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Exhibit 4.C
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GENERAL NUTRITION COMPANIES, INC.
STOCK OPTION AGREEMENT
AND
STOCK OPTION
AGREEMENT entered into as of the 7th day of January, 1997 by and
between General Nutrition Companies, Inc., a Delaware corporation with a
principal place of business at 000 Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000
(the "Company"), and Xxxxxxx Xxxxxxxx (the "Optionee").
WHEREAS, the Company desires to grant the Optionee a non-qualified
stock option to acquire shares of the Company's Common Stock, $.01 par value
per share ("Common Stock") as compensation for the consulting and design
services provided to the Company and its affiliates; and
ACCORDINGLY, in consideration of the premises and of the mutual
covenants and agreements contained herein, the Company and the Optionee hereby
agree as follows:
1. GRANT OF OPTION. The Company hereby irrevocably grants to the
Optionee a non-qualified stock option (the "Option") subject to the terms and
conditions set forth herein, to purchase all or any part of an aggregate of
125,000 shares of Common Stock ("Shares") on the terms and conditions
hereinafter set forth.
2. PURCHASE PRICE. The purchase price ("Purchase Price") for
the Shares covered by the Option shall be $16.875 per Share subject to
adjustment as called for herein.
3. OPTION VESTING SCHEDULE.
(a) Subject to the other terms of this option agreement
regarding exercisability of Options, eight percent (8%) of the Options to
Purchase shares shall vest and may be exercised each time the Orlando Prototype
Alive Store achieves or exceeds on a period (the Company's 28 day accounting
cycle pursuant to its fiscal year) basis a 20% operating profit (pre-tax
operating profit on a fully absorbed at the store level basis but excluding
allocation of corporate overhead costs) on at least a 30%, or whatever
percentage increase, when combined with that stores first years increase over
the previous GNC store is equal to or greater than a 50% increase in overall
same store sales for that Prototype Store over that stores 13 periods following
the first anniversary date of its store opening as an Alive Store.
(b) Subject to the other terms of this option agreement
regarding exercisability of Options, eight percent (8%) of the Options to
Purchase shares shall vest and may be exercised each time one of the Prototype
Alive Stores achieve or exceed on a period basis within the first thirteen
periods after the opening of the Prototype Store, other than the Orlando Store,
a 20% operating profit (pre-tax operating profit on a fully absorbed at the
store level basis but excluding allocation of corporate overhead costs) on at
least a 50% increase in overall same store sales for that Prototype Store. The
sales increase will be calculated by comparing the sales by period in the
Prototype to the actual sales achieved by the GNC store for the prior year if
it was a GNC store in the same mall prior to converting to the Prototype Store.
(c) Sales and profit hurdles must be achieved individually.
In determining profit increase at the Prototype locations depreciation will be
calculated based on the projected buildout cost of the Alive Store concept on a
rollout basis. If more than one Prototype Store meets the performance hurdle in
any given month during the vesting period then an additional eight percent (8%)
of the Options shall vest per each such store.
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(d) An Option shall be exercisable on or after the date that
the corporate secretary of the Company certifies in writing to the Company that
the performance hurdle has been met for the applicable month. Any exercise
shall be accompanied by a written notice to the Company specifying the number
of shares as to which the Option is being exercised.
(e) Notwithstanding the foregoing, Options will become vested
and exercisable with respect to all Shares if, prior to the expiration of the
vesting schedule period, there is (i) a sale or conveyance to another entity of
all or substantially all of the property and assets of the Company or (ii) a
change in control of the Company as defined in paragraph 8 below.
4. TERM OF OPTIONS;
(a) The Option shall expire not more than five (5) years from
the date of the granting thereof, but shall be subject to earlier termination
as herein provided.
5. MANNER OF EXERCISE OF OPTION AND MANNER OF PAYMENT.
(a) To the extent that the right to exercise the Option has
accrued and is in effect, the Option may be exercised in full or in part by
giving written notice to the Company stating the number of Shares exercised and
accompanied by payment in full for such Shares. Payment shall be wholly in cash
or by certified check. Upon such exercise, delivery of a certificate for
paid-up, non-assessable Shares shall be made at the principal office of the
Company to the person exercising the Option, not more than thirty (30) days
from the date of receipt of the notice by the Company.
(b) The Company shall at all times during the term of the
Option reserve and keep available such number of Shares of its common stock as
will be sufficient to satisfy the requirements of the Option. The Optionee
shall not have any of the rights of a stockholder of the Company in respect of
the Shares until one or more certificates for such Shares shall be delivered to
him or her upon the due exercise of the Option.
(c) Payment of the exercise price may be made by delivery of
(i) cash or a check payable to the order of the Company in an amount equal to
the exercise price of such options.
(d) To the extent that the right to purchase shares under an
option has accrued and is in effect, options may be exercised in full at one
time or in part from time to time, by giving written notice, signed by the
person or persons exercising the option, to the Company, stating the number of
shares with respect to which the option is being exercised, accompanied by
payment in full for such shares as provided in subparagraph (c) above. Upon
such exercise, delivery of a certificate for paid-up non-assessable shares
shall be made at the principal office of the Company to the person or persons
exercising the option at such time, during ordinary business hours, after five
(5) but not more than thirty (30) days from the date of receipt of the notice
by the Company, as shall be designated in such notice, or at such time, place
and manner as may be agreed upon by the Company and the person or persons
exercising the option.
(e) To the extent that an option to purchase shares is not
exercised by an optionee when it becomes initially exercisable, it shall not
expire but shall be carried forward and shall be exercisable, on a cumulative
basis, until the expiration of the exercise period. No partial exercise may be
made for less than ten (10) full shares of Common Stock.
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6. NON-TRANSFERABILITY. Except as provided below, the right
of the Optionee to exercise the Option shall not be assignable or transferable
by the Optionee otherwise than by will or the laws of descent and distribution,
and the Option may be exercised during the lifetime of the Optionee only by him
or her. The Option shall be null and void and without effect upon the
bankruptcy of the Optionee or upon any attempted assignment or transfer, except
as hereinabove provided, including without limitation any purported assignment,
whether voluntary or by operation of law, pledge, hypothecation or other
disposition attachment, trustee process or similar process, whether legal or
equitable, upon the Option.
7. REPRESENTATION LETTER AND INVESTMENT LEGEND.
(a) In the event that for any reason the Shares to be issued
upon exercise of the Option shall not be effectively registered under the
Securities Act of 1933 (the "1933 Act"), upon any date on which the Option is
exercised in whole or in part, the person exercising the Option shall give a
written representation to the Company and the Company shall place an
"investment legend", so-called, upon any certificate for the Shares issued by
reason of such exercise.
(b) The Company shall be under no obligation to qualify
Shares or to cause a registration statement or a post-effective amendment to
any registration statement to be prepared for the purposes of covering the
issue of Shares.
8. ADJUSTMENTS ON CHANGES IN CAPITALIZATION AND CHANGE
IN CONTROL. Adjustments on Changes in Capitalization and the like shall be
made in accordance with the following provisions.
(a) In the event that the outstanding shares of the Common
Stock of the Company are changed into or exchanged for a different number or
kind of shares or other securities of the Company or of another corporation by
reason of any reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination of shares, or dividends payable
in capital stock, appropriate adjustment shall be made in the number and kind
of shares as to which outstanding options or portions thereof then unexercised
shall be exercisable, to the end that the proportionate interest of the
optionee shall be maintained as before the occurrence of such event; such
adjustment in outstanding options shall be made without change in the total
price applicable to the unexercised portion of such options and with a
corresponding adjustment in the option price per share.
(b) In addition, unless otherwise determined by the Board or
the Committee in its sole discretion, in the case of any (i) sale or conveyance
to another entity of all or substantially all of the property and assets of the
Company or (ii) a Change in Control (as hereinafter defined) of the Company,
the purchaser(s) of the Company's assets or stock may, in his, her or its
discretion, deliver to the optionee the same kind of consideration that is
delivered to the stockholders of the Company as a result of such sale,
conveyance or Change in Control, or the Board of Directors may cancel all
outstanding options in exchange for consideration in cash or in kind which
consideration in both cases shall be equal in value to the value of those
shares of stock or other securities the optionee would have received had the
option been exercised (to the extent then exercisable) and no disposition of
the shares acquired upon such exercise been made prior to such sale, conveyance
or Change in Control, less the option price therefor. Upon receipt of such
consideration by the optionee, his or her option shall immediately terminate
and be of no further force and effect. The value of the stock or other
securities the optionee would have received if the option had been exercised
shall be determined in good faith by the Board of Directors of the Company, and
in the case of shares of the Common Stock of the Company, in accordance with
the provisions below. If such shares are then listed on any national securities
exchange, the fair market value shall be the mean between the high and low
sales prices, if any, on the largest such exchange on the business day
immediately preceding the date of the grant of the option or, if none, shall be
determined by taking a weighted average of the means between the highest and
lowest sales prices on the nearest date before and the nearest date after the
date of grant in
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accordance with Treasury Regulations Section 25.2512-2. If the shares are not
then listed on any such exchange, the fair market value of such shares shall be
the mean between the high and low sales prices, if any, as reported in the
National Association of Securities Dealers Automated Quotation System National
Market System ("NASDAQ/NMS") for the business day immediately preceding the
date of the grant of the option, or, if none, shall be determined by taking a
weighted average of the means between the highest and lowest sales on the
nearest date before and the nearest date after the date of grant in accordance
with Treasury Regulations Section 25.2512-2. If the shares are not then either
listed on any such exchange or quoted in NASDAQ/NMS, the fair market value
shall be the mean between the average of the "Bid" and the average of the "Ask"
prices, if any, as reported in the National Daily Quotation Service for the
business day immediately preceding the date of the grant of the option, or, if
none, shall be determined by taking a weighted average of the means between the
highest and lowest sales prices on the nearest date before and the nearest date
after the date of grant in accordance with Treasury Regulations Section
25.2512-2. If the fair market value cannot be determined under the preceding
three sentences, it shall be determined in good faith by the Board or the
Committee.
(c) The Board shall also have the power and right to
accelerate the exercisability of any options, notwithstanding any limitations
in this Agreement upon such a sale, conveyance or Change in Control. A "Change
in Control" shall be deemed to have occurred if any person, or any two or more
persons acting as a group, and all affiliates of such person or persons, shall
acquire shares of the Company's then outstanding Common Stock of the Company,
in one or more transactions, or series of transactions, such that following
such transaction or transactions, such person or group and affiliates
beneficially own twenty (20%) percent or more of the Company's Common Stock
outstanding.
(d) Upon dissolution or liquidation of the Company, all
options granted herein shall terminate, but the optionee shall have the right,
immediately prior to such dissolution or liquidation, to exercise his or her
option to the extent then exercisable.
(e) If by reason of a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization, or liquidation,
the Board of Directors shall authorize the issuance or assumption of a stock
option or stock options in a transaction to which Section 424(a) of the Code
applies, then, the Board or Committee may grant an option or options upon such
terms and conditions as it may deem appropriate for the purpose of assumption
of the old option, or substitution of a new option for the old option, in
conformity with the provisions of such Section 424(a) of the Code and the
Regulations thereunder.
(f) No fraction of a share shall be purchasable or
deliverable upon the exercise of any option, but in the event any adjustment
hereunder of the number of shares covered by the option shall cause such number
to include a fraction of a share, such fraction shall be adjusted to the
nearest smaller whole number of shares.
9. RESTRICTIONS ON ISSUE OF SHARES.
(a) Notwithstanding the provisions of Section 5, the Company
may delay the issuance of shares covered by the exercise of any option and the
delivery of a certificate for such shares until one of the following conditions
shall be satisfied:
(i) The shares with respect to which such option
has been exercised are at the time of the issue of such shares effectively
registered or qualified under applicable Federal and state securities acts now
in force or as hereafter amended; or
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(ii) Counsel for the Company shall have given an
opinion, which opinion shall not be unreasonably conditioned or withheld, that
such shares are exempt from registration and qualification under applicable
Federal and state securities acts now in force or as hereafter amended.
(b) It is intended that all exercises of options shall be
effective, and the Company shall use its best efforts to bring about compliance
with the above conditions within a reasonable time, except that the Company
shall be under no obligation to qualify shares or to cause a registration
statement or a post-effective amendment to any registration statement to be
prepared for the purpose of covering the issue of shares in respect of which
any option may be exercised, except as otherwise agreed to by the Company in
writing.
10. PURCHASE FOR INVESTMENT; RIGHTS OF HOLDER ON SUBSEQUENT
REGISTRATION.
Unless the shares to be issued upon exercise of an option
have been effectively registered under the Securities Act of 1933, as now in
force or hereafter amended, the Company shall be under no obligation to issue
any shares covered by any option unless the person who exercises such option,
in whole or in part, shall give a written representation and undertaking to the
Company which is satisfactory in form and scope to counsel for the Company and
upon which, in the opinion of such counsel, the Company may reasonably rely,
that he or she is acquiring the shares issued pursuant to such exercise of the
option for his or her own account as an investment and not with a view to, or
for sale in connection with, the distribution of any such shares, and that he
or she will make no transfer of the same except in compliance with any rules
and regulations in force at the time of such transfer under the Securities Act
of 1933, or any other applicable law, and that if shares are issued without
such registration, a legend to this effect may be endorsed upon the securities
so issued. In the event that the Company shall, nevertheless, deem it necessary
or desirable to register under the Securities Act of 1933 or other applicable
statutes any shares with respect to which an option shall have been exercised,
or to qualify any such shares for exemption from the Securities Act of 1933 or
other applicable statutes, then the Company may take such action and may
require from each optionee such information in writing for use in any
registration statement, supplementary registration statement, prospectus,
preliminary prospectus or offering circular as is reasonably necessary for such
purpose and may require reasonable indemnity to the Company and its officers
and directors and controlling persons from such holder against all losses,
claims, damages and liabilities arising from such use of the information so
furnished and caused by any untrue statement of any material fact therein or
caused by the omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made.
11. RIGHTS AS A SHAREHOLDER. The Optionee shall have no
rights as a shareholder with respect to any Shares which may be purchased by
exercise of this Option unless and until a certificate or certificates
representing such Shares are duly issued and delivered to the Optionee. Except
as otherwise expressly provided herein, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
stock certificate is issued.
12. WITHHOLDING TAXES. Whenever Shares are to be issued upon
exercise of this Option, the Company shall have the right to require the
Optionee to remit to the Company an amount sufficient to satisfy all Federal,
state and local tax requirements, if any, prior to the transfer of the Shares
delivery transfer of any certificate or certificates for such Shares.
13. MODIFICATION OF OUTSTANDING OPTIONS.
The Board or the Committee may authorize the amendment of any
outstanding option with the consent of the optionee when and subject to such
conditions as are deemed to be in the best interest of the Company.
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14. NOTICES.
Any communication or notice required or permitted to be given
under the Plan shall be in writing, and mailed by registered or certified mail
or delivered by hand, if to the Company, to its principal place of business,
attention: President, and, if to an optionee, to the address as appearing on
the records of the Company.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed and its corporate seal to be hereto affixed by its officer
thereunto duly authorized, and the Optionee has hereunto set his or her hand
and seal, all as of the day and year first above written.
GENERAL NUTRITION COMPANIES, INC.
By:
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Title: President
OPTIONEE
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