Document:

exv10w1

 

EXHIBIT 10.1

AMERICAN STATES WATER COMPANY

2000 STOCK INCENTIVE PLAN

NONQUALIFIED STOCK OPTION AGREEMENT

     THIS NONQUALIFIED STOCK OPTION AGREEMENT (this “Option Agreement”) by and between AMERICAN
STATES WATER COMPANY, a California corporation (the
“Corporation”), and
                        
 (the “Participant”) evidences the nonqualified stock option (the “Option”)
granted by the Corporation to the Participant as to the number of shares of the Corporation’s
common shares, no par value (the “Common Shares”), first set forth below.

	 	 	 	 	 	 	 
	Number of Common Shares:1

	 	 	 	Award Date:	 	 
	

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Exercise Price per Share:1

	 	 	 	Expiration Date:1,2	 	 
	

	 	 
	 	 	 	 

	 	 	 	 	 
	% Vesting

	 	Date of Vesting 1,2	 	 
	 

	 	 
	 	 
	________%

	 	______________________	 	 
	________%

	 	______________________	 	 
	________%

	 	______________________	 	 

     The Option is granted under the American States Water Company 2000 Stock Incentive Plan, as
amended (the “Plan”) and subject to the Terms and Conditions of Option (the “Terms”) attached to
this Option Agreement (incorporated herein by this reference) and to the Plan. The Option has been
granted to the Participant in addition to, and not in lieu of, any other form of compensation
otherwise payable or to be paid to the Participant. The Option is not and shall not be deemed to
be an incentive stock option within the meaning of Section 422 of the Code. Capitalized terms are
defined in the Plan if not defined herein. The parties agree to the terms of the Option set forth
herein, and the Participant acknowledges receipt of a copy of the Terms and the Plan.

	 	 	 	 	 
	“PARTICIPANT”

 	 	AMERICAN STATES WATER COMPANY,

a California corporation
	 
	 	 	 	 
	 
	 	 	 	 
	Signature

	 	 	 	 
	 
	 	By:	 	 
	 

	 	 	 	 
	Print Name

	 	 	 	 
	 
	 	Its:	 	 
	 

	 	 	 	 
	Address

	 	 	 	 
	 
	 	 
	 	 
	 
	 	 	 	 
	City, State, Zip Code

	 	 	 	 

CONSENT OF SPOUSE

     In consideration of the Corporation’s execution of this Option Agreement, the undersigned
spouse of the Participant agrees to be bound by all of the terms and provisions hereof and of the
Plan.

	 	 	 	 	 	 	 	 	 
	 	 

	 	 	 
	 	 	 	 
	 	Signature of Spouse

	 	 	 	 	 	Date	 
	 

	1	 	Subject to adjustment under Section 4.2 of the Plan.
	2	 	Subject to early termination under Section 4.2 of the Plan.

 

 

TERMS AND CONDITIONS OF OPTION

	1.  	Vesting; Limits on Exercise.

     As set forth in the Option Agreement, the Option shall vest and become exercisable in
percentage installments of the aggregate number of Common Shares subject to the Option. The Option
may be exercised only to the extent the Option is vested and exercisable.

	 	•  	Cumulative Exercisability. To the extent that the Option is vested and
exercisable, the Participant has the right to exercise the Option (to the extent not
previously exercised), and such right shall continue, until the expiration or earlier
termination of the Option.
	 
	 	•  	No Fractional Shares. Fractional share interests shall be disregarded, but
may be cumulated.
	 
	 	•  	Minimum Exercise. No fewer than 1001 Common Shares may be
purchased at any one time, unless the number purchased is the total number at the time
exercisable under the Option.

	2.  	Continuance of Employment Required; No Employment Commitment.

     The vesting schedule does not require continued service through each applicable vesting date
as a condition to the vesting of the applicable installment of the Option and the rights and
benefits under this Option Agreement.

     Nothing contained in this Option Agreement or the Plan constitutes an employment commitment by
the Company, affects the Participant’s status as an employee at will who is subject to termination
without cause, confers upon the Participant any right to remain employed by the Company or any
Subsidiary, interferes in any way with the right of the Company or any Subsidiary at any time to
terminate such employment, or affects the right of the Company or any Subsidiary to increase or
decrease the Participant’s other compensation.

	3.  	Method of Exercise of Option.

     The Option shall be exercisable by the delivery to the Secretary of the Corporation of a
written notice stating the number of Common Shares to be purchased pursuant to the Option and
accompanied by:

	 	•  	delivery of an executed Exercise Agreement in substantially the form attached hereto
as Exhibit A or such other form as from time to time may be required by the Committee
(the “Exercise Agreement”);
	 
	 	•  	payment in full for the Exercise Price of the shares to be purchased, by check or
electronic funds transfer to the Corporation, subject to such specific procedures or
directions as the Committee may establish;
	 
	 	•  	satisfaction of the tax withholding provisions of Section 4.5 of the Plan; and
	 
	 	•  	any written statements or agreements required pursuant to Section 4.4 of the Plan.

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     The Committee also may but is not required to authorize a non-cash payment alternative specified
below at or prior to the time of exercise, in which case, the Exercise Price and/or applicable
withholding taxes, to the extent so authorized, may be paid in full or in part by Common Shares
already owned by the Participant, valued at their Fair Market Value on the exercise date;
provided, however, that any shares acquired upon exercise of a stock option or
otherwise directly from the Corporation must have been owned by the Participant for at least six
(6) months before the date of such exercise.

	4.  	Early Termination of Option.

     The Option, to the extent not previously exercised, and all other rights hereunder, whether
vested and exercisable or not, shall terminate and become null and void prior to the Expiration
Date in the event of the termination of the Option pursuant to Section 4.2 of the Plan. The
provisions of subsections (a), (b) and (c) of Section 2.6 of the Plan are not applicable to this
Option.

     Your Options will terminate immediately if you are terminated by the Company or one of its
Subsidiaries for “Cause”.

	5.  	Non-Transferability and Other Restrictions.

     The Option and any other rights of the Participant under this Option Agreement or the Plan are
nontransferable and exercisable only by the Participant, except as set forth in Section 1.9 of the
Plan.

	6.  	Notices.

     Any notice to be given under the terms of this Option Agreement or the Exercise Agreement
shall be in writing and addressed to the Corporation at its principal office to the attention of
the Secretary, and to the Participant at the address given beneath the Participant’s signature
hereto, or at such other address as either party may hereafter designate in writing to the other.
Any such notice shall be given only when received, but if the Participant is no longer an Eligible
Employee, shall be deemed to have been duly given when enclosed in a properly sealed envelope
addressed as aforesaid, registered or certified, and deposited (postage and registry or
certification fee prepaid) in a post office or branch post office regularly maintained by the
United States Government.

	7.  	Plan.

     The Option and all rights of the Participant under this Option Agreement are subject to, and
the Participant agrees to be bound by, all of the terms and conditions of the Plan, incorporated
herein by this reference. In the event of a conflict or inconsistency between the terms and
conditions of this Option Agreement and of the Plan, the terms and conditions of the Plan shall
govern. The Participant acknowledges receipt of a copy of the Plan and agrees to be bound by the
terms thereof. The Participant acknowledges reading and understanding the Plan. Unless otherwise
expressly provided in other sections of this Option Agreement, provisions of the Plan that confer
discretionary authority on the Board or the Committee do not and shall not be deemed to create any
rights in the Participant unless such rights are expressly set forth herein or are otherwise in the
sole discretion of the Board or the Committee so conferred by appropriate action of the Board or
the Committee under the Plan after the date hereof.

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	8.  	Entire Agreement.

     This Option Agreement (together with the form of Exercise Agreement attached hereto) and the
Plan together constitute the entire agreement and supersede all prior understandings and
agreements, written or oral, of the parties hereto with respect to the subject matter hereof. The
Plan, this Option Agreement and the Exercise Agreement may be amended pursuant to Section 4.6 of
the Plan. Such amendment must be in writing and signed by the Corporation. The Corporation may,
however, unilaterally waive any provision hereof or of the Exercise Agreement in writing to the
extent such waiver does not adversely affect the interests of the Participant hereunder, but no
such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a
waiver of any other provision hereof.

	9.  	Governing Law; Limited Rights.

     9.1. California Law. This Option Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of California without regard to conflict of law principles
thereunder.

     9.2. Limited Rights. The Participant has no rights as a shareholder of the Corporation with
respect to the Option as set forth in Section 4.7 of the Plan. The Option does not place any limit
on the corporate authority of the Corporation as set forth in Section 4.14 of the Plan.

(Remainder of Page Intentionally Left Blank)

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EXHIBIT A

AMERICAN STATES WATER COMPANY

2000 STOCK INCENTIVE PLAN

OPTION EXERCISE AGREEMENT

     The undersigned (the “Purchaser”) hereby irrevocably elects to exercise his/her right,
evidenced by that certain Nonqualified Stock Option Agreement dated
as of ____________ (the
“Option Agreement”) under the American States Water Company 2000 Stock Incentive Plan, as amended
(the “Plan”), as follows:

	 	•  	the Purchaser hereby irrevocably elects to purchase
_________ shares of
Common Shares (the “Shares”), of American States Water Company (the “Corporation”), and
	 
	 	•  	such purchase shall be at the price of $  per share, for an
aggregate amount of $______ (subject to applicable withholding taxes
pursuant to Section 4.5 of the Plan).

     Capitalized terms are defined in the Plan if not defined herein.

     Delivery of Shares. The Purchaser requests that (1) a certificate representing the Common
Shares be registered to Purchaser and delivered to: _______________________or (2) that the
Common Shares be registered in the Purchaser’s name and electronically delivered
to:____________________________________________________________________________________________.

     Plan and Option Agreement. The Purchaser acknowledges that all of his/her rights are subject
to, and the Purchaser agrees to be bound by, all of the terms and conditions of the Plan and the
Option Agreement, both of which are incorporated herein by this reference. If a conflict or
inconsistency between the terms and conditions of this Exercise Agreement and of the Plan or the
Option Agreement shall arise, the terms and conditions of the Plan and/or the Option Agreement
shall govern. The Purchaser acknowledges receipt of a copy of all documents referenced herein and
acknowledges reading and understanding these documents and having an opportunity to ask any
questions that he/she may have had about them.

“PURCHASER”

Signature

 

Print Name

 

Address

 

City, State, Zip Code

ACCEPTED BY:

AMERICAN STATES WATER COMPANY,

a California corporation

	 	 	 
	By:

	 	 
	

	 	 

	 	 	 
	Print Name:

	 	 
	

	 	 

	 	 	 
	Title:

	 	 
	

	 	 

(To be completed by the Corporation
after the price (including applicable
withholding taxes), value (if
applicable) and receipt of funds is
verified.)exv10w1

 

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of the 14 day of December, 2004
(the “Effective Date”), by and between General Nutrition Centers, Inc., a Delaware corporation (the
“Company”), and Curtis Larrimer (the “Executive”).

     WHEREAS, the Company desires to employ 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:

	•  	Employment of Executive; Duties.

	•  	Title. During the “Employment Period” (as defined in Section 2
hereof), the Executive shall serve as Senior Vice President and
Chief Financial Officer of the Company. The Executive shall have
the normal duties, responsibilities and authority commensurate
with such positions.

	•  	Duties. During the Employment Period, the Executive shall do and
perform all services and acts necessary or advisable to fulfill
the duties and responsibilities of his positions 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, commensurate with
his serving as Senior Vice President and Chief Financial 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
and skills faithfully and to the best of his ability, to the
duties and responsibilities of his positions in furtherance of the
business affairs and activities of the Company, and its
subsidiaries and affiliates. The 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.

	•  	Term of Employment.

	•  	Employment Period. The employment of the Executive hereunder
shall continue until the later to occur of (i) December 31, 2006,
or (ii) the applicable expiration date of any extension of this
Agreement as provided in Section 2.2 hereof, unless terminated
earlier in accordance with the provisions of this Agreement (the
“Employment Period”).

	•  	Extension. On December 15, 2005, and on each December
15th thereafter, the Employment Period shall be
extended for an additional one-year period unless the Company or
the Executive notifies the other in writing prior to such date of
its or his election, in its or his sole discretion, not to extend
the Employment Period.

 

 

	•  	Compensation and General Benefits.

	•  	Base Salary.

	•  	During the Employment Period, the Company agrees to pay to the
Executive an annual base salary in an amount equal to $275,000
(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.

	•  	The Board of Directors of the Company (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.

	•  	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”) in an amount to be
determined by the Compensation Committee in the exercise of its
discretion 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.

	•  	Expenses. During the Employment Period, in addition to any
amounts to which the Executive may be entitled pursuant to the
other provisions of this Section 3.3 or elsewhere herein, the
Executive shall be entitled to receive prompt reimbursement from
the Company for all reasonable and necessary expenses incurred by
him in performing his duties hereunder on behalf of the Company,
subject to, and consistent with, the Company’s policies for
expense payment and reimbursement, in effect from time to time.

	•  	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.

	•  	Stock Options. Subject to Section 4 below and the approval of the
Compensation Committee, Executive shall be eligible to participate
in and be granted awards under the General Nutrition Centers, Inc.
2003 Omnibus Stock Incentive Plan (the “Plan”).

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	•  	Termination.

	•  	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.

	•  	Death or Disability of the Executive.

	•  	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 program or policy for the period following
such date of termination), (i) the Executive’s current Base Salary
for the remainder of the Employment Period (without giving effect
to any further extensions pursuant to Section 2.2 hereof) and (ii)
subject to the discretion of the Compensation Committee, a
prorated share of the Annual Bonus pursuant to Section 3.2 hereof
(based on the period of actual employment) that the Executive
would have been entitled to had he worked the full year during
which the termination occurred, provided that bonus targets are
met for the year of such termination. The bonus shall be payable
in full within forty-five (45) days following the determination of
the amount thereof and in accordance with the Company’s normal
payroll practices and procedures.

	•  	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 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.

	•  	In conjunction with determining mental and/or physical disability
for purposes of this Agreement, the Executive hereby consents to
(i) any examinations that the Compensation Committee determines
are relevant to a determination of whether he is mentally and/or
physically disabled, or required by the Company physician, (ii)
furnish such medical information as may be reasonably requested,
and (iii) waive any applicable physician patient privilege that
may arise because of such examination.

	•  	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

3

 

	   	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.
	 
	•  	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.

	•  	Termination by the Company Without Cause or
Resignation by the Executive For Good Reason.

	•  	The Company may terminate Executive’s employment
without “Cause” (as defined below), and thereby
terminate Executive’s employment (and the Employment
Period) under this Agreement at any time upon not
less than thirty (30) days’ prior written notice.

	•  	The Executive may resign, and thereby terminate his
employment (and the Employment Period), at any time
for “Good Reason” (as defined below), upon not less
than thirty (30) days’ prior written notice to the
Company specifying in reasonable detail the reason
therefore; provided, however, that the Company shall
have a reasonable opportunity to cure any such “Good
Reason ” (to the extent possible) within thirty (30)
days after the Company’s receipt of such notice.

	•  	In the event the Executive’s employment is terminated
(i) by the Company without “Cause,” or (ii) by the
Executive for “Good Reason” then, subject to Section
4.3(d) hereof, the following provisions shall apply:

	•  	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 rate during the year of termination) had the
Executive remained in the employ of the Company until
the expiration of the Employment Period without
giving effect to any further extensions pursuant to
Section 2.2 hereof, 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.

	•  	If such termination occurs upon or within six (6)
months following a Change of Control (as defined
below), 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 rate during the year of
termination) for a two (2) year period following such
date of termination, with all such amounts payable in
accordance with the Company’s payroll system

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	   	in the same manner and at the same time as though the Executive remained employed by the Company, subject to Section 4.3(c)(vii)
hereof.

	•  	Subject to the discretion of the Compensation Committee, the Company shall pay to the Executive a prorated
share of the Annual Bonus pursuant to Section 3.2 hereof (based on the period of actual employment) that
the Executive would have been entitled to had he worked the full year during which the termination
occurred, provided that bonus targets are met for the year of such termination. The bonus shall be
payable in full within forty-five (45) days following the determination of the amount thereof and in
accordance with the Company’s normal payroll practices and procedures, subject to Section 4.3(c)(vii)
hereof.

	•  	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 (A) through the expiration of the Employment Period, or, (B) in the event that Executive’s Base
Salary is being paid pursuant to clause (ii) of this Section 4.3(c), for the two (2) year period the
Executive is entitled to such payment, without giving effect to any further extensions pursuant to Section
2.2 hereof.

	•  	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.

	•  	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(c)(v) 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.

	•  	With respect to the amounts payable to the Executive under clauses (ii) and (iii) of this Section 4.3
following a Change of Control, the Executive may elect to receive the present value of such amounts in a
lump sum based on a present value discount rate equal to six percent (6%) per year. Such election must be
made in writing by the Executive within fifteen (15) days of his date of termination.

	•  	The Executive agrees to release the Company and its respective Affiliates, 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 to be in form and substance reasonably satisfactory to the Company.

5

 

	•  	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 (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.

	•  	Subject to the provisions of Section 4.3(e)(ii), all determinations required to be made under this Section
4.3(e), 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(e)(ii) and (iii)), in the absence of material mathematical or legal error.

	•  	As a result of uncertainty in the application of Section 4999 that may exist at the time of the initial
determination by the Accounting Firm, it may be possible that in making the calculations required to be
made hereunder, the Accounting Firm shall determine that a Payment Reduction need not be made that
properly should be made (an “Overpayment”) or that a Payment Reduction not properly needed to be made
should be made (an “Underpayment”). If, within seventy-five (75) days after the Accounting Firm’s initial
determination under the preceding clause (i), the Accounting Firm shall determine that an Overpayment was
made, any such Overpayment shall be treated for all purposes, to the extent practicable and subject to
applicable law, as a loan to the Executive with interest at the applicable Federal rate provided for in
Section 1274(d) of the Code and shall be repaid by the Executive to the Company within thirty-five (35)
days after the Executive receives notice of the Accounting Firm’s determination; provided, however, that
the amount to be repaid by the Executive to the Company either as a loan or otherwise as a lump sum
payment (where a loan is not practicable or permitted by law) shall be reduced to the extent that any
portion of the Overpayment to be repaid will not be offset by a corresponding reduction in tax by reason
of such repayment of the Overpayment. If the Accounting Firm shall determine that an Underpayment was
made, any such Underpayment shall be due and payable by the Company

6

 

	   	to the Executive within thirty-five (35) days after the Company receives notice of the Accounting Firm’s determination.

	•  	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.

	•  	This Section 4.3(e) 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.

	•  	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:

	•  	The Company fails to comply with any material obligation imposed by this Agreement;

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

	•  	The Company effects a reduction in the Executive’s Base Salary.

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

	•  	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);

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

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

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

	•  	the misappropriation by the Executive of any material business opportunity of the Company.

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

7

 

	•  	Termination For Cause and Voluntary Resignation Other Than For Good Reason.

	•  	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 resignation by the Executive
other than for Good Reason, the following provisions shall apply:

	•  	The Executive shall be entitled to receive all amounts of earned but unpaid Base Salary and benefits
accrued through the date of such termination. Except as provided below, all other rights of the Executive
(and all obligations of the Company) hereunder shall terminate as of the date of such termination.

	•  	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.

	•  	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.

	•  	Before the Company may terminate the Executive for Cause pursuant to Section 4.4(a) above, the Board shall
deliver to the Executive a written notice of the Company’s intent to terminate the Executive for Cause,
and the Executive shall have been given a reasonable opportunity to cure any such acts or omissions (which
are susceptible of cure as reasonably determined by the Board) within thirty (30) days after the
Executive’s receipt of such notice.

	•  	Confidentiality and Non-Competition.

	•  	Confidentiality; Intellectual Property.

	•  	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

8

 

	   	“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.

	•  	The Executive acknowledges and agrees that:

	•  	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;

	•  	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

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

	•  	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.

	•  	Upon termination or expiration of the Employment
Period and at any other time upon request, the
Executive further agrees to surrender to the Company
all documents, writings, notes, business, marketing
or strategic plans, financial information, customer,
distributor and supplier lists, manuals,
illustrations, models, and other such materials
(collectively, “Company Documents”) produced by the
Executive or coming into his possession by or through
employment with the Company during the Employment
Period, within the scope of such employment, and
agrees that all Company Documents are at all times
the Company’s property, provided that the Executive
may maintain a copy of any Company Documents that are
not Trade Secrets or Confidential or Proprietary
Information.

	•  	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.

	•  	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,

9

 

	   	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:

	•  	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.

	•  	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.

	•  	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.

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

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

	•  	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.

	•  	“Misappropriate”, or any form thereof, means:

	•  	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

10

 

	   	breach of a duty to maintain secrecy, or espionage through electronic or other means (each, an “Improper Means”); or

	•  	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.

	•  	“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.

	•  	“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.

	•  	“Trade Secrets or Confidential or Proprietary Information” shall mean:

	•  	any and all information, formulae, patterns, compilations, programs, devices, methods, techniques,
processes, know how, plans (marketing, business, strategic or otherwise), arrangements, pricing and other
data (collectively, “Information”) that (a) derives independent economic value, actual or potential, from
not being generally known to the public or to other Persons who can obtain economic value from its
disclosure or use, and (b) is the subject of efforts by the Company that are reasonable under the
circumstances to maintain its secrecy; or

	•  	any and all other Information (i) unique to the Company which has a significant business purpose and is
not known or generally available from sources outside of such Persons or typical of industry practice, or
(ii) the disclosure of which would have a material adverse effect on the business of the Company.

	•  	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

11

 

	   	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.

	•  	Interpretation; Severability.

	•  	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.

	•  	The Executive acknowledges and agrees that the
restrictive covenants set forth in this Agreement are
reasonable and necessary in order to protect the
Company’s valid business interests. It is the
intention of the parties hereto that the covenants,
provisions and agreements contained herein shall be
enforceable to the fullest extent allowed by law. If
any covenant, provision, or agreement contained
herein is found by a court having jurisdiction to be
unreasonable in duration, scope or character of
restrictions, or otherwise to be unenforceable, such
covenant, provision or agreement shall not be
rendered unenforceable thereby, but rather the
duration, scope or character of restrictions of such
covenant, provision or agreement shall be deemed
reduced or modified with retroactive effect to render
such covenant, provision or agreement reasonable or
otherwise enforceable (as the case may be), and such
covenant, provision or agreement shall be enforced as
modified. If the court having jurisdiction will not
review the covenant, provision or agreement, the
parties hereto shall mutually agree to a revision
having an effect as close as permitted by applicable
law to the provision declared unenforceable. The
parties hereto agree that if a court having
jurisdiction determines, despite the express intent
of the parties hereto, that any portion of the
covenants, provisions or agreements contained herein
are not enforceable, the remaining covenants,
provisions and agreements herein shall be valid and
enforceable. Moreover, to the extent that any
provision is declared unenforceable, the Company
shall have any and all rights under applicable
statutes or common law to enforce its rights with
respect to any and all Trade Secrets or Confidential
or Proprietary Information or unfair competition by
the Executive.

	•  	Miscellaneous.

	•  	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
PROCEDURES OF THE AMERICAN ARBITRATION ASSOCIATION,
PROVIDED, HOWEVER,

12

 

	   	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. COSTS AND FEES INCURRED
IN CONNECTION WITH SUCH ARBITRATION SHALL BE BORNE BY THE PARTIES AS DETERMINED
BY THE ARBITRATION.

	•  	Entire Agreement; Waiver. This Agreement contains
the entire agreement between the Executive and the
Company with respect to the subject matter hereof,
and supersedes any and all prior understandings or
agreements, whether written or oral. No modification
or addition hereto or waiver or cancellation of any
provision hereof shall be valid except by a writing
signed by the party to be charged therewith. No
delay on the part of any party to this Agreement in
exercising any right or privilege provided hereunder
or by law shall impair, prejudice or constitute a
waiver of such right or privilege.

	•  	Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of New
York, without regard to principles of conflict of
laws.

	•  	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.

	•  	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.

	•  	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.

13

 

	•  	Survival. The provisions of Sections 5 and 6 hereof
shall survive the termination of this Agreement.

	•  	Notices. All notices and communications hereunder
shall be in writing and shall be deemed properly
given and effective when received, if sent by
facsimile or telecopy, or by postage prepaid by
registered or certified mail, return receipt
requested, or by other delivery service which
provides evidence of delivery, as follows:

If to the Company, to:

General Nutrition Centers, Inc.

300 Sixth Avenue

Pittsburgh, PA 15222

Attn: Board of Directors

with 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 Executive, to:

Curtis Larrimer

656 Dodds Road

Butler, PA 16002

or to such other address as one party may provide in writing to the other party from time to time.

	•  	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.

	•  	Captions. Paragraph headings are for convenience only and shall
not be considered a part of this Agreement.

	•  	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.

	•  	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]

14

 

     IN WITNESS WHEREOF, the parties have duly executed this Agreement, intending it as a document
under seal, as of the date first above written.

	 	 	 	 	 	 
	WITNESS/
ATTEST:	 	GENERAL NUTRITION CENTERS, INC.
 	 
	 
	 
	 	 	By:  	/s/ Robert DiNicola 	 
	 	 	 	Name:  	Robert DiNicola 	 
	 	 	 	Title:  	Chairman 	 
	 
	 	 	EXECUTIVE
 	 
	 
	 
	 	 	/s/ Curtis Larrimer
 	 
	 	 	Name:  	Curtis Larrimer 	 
	 	 	 	 
	 

15

 

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,

16

 

directly or indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

          “Apollo” means Apollo Management V, L.P. and its Affiliates or any entity controlled thereby
or any of the partners thereof.

          “Board of Directors” means the Board of Directors of GNC or any committee thereof duly
authorized to act on behalf of such Board.

          “Capital Stock” of any Person means any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in, however designated,
equity of such Person, including any Preferred Stock, but excluding any debt securities convertible
into such equity.

          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          “Permitted Holder” means Apollo.

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

          “Preferred Stock” as applied to the Capital Stock of any corporation means Capital Stock of
any class or classes, however designated, that is preferred as to the payment of dividends, or as
to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such corporation.

          “Related Party” means:

          (1) any controlling stockholder, 80% (or more) owned Subsidiary, or immediate family member
(in the case of an individual) of any Permitted Holder; or

          (2) any trust, corporation, partnership, limited liability company or other entity, the
beneficiaries, stockholders, partners, members, owners or Persons beneficially holding an 80% or
more controlling interest of which consist of any one or more Permitted Holders and/or such other
Persons referred to in the immediately preceding clause (1).

          “Subsidiary” means, with respect to any specified Person:

          (1) any corporation, association or other business entity of which more than 50% of the total
voting power of shares of Capital Stock entitled (without regard to the occurrence of any
contingency and after giving effect to any voting agreement or

17

 

stockholders’ agreement that effectively transfers voting power) to vote in the election of
directors, managers or trustees of the corporation, association or other business entity is at the
time owned or controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person (or a combination thereof); and

          (2) any partnership (a) the sole general partner or the managing general partner of which is
such Person or a Subsidiary of such Person or (b) the only general partners of which are that
Person or one or more Subsidiaries of that Person (or any combination thereof).

          “Voting Stock” of an entity means all classes of Capital Stock of such entity then outstanding
and normally entitled to vote in the election of directors or all interests in such entity with the
ability to control the management or actions of such entity.

18

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