this Agreement shall be subject

15

 

to such modification without the consent of the Executive as the Board shall deem appropriate
under the circumstances. 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

16

 

          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:
	 
	 	 
	

	 	Bruce E. Barkus

                    The most recent address of the Executive on file with the Company
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.

[THIS SPACE INTENTIONALLY LEFT BLANK]

17

 

          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.
	 
	 	 	 	 	 	 
	/s/ James M. Sander

	 	 	 	By:
	 	/s/ Robert J. DiNicola
	 

	 	 	 	 	 	 
	Sr. V.P. and Secretary

	 	 	 	 	 	Name: Robert J. DiNicola
	

	 	 	 	 	 	Title: Executive Chairman and Interim Chief
	

	 	 	 	 	 	          Executive Officer
	 
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	EXECUTIVE
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	/s/Bruce E. Barkus
	 	 	 	 	 

 

 

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

2

 

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).

3

 

  “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.

4EX-10.2

 

EXHIBIT 10.2

GNC CORPORATION

2003 OMNIBUS STOCK INCENTIVE PLAN

STOCK OPTION AGREEMENT

          This STOCK OPTION AGREEMENT (this “Option Agreement”), dated as of the [___] day of
[______], 2005 (the “Date of Grant”), by and between GNC Corporation, a Delaware corporation (the
“Company”), and [_________] (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 [_________]shares
of the Company’s Common Stock (the “Option Shares”) at a price of $[___] 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 in equal
installments of 25% on each anniversary of the Date of Grant, subject to the Optionee’s continued
employment with GNC; 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 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. Nontransferability 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.

               (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 , 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,
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 consummates a Qualified IPO
(as defined in the Stockholders’ Agreement), 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	 	 	 	 
	

	 	 	 	Facsimile:                                         	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	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:	 	 	 	 
	

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	Facsimile:                                        	 	 	 	 

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 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 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:
	 	 	 	 
	 
	 	 	 
	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:
	 	 	 	 
	 
	 	 

	 	 	 	 	 
	Address:

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