SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No.)
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NBTY, Inc.
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date Filed:
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"NBTY Logo"
PROXY STATEMENT
for
APRIL 10, 2000
Annual Meeting of Stockholders
of NBTY, Inc.
NBTY, Inc.
90 Orville Drive
Bohemia, New York 11716
Scott Rudolph
Chairman of the Board, President and
Chief Executive Officer
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of NBTY, Inc. to be held on April 10, 2000 in Hauppauge, New
York. On the following pages you will find information about the meeting
together with a Proxy Statement.
At the meeting we will review NBTY's operations, discuss fiscal 1999
financial statements and report on first quarter results as well as our
plans for the future. A brief reception will precede the meeting and
management presentation followed by a question and answer session for
stockholders.
Your vote is important to us. If you cannot be with us in person,
please be sure to vote your shares by proxy. Just mark, sign and date the
enclosed proxy card and return it in the postage-paid envelope. Also for
your convenience, you may vote your shares over the Internet or by
telephone. Your prompt return of the card or vote over the Internet or by
telephone will help your Company avoid additional solicitation costs. If
you attend the meeting, you may continue to have your shares voted as
instructed in the proxy or you may withdraw your proxy at the meeting and
vote your shares in person.
Sincerely,
Scott Rudolph,
Chairman and President
NBTY, INC.
90 Orville Drive, Bohemia, New York 11716
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
SUMMARY OF PROPOSALS TO BE CONSIDERED BY STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of
NBTY, Inc. (the "Company") will be held at the Wyndham Windwatch Hotel,
1717 Motor Parkway, Hauppauge, New York 11788 on April 10, 2000, at 10:00
A.M., local time for the purpose of considering and taking action on the
following:
(1) to re-elect three members to Class I of the Board of Directors,
Aram Garabedian, Bernard Owen and Alfred Sacks to serve until the 2003
Annual Meeting of Stockholders or until their respective successors are
duly elected and qualified. The Board of Directors is divided into three
Classes, Class I, Class II and Class III directors. Each Class serves for
a term of three years.
(2) to approve the adoption of an Incentive Stock Option Plan.
(3) to ratify the Board of Directors' designation of
PricewaterhouseCoopers L.L.P. as independent certified public accountants
to audit the consolidated financial statements of the Company for the 2000
fiscal year.
(4) to transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has set the close of business on March 10,
2000 as the record date for determining stockholders entitled to notice of,
and to vote at, the Annual Meeting.
(This Summary is qualified in its entirety by the detailed
information appearing within the Proxy Statement).
By order of the Board of Directors,
Scott Rudolph
Chairman of the Board, President
and Chief Executive Officer
Bohemia, New York
March 13, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE MARK, SIGN AND DATE
THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS OF THE
COMPANY, AND RETURN IT TO THE COMPANY IN THE ENCLOSED PRE-ADDRESSED
ENVELOPE OR YOU MAY UTILIZE THE CONVENIENCE OF VOTING BY TELEPHONE OR
ONLINE OVER THE INTERNET BY FOLLOWING THE INSTRUCTIONS ENCLOSED WITH THIS
MATERIAL. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO ITS EXERCISE BY
WRITTEN NOTICE TO THE COMPANY'S SECRETARY PRIOR TO THE MEETING, BY
SUBMITTING A SUBSEQUENTLY DATED PROXY OR BY ATTENDING THE MEETING AND
VOTING IN PERSON.
NBTY, INC.
90 Orville Drive, Bohemia, New York 11716
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
INFORMATION CONCERNING THE SOLICITATION
The Proxy Statement and enclosed Proxy are being furnished to all
holders of the common stock, par value $.008 per share (the "Common
Stock"), of NBTY, Inc. (the "Company"), a Delaware corporation, in
connection with a solicitation of proxies in the form enclosed by the Board
of Directors of the Company for use at the annual meeting of Stockholders
to be held on April 10, 2000, and at any adjournments thereof (the
"Meeting"). The persons named as proxies were selected by the Board of
Directors of the Company.
The Company anticipates first sending this Proxy Statement and the
enclosed Proxy to its stockholders on or about March 13, 2000. The
Company's Annual Report to Stockholders, which includes financial
statements for the fiscal year ended September 30, 1999 has been mailed
simultaneously with this Proxy Statement to stockholders entitled to vote
at the Annual Meeting. The Annual Report is not to be regarded as proxy
soliciting material.
The enclosed Proxy provides that each stockholder may specify that
his or her shares be voted "FOR" the election of the named nominees to the
Company's Board of Directors with provision to "WITHHOLD AUTHORITY" as to
all nominees or any individual nominee or nominees; and voted "FOR",
"AGAINST" or "ABSTAIN" from voting with respect to: vote upon the Incentive
Stock Option Plan, the Key Employee Stock Option Plan and the ratification
of the Board of Directors' designation of PricewaterhouseCoopers L.L.P as
independent certified public accountants to audit the consolidated
financial statements of the Company for the 2000 fiscal year. If properly
executed and returned in time for the Meeting, the enclosed Proxy will be
voted as specified therein. Except with respect to broker non-votes, where
a signed Proxy is returned, but no choice is specified, the shares will be
voted "FOR" the election of each named nominee to the Company's Board of
Directors, and ratification of the Company's independent public
accountants. Under the General Corporation Law of the State of Delaware,
the state in which the Company is incorporated, an abstaining vote is
deemed to be "present" but is not deemed to be a "vote cast". As a result,
abstentions and broker "non-votes" are not included in the tabulation of
the voting results on the election of directors or issues requiring
approval of a majority of the votes cast and, therefore, do not have an
effect of votes in opposition in such tabulations. A broker "non-vote"
occurs when a nominee holding shares for a beneficial owner does not vote
on a particular proposal because the nominee does not have discretionary
voting power with respect to that item and has not received instructions
from the beneficial owner. Broker "non-votes" and the shares as to which a
stockholder abstains are included for purposes of determining whether a
quorum is present at the Annual Meeting.
All shares entitled to vote and represented by properly executed
proxies received prior to the Meeting, and not revoked, will be voted at the
Meeting in accordance with the instructions indicated on those proxies. If
no instructions are indicated on a properly executed proxy, the shares
represented by that proxy will be voted as recommended by the Board of
Directors.
If any other matters are properly presented at the Meeting for
consideration, including, among other things, consideration of a motion to
adjourn the Meeting to another time or place, the persons named in
the enclosed form of proxy and acting thereunder will have discretion to
vote on those matters in accordance with their best judgment to the same
extent as the person signing the proxy would be entitled to vote. The
Company does not currently anticipate that any other matters will be raised
at the Meeting or that the Meeting will be adjourned.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. A proxy may be revoked
(i) by filing with the Secretary of the Company, at or before the taking of
the vote at the Meeting, a written notice of revocation or a duly
executed proxy, in either case later dated than the prior proxy relating to
the same shares, or (ii) by attending the Meeting and voting in
person (although attendance at the Meeting will not itself revoke a
proxy). Any written notice of revocation or subsequent proxy should be
sent as to be delivered to NBTY, Inc., 90 Orville Drive, Bohemia, New York
11716, Attention: Secretary, or hand delivered to the Secretary, at or
before the taking of the vote at the Meeting. Instructions for
voting on the Internet or by telephone may be found in the Proxy Voting
Instructions accompanying the proxy card.
The Company has fixed the close of business on March 10, 2000 as the
record date for determining the holders of its Common Stock who will be
entitled to notice of and to vote at the Meeting. On September 30,
1999, the Company had issued and outstanding 67,215,611 shares of its
Common Stock which are the only outstanding shares of the capital stock of
the Company. Holders of the Company's Common Stock are entitled to one
vote for each share owned of record. Shares representing a majority of
the votes entitled to be cast by the holders of the outstanding shares of
Common Stock must be represented in person or by proxy at the
Meeting in order for a quorum to be present.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Company's Amended and Restated By-Laws provide that the members
of the Board of Directors of the Company shall be divided into three
classes and that the number of directors constituting the Board of
Directors, and each Class thereof, shall from time to time be fixed and
determined by a vote of a majority of the Company's whole Board of
Directors serving at the time of such vote. The Board of Directors is now
comprised of eleven members, with Class I consisting of three members,
Class II consisting of four members and Class III consisting of four
members, who shall serve until the end of each respective term, or until
their successors are duly elected and qualified. The Board of Directors
has nominated Aram Garabedian, Bernard G. Owen and Alfred Sacks for re-
election to Class I at the Annual Meeting. Messrs. Garabedian, Owen and
Sacks are currently serving as Class I Directors of the Company.
Directors are elected by a plurality of the votes cast at the Annual
Meeting by the holders of the shares present in person or represented by
proxy at a meeting at which a quorum is present. "Plurality" means that
the individuals who receive the largest number of votes cast are elected as
directors up to the maximum number of directors to be chosen at the
meeting. Consequently, any shares not voted (whether by abstention,
withholding authority or broker non-vote) have no impact in the election of
directors, except to the extent the failure to vote for the individual
results in another individual receiving a larger number of votes.
Stockholders of the Company do not have cumulative voting rights with
respect to the election of directors. It is the intention of the persons
named in the enclosed form of Proxy to vote such proxy "FOR" the election
of the named nominees for Class I directorships unless authorization is
withheld on the Proxy. Should any nominee be unable or unwilling to serve
as a director, which is not anticipated, it is intended that the named
proxies will vote for the election of such other person or persons as they,
in their discretion, may choose.
Information as to Director Nominees and Directors
- -------------------------------------------------
The following table provides information as of January 31, 2000, with
respect to each of the Company's directors and director nominees.
<TABLE>
<CAPTION>
Name and year first became Principal Occupation during
a Director of the Company Age the past Five Years
- -------------------------- --- ---------------------------
CLASS I - Terms Expiring at the 2000 Annual Meeting of Stockholders
<S> <C> <C>
Aram Garabedian 64 A real estate developer in Rhode Island since
1971 1988. He was associated with NBTY and its
predecessor, Arco Pharmaceuticals, Inc., for
20 years in a sales capacity and as an Officer.
Bernard G. Owen 71 He currently serves as Chairman of Wood-
1971 Hew Travel and had been associated with
Pitkin, Owen Insurance Agency for more than
the past five years.
Alfred Sacks 71 President of Al Sacks, Inc., an insurance
1971 consulting firm.
CLASS III - Terms Expiring at the 2001 Annual Meeting of Stockholders
Arthur Rudolph 71 Founded the Company in 1971 and had
1971 served as the Company's Chief Executive
Officer and Chairman of the Board of
Directors since that date until his resignation
in September, 1993. Mr. Rudolph is now a
consultant to the Company. He is a member
of the Board of Directors and he is the father
of Scott Rudolph.
Glenn Cohen 40 President of Glenn-Scott Landscape &
1988 Design.
Michael L. Ashner 47 President and Chief Executive Officer of
1998 Winthrop Financial Assoc., a firm engaged in
the organization and administration of real
estate limited partnerships.
Michael C. Slade 50 For more than the past five years, he was
1998 the President and an owner of Nutrition
Headquarters Corp., Nutro Labs, Inc. and Lee
Nutrition, Inc., which companies were
acquired by the Company in 1998.
CLASS II - Terms Expiring at the 2002 Annual Meeting of Stockholders
Scott Rudolph 42 The Chairman of the Board of Directors,
1986 President and Chief Executive Officer of the
Company. He is the Chairman of Dowling
College, Long Island, New York. He joined
NBTY in 1986. He is the son of Arthur
Rudolph.
Murray Daly 72 Formerly a Vice President of J. P. Egan
1971 Office Equipment Co., is currently a
consultant to the office equipment industry.
Bud Solk 65 President of Chase/Ehrenberg & Rosene, Inc.,
1994 an advertising and marketing agency located
in Chicago, Illinois.
Nathan Rosenblatt 43 President and Chief Executive Officer of
1994 Ashland Maintenance Corp., a commercial
maintenance organization located in Long
Island City, New York.
</TABLE>
The Board of Directors recommends a vote FOR the re-election of the Class I
Directors, Aram Garabedian, Bernard G. Owen and Alfred Sacks. In the event
that any nominee named as a Class I director is unable to serve (which is
not anticipated), the persons named in the Proxy may vote for another
nominee of their choice.
Committees of the Board of Directors
- ------------------------------------
During fiscal 1999, the Board of Directors had four ongoing
committees: (i) an Audit Committee; (ii) a Compensation Committee; (iii) a
Nominating Committee; and (iv) a Strategic Planning Committee.
The Audit Committee is comprised entirely of outside Directors and
recommends to the Board independent auditors to audit the Company's
financial statements; reviews the audit with the auditors and management;
reviews the Company's dealings with Directors and their affiliates; reviews
the Company's legal affairs; and consults with the auditors and management
regarding risk management and the adequacy of financial and accounting
procedures and controls. In carrying out its responsibilities, the
Committee meets with the independent auditors in executive session, without
members of management present.
The Compensation and Stock Option Committee is comprised entirely of
outside Directors and is responsible for developing compensation policies,
including stock options, consistent with and linked to the Company's
strategies. In addition, the Committee evaluates, in consultation with all
outside Directors, the performance of the Company's Chief Executive Officer
and recommends his compensation and that of all executive management to the
Board annually; reviews and approves all other officers' compensation; and
recommends to the Board the fees of outside Directors. The Committee's
report on executive compensation can be found on page 11.
The Nominating Committee establishes criteria for Board membership,
searches for and screens candidates to fill vacancies on the Board,
recommends an appropriate slate of candidates for election each year and,
in this regard, evaluates the performance of individual Directors, assesses
the overall performance of the Board and considers issues regarding the
composition and size of the Board. Shareholders wishing to nominate
Director candidates for consideration may do so by writing to the
Secretary, NBTY, Inc., 90 Orville Drive, Bohemia, New York 11716 and
providing the candidate's name, biographical data and qualifications.
The Strategic Planning Committee may exercise the broad powers and
authority granted to it under the Company's By-Laws, including such things
as evaluating potential acquisitions, exploring new marketing areas and
assisting in the formulation of major policy objectives.
The chart below sets forth the composition of the Board's committee
as of December 31, 1999, as well as the number of meetings each committee
held in 1999.
<TABLE>
<CAPTION>
Compensation/ Strategic Number of
Audit Stock Option Nominating Planning Meetings
Member Committee Committee Committee Committee in 1999
- ------ --------- ------------ ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Glenn Cohen * 2
Murray Daly * 1
Aram Garabedian * 2
Bernard G. Owen * 1
Nathan Rosenblatt * * 2
Arthur Rudolph * * * 9
Scott Rudolph * * 5
Alfred Sacks * 2
Michael Ashner * 2
<FN>
- --------------------
* Member
</FN>
</TABLE>
During 1999 the Board convened four regular meetings and one special
meeting. Each of the directors, except Glenn Cohen attended 100% of the
meetings and the Committees of the Board of which they were members. Glenn
Cohen attended three of the four regular meetings.
Compensation of Directors
- -------------------------
During fiscal 1999, each outside Director earned an annual retainer
of $20,000 for a total of $180,000 for services rendered as Directors.
Each Director is entitled to reimbursement for out-of-pocket expenses to
attend meetings. Any Director who is an officer of the Company did not
receive additional compensation for his services as a director.
The Company does not offer a pension plan to its outside Directors.
Principal Stockholders and Security Ownership of Management
- -----------------------------------------------------------
The following information with respect to the outstanding shares of
common stock beneficially owned by (i) each director of the Company, (ii)
the chief executive officer and the five other most highly compensated
executive officers, (iii) all beneficial owners of more than five percent
of common stock known to the Company, and (iv) the directors and executive
officers as a group, is furnished as of December 31, 1999, except as
otherwise indicated.
<TABLE>
<CAPTION>
Number of Shares
Beneficially Percentage
Directors Owned(a)(b)(d) Ownership
- --------- ---------------- ----------
<S> <C> <C>
Scott Rudolph(c) 12,408,058 18.46
Arthur Rudolph(c) 2,056,893 3.06
Aram Garabedian 36,000 *
Bernard G. Owen 44,400 *
Alfred Sacks 60,000 *
Murray Daly 58,000 *
Glenn Cohen 87,000 *
Bud Solk 50,000 *
Nathan Rosenblatt 30,000 *
Michael L. Ashner 55,000 *
Michael Slade(e) 2,137,448 3.18
Other Named Executive Officers
- ------------------------------
Harvey Kamil 2,281,432 3.39
William Shanahan 145,000 *
James P. Flaherty 84,408 *
Abraham Rubenstein 60,000 *
Other
- -----
All Directors and Executive
Officers as a group (15 persons)(a)(b)(c) 19,593,639 29.15
NBTY, Inc. Employees'
Stock Ownership Plan(a) 2,585,301 3.85
<FN>
- --------------------
(a) Each stockholder shown on the table has sole voting and investment
power with respect to the shares beneficially owned.
(b) Each named person or group is deemed to be the beneficial owner of
securities which may be acquired within 60 days through the exercise
or conversion of options, if any, and such securities are deemed to
be outstanding for the purpose of computing the percentage
beneficially owned by such person or group. Such securities are not
deemed to be outstanding for the purpose of computing the percentage
of class beneficially owned by any other person or group.
Accordingly, the indicated number of shares includes shares issuable
upon exercise of options (including employee stock options) and any
other beneficial ownership of securities held by such person or
group.
(c) Includes shares held in a Trust created by Arthur Rudolph for the
benefit of Scott Rudolph and others.
(d) Includes options to purchase common stock of the Company which are
presently exercisable.
(e) Includes shares held in a Trust for the benefit of Ruth Slade, the
wife of Michael Slade. Mr. Slade is a trustee of this Trust.
An asterisk (*) in the above table means percentage ownership of less than
one percent.
</FN>
</TABLE>
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning total compensation
earned or paid to the Chief Executive Officer and the four other most
highly compensated executive officers of the Company who served in such
capacities as of September 30, 1999 for services rendered to the Company
during each of the last three fiscal years.
<TABLE>
<CAPTION>
Long-Term
Compensation Awards All Other
Annual Compensation ------------------------ Compensation:
Name and -------------------- Restricted Stock Pension Plan
Principal Position Year Salary $ Bonus $ Stock($) Options # and 401(k) Plan
<S> <C> <C> <C> <C> <C> <C>
Scott Rudolph 1999 609,600 500,000 260,000 4,801
Chairman of the Board, 1998 600,008 400,000 1,050,000 7,672
President and Chief 1997 488,838 350,000 -- 4,792
Executive Officer
Harvey Kamil 1999 304,800 225,000 250,000 4,801
Executive Vice President 1998 300,000 225,000 150,000 7,672
Chief Financial Officer 1997 271,611 200,000 4,792
Michael C. Slade 1999 275,000 -- -- 3,312
Senior Vice President 1998 -- -- -- --
Strategic Planning 1997 -- -- -- --
James Flaherty 1999 174,700 75,000 20,000 4,801
Vice President 1998 167,500 75,000 30,000 7,672
Marketing & Advertising 1997 151,000 50,000 -- 4,792
William Shanahan 1999 152,000 60,000 20,000 4,801
Vice President 1998 146,000 60,000 30,000 7,672
Data Processing 1997 140,000 40,000 -- 4,792
</TABLE>
Employment and Consulting Agreements
- ------------------------------------
Scott Rudolph, Chairman of the Board, President and Chief Executive
Officer of the Company, entered into an employment agreement with the
Company effective February 1, 1994, as amended, to terminate in January,
2004. During the period of the employment agreement, the salary payable to
Mr. Rudolph shall be fixed by the Board of Directors of the Company,
provided that in no event will the executive salary be at a rate lower than
$600,000 per year, with bonuses, certain fringe benefits accorded other
executives of NBTY, and with annual cost of living index increases.
Harvey Kamil, Executive Vice President, Chief Financial Officer and
Secretary of the Company, entered into an employment agreement with the
Company effective February 1, 1994, as amended, to terminate in January,
2004. During the period of the employment agreement, the salary payable to
Mr. Kamil shall be fixed by the Board of Directors of the Company, provided
that in no event will the executive salary be at a rate lower than $300,000
per year, with bonuses, certain fringe benefits accorded other executives
of NBTY, and with annual cost of living index increases.
Each of the above agreements also provides for the immediate
acceleration of the payment of compensation for the term of the contract
and the registration and sale of all issued stock, stock options and shares
underlying options in the event of certain changes of control, or
involuntary (i) termination of employment, (ii) reduction of compensation,
or (iii) diminution of responsibilities or authority.
Effective January 1, 1997, the Company entered into a consulting
agreement with Rudolph Management Associates, Inc. for the services of
Arthur Rudolph, a director of the Company. The agreement has been renewed
to provide services from January 1, 1999 through December 31, 2000 with the
consulting fee fixed by the Board of Directors of the Company, provided
that in no event will the consulting fee be at a rate lower than $400,000
per year, payable monthly, with certain fringe benefits accorded to other
executives of NBTY.
On April 20, 1998, the Company entered into a one-year consulting
agreement with Michael C. Slade, one of the former owners of Nutrition
Headquarters Corp. Under the terms of the agreement, Mr. Slade presently
is a consultant to the Company and the President of the Company's Nutrition
Headquarters subsidiary and will receive an annual compensation of $275,000
renewable at Mr. Slade's option, for up to two additional one-year periods.
The agreement also provides for fringe benefits accorded to other
executives of NBTY. Mr. Slade exercised his option to renew the contract
through April, 2000.
Four members of Holland & Barrett's senior executive staff have
service contracts with the Company, terminable by the Company upon twelve
months notice, at annual salaries ranging between approximately $75,000 and
$200,000.
Executive Compensation Policies
- -------------------------------
Compensation packages generally include base salary, stock options,
executive benefits, and in certain years, a performance bonus. Factors
considered have typically included the results of the performance review of
each executive officers' performance and an evaluation of the significance
of the executives' contribution to the Company. The compensation packages
have been designated to attract and retain experienced and well-qualified
executive officers who will enhance the performance of the Company.
The Committee believes that Company tenure and the level of
responsibility undertaken by individual executives should be appropriately
reflected in the establishment of base salary amounts. Additionally, the
Committee believes that the performance-based bonus structure is of key
importance. Accordingly, for executive officers in charge of sales
divisions, a material portion of total bonus eligibility is tied to year-
to-year improvement in financial and operational indicators measured at the
divisional level. For executive officers in charge of corporate
departments, bonuses are based in large part on improvements in the
Company's net earnings. The Committee believes that these standards serve
to align the interests of executives with those of stockholders.
The Company has attempted to set the base salary of its executive
officers to be competitive within the nutritional supplement industry. In
addition, base salaries have reflected the Company's operating philosophy,
strategic direction and cost-conscious orientation. The Company conducts
performance reviews to determine and adjust each executive officer's base
salary. During the past 10 years, stock options have generally been a
component of executive officers' total compensation. Since stock options
become exercisable over a ten-year period, their ultimate value is
dependent on the long-term appreciation of the Company's stock price. Such
options are intended to increase executive officers' equity interests in
the Company, providing executives with the opportunity to share in the
future value they are responsible for creating. In addition to the
standard benefits package offered to its executives, the Company provides
company cars to all of its executive officers. No options were granted in
fiscal 1999.
Aggregated option exercise in 1999 and fiscal year-end option values table.
The following table shows information concerning the exercise of
stock options by each of the Officers during fiscal 1999 and the value of
all remaining exercisable and unexercisable options at September 30, 1999,
on a pre-tax basis.
<TABLE>
<CAPTION>
Number of securities Value of unexercised
Shares Value underlying unexercised in-the-money options
acquired on realized options at 12/31/99 (#)(b) options at 12/31/99 ($)(c)
Name exercise(#) ($)(a) exercisable/unexercisable exercisable/unexercisable
- ---- ----------- -------- -------------------------- --------------------------
<S> <C> <C> <C> <C>
James Flaherty 90,000 394,416 50,000 307,950
Abraham Rubenstein 45,000 351,900 50,000 314,550
Jean Palladino 50,000 247,220 -0- -0-
<FN>
- --------------------
(a) Calculated by subtracting the exercise price from the market value of
the Common Stock as of the exercise date.
(b) The securities underlying the options are shares of Common Stock.
</FN>
</TABLE>
NBTY, Inc. Employees' Stock Ownership Plan
The Company has an Employees' Stock Ownership Plan pursuant to which
the Company can elect to make contributions of cash and/or Common Stock to
a related trust for the benefit of all employees as defined.
All employees of the Company, including officers, over the age of 21
and who have been employed by the Company for at least one year are
eligible participants in the Plan.
Contributions are made on a voluntary basis by the Company. There is
no minimum contribution required in any one year.
There will be no contributions required by an employee. All
contributions will be made by the Company at the rate of up to 15% of the
Company's annual payroll, at the discretion of the Company. Each eligible
employee receives an account or share in the Trust and the cash and/or
shares of stock contributed to the Plan each year are credited to his or
her account.
Once an associate is eligible, a portion of the stock in his or her
account becomes "vested" each year, as follows:
<TABLE>
<CAPTION>
Number of Years Percentage of Shares
Of Service Earned Each Year
--------------- --------------------
<S> <C>
0-2 0%
3 20%
4 20%
5 20%
6 20%
7 20%
8+ 100%
</TABLE>
Defined Contribution Savings Plan
- ---------------------------------
The Company has adopted a Defined Contribution Savings Plan qualified
under Section 401(k) of the Internal Revenue Code. The employees of the
Company who have completed six months of service and have attained the age
of twenty and one-half may elect to contribute to this plan in accordance
with the Company's guidelines. Each year the Board of Directors will vote
to determine the amount, if any, of matching contributions up to a maximum
equal to the lesser of 2% percent of each employee's annual gross
compensation or the amount contributed, if any, by each employee.
Compensation Committee's Report on Executive Compensation
- ---------------------------------------------------------
The Company's Compensation Committee has determined generally to
retain base salary, stock options, executive benefits and performance
bonuses as components in the Company's executive compensation packages. In
setting the compensation levels for executive officers, the Committee
expects to be guided by the following considerations:
- - compensation levels should be competitive with compensation generally
being paid to executives in other nutritional supplement companies;
- - a significant portion of the executive officer's compensation may be
awarded in the form of stock options to closely link shareholder and
executive interests and to encourage stock ownership by executive
officers;
- - each individual executive officer's compensation should, to the
extent possible, reflect the performance of the Company as a whole,
the performance of the officers' business unit, and the performance
of the individual executive; and
- - executive compensation should reflect the Company's unique,
entrepreneurial and cost-conscious orientation.
Under the Omnibus Budget Reconciliation Act of 1993, compensation
paid to certain executive officers of the Company in excess of $1 million
in 1995 and subsequent years may be non-deductible for federal income tax
purposes unless the compensation qualifies as "performance-based"
compensation or is otherwise exempt under the law and Internal Revenue
Service regulations. The Company's policy is to seek to structure its
executive officer incentive compensation to qualify as "performance-based"
compensation so as to attempt to preserve its deductibility for federal
income tax purposes. However, there can be no assurances that such
compensation will continue to be deductible for federal income tax
purposes. The Compensation Committee may also determine in any year in
light of all applicable circumstances that it would be in the best
interests of the Company for awards to be paid under its incentive
compensation plans or otherwise in a manner which would not satisfy the
requirements of such tax law and regulations for deductibility.
Summary
- -------
The Compensation Committee is committed to attracting, motivating and
retaining executives who will help the Company meet the increasing
challenges of the nutritional supplement industry. The Compensation
Committee recognizes its responsibility to the Company's stockholders to
increase the value of the Company's Common Stock and intends to continue to
review, establish and implement compensation policies that are consistent
with competitive practices, are based on the Company's and the executives'
performance and permit the Company to attract, motivate and retain
executives who will lead the Company.
The Compensation Committee annually establishes the base salaries,
subject to the approval of the Board of Directors, and incentive
compensation which will be paid to the Company's executive officers. In
setting compensation, the Compensation Committee generally takes into
account a number of factors, including the Company's results of operations
and other Company performance measures, competitive compensation data,
comparisons of salaries, incentive compensation terms and responsibilities
among the Company's executive officers, the desired proportion of incentive
compensation in the officer's total compensation package and qualitative
factors bearing on an individual's experience, responsibilities, management
and leadership abilities and job performance. The Compensation Committee
does not generally expressly assign greater weight to any one or more such
factors than to others.
Members of the Compensation and Stock Option Committee
------------------------------------------------------
Arthur Rudolph, Chairman
Alfred Sacks
Glenn Cohen
The foregoing report of the Compensation Committee shall not be
deemed incorporated by reference by any general statement incorporating by
reference this Proxy Statement into any filing under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended,
except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under
such Acts.
Performance Graph
- -----------------
The following graph illustrates, for the period from September, 1993
(Base Year) through September, 1999, the cumulative total shareholder
return of $100 invested in (1) The Company's common stock, (2) Nasdaq Stock
Market - US and (3) Nasdaq Health Services.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG NBTY, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ HEALTH SERVICES INDEX
<TABLE>
<CAPTION>
Cumulative Total Return
-------------------------------------------------
9/94 9/95 9/96 9/97 9/98 9/99
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
NBTY, INC. 100 54 157 201 225 218
NASDAQ STOCK MARKET (U.S.) 100 138 164 225 229 372
NASDAQ HEALTH SERVICES 100 106 138 139 93 88
<FN>
- --------------------
* $100 INVESTED ON 9/30/94 IN STOCK OR INDEX - INCLUDING REINVESTMENT
OF DIVIDENS. FISCAL YEAR ENDING SEPTEMBER 30.
</FN>
</TABLE>
NASDAQ
------
<TABLE>
<CAPTION>
Fiscal Quarter 2000 1999 1998
------------------- ------------- ---------------
Low High Low High Low High
--- ---- --- ---- --- ----
<S> <C> <C> <C> <C> <C> <C>
First 6.75 12.50 4.38 10.00 6.42 8.46
Second* 9.93 15.87 4.63 8.00 10.67 20.58
Third 4.44 6.88 14.63 24.38
Fourth 5.81 9.00 7.31 23.25
<FN>
- --------------------
* Closing price through February 29, 2000
The closing price of the Company's Common Stock on February 29, 2000 was
$14.06. The Company's Common Stock is traded over-the-counter and is
included in the Nasdaq-National Market System (symbol NBTY).
</FN>
</TABLE>
PROPOSAL TWO
INCENTIVE STOCK OPTION PLAN
Stockholders are being asked to approve an Incentive Stock Option
Plan under which 4,000,000 options will be reserved for issuance to
qualified employees and consultants. This Plan has been approved by the
Company's Board of Directors, subject to approval by stockholders.
Currently, there are no options available for grant under any of the
Company's previously authorized plans.
Summary of the Incentive Stock Option Plan
- ------------------------------------------
Purpose
The purpose of the Incentive Stock Option Plan (the "Plan") is to
provide an additional incentive to eligible employees and consultants whose
present and potential contributions are important to the continued success
of NBTY, to afford them an opportunity to acquire a proprietary interest in
NBTY and to enable NBTY to enlist and retain in its employ the best
available talent for the successful conduct of its business.
Eligibility
Officers, consultants and other employees of NBTY and its
subsidiaries and affiliates whom the Board deems to have the potential to
contribute to the future success of NBTY shall be eligible to receive
awards under the Plan.
Administration
The Plan is to be administered by the Board of Directors or a
committee appointed by the Board. All questions of interpretation or
application of the Plan are determined in the sole discretion of the Board
or its committee, and decisions are final and binding upon all
participants. Members of the Board who are eligible employees are
permitted to participate in the Plan, but may not vote on any matter
affecting the administration of the Plan. No member of the Board who is
eligible to participate in the Plan may be a member of the committee
appointed to administer the Plan. Members of the Board receive no
additional compensation for their services in connection with the
administration of the Plan.
Stock Options
The Plan permits the granting of non-transferable stock options that
are intended to qualify as incentive stock options ("ISOs").
The option exercise price for each share covered by an option must be
equal to or greater than the fair market value of a share of common stock
on the date of grant (110% of the fair market value in the case of a 10% or
greater stockholder).
The term of each option will be fixed by the Board or its committee
but may not exceed ten years from the date of grant. The Board or its
committee will determine the time or times each option will be exercised.
Options may be made exercisable in installments and the exercisability of
options may be accelerated by the Board or its committee.
The option may be exercised by the payment of the exercise price in
cash or by delivery of shares of NBTY owned by the optionee, priced at the
fair market value at the time of exercise.
In the event of termination of an employee's employment or
consultancy for any reason, including retirement, an option may thereafter
be exercised (to the extent that it was exercisable on the date of
termination, but in no event more than 90 days after termination). If the
Board or its committee has determined that an employee was discharged for
just cause, such employee shall have no further rights under the Plan. In
the event of the death of an employee, the option will be exercisable for
such period following death as is determined by the Board or its committee.
Certain United States Federal Income Tax Information
The following is only a brief summary of the effect of federal income
taxation upon the recipient and NBTY under the Plan based upon the Internal
Revenue Code. This summary does not purport to be complete and does not
discuss the income tax laws of any municipality, state or country outside
the United States in which an optionee may reside.
If an option granted under the Plan is an ISO, the optionee will
recognize no income upon grant of the ISO and will incur no tax liability
due to the exercise unless the optionee is subject to the alternative
minimum tax. NBTY will not be allowed a deduction for federal income tax
purposes as a result of the exercise of an ISO regardless of the
applicability of the alternative minimum tax. Upon the sale or exchange of
the shares at least two years after grant of the ISO and one year after
exercise by the optionee, any gain (or loss) will be treated as long-term
capital gain (or loss). If these holding periods are not satisfied, the
optionee will recognize ordinary income equal to the difference between the
exercise price and the lower of the fair market value of the stock at the
date of the option exercise or the sale price of the stock. A different
rule for measuring ordinary income upon such premature disposition may
apply if the optionee is subject to Section 16 of the Exchange Act. NBTY
will be entitled to a deduction in the same amount as the ordinary income
recognized by the optionee. Any gain (or loss) recognized on such a
premature disposition of the shares in excess of the amount treated as
ordinary income will be characterized as capital gain (or loss).
VOTE REQUIRED AND RECOMMENDATION OF THE BOARD WITH RESPECT TO PROPOSAL TWO.
Under Delaware law, the affirmative vote of the holders of a majority
of the shares of Common Stock entitled to vote at the Meeting is required
to adopt this Proposal Two. Shares of Common Stock that are voted as an
abstention shall be treated as voting against Proposal Two and broker non-
votes shall have no effect on the outcome of the vote on Proposal Two.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" PROPOSAL
TWO.
PROPOSAL THREE
APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed PricewaterhouseCoopers L.L.P. as
independent auditors of the Company to audit its consolidated financial
statements for 1999 and has determined that it would be desirable to
request that the stockholders approve such appointment.
PricewaterhouseCoopers L.L.P. has served the Company and its
subsidiaries as independent auditors for many years. Representatives of
PricewaterhouseCoopers L.L.P. will be present at the Annual Meeting with
the opportunity to make a statement if they desire to do so and to respond
to appropriate questions from stockholders.
Vote Required for Approval
Stockholder approval is not required for the appointment of
PricewaterhouseCoopers L.L.P., since the Board of Directors has the
responsibility for selecting auditors. However, the appointment is being
submitted for approval at the Annual Meeting. No determination has been
made as to what action the Board of Directors would take if stockholders do
not approve appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE APPOINTMENT
OF PRICEWATERHOUSECOOPERS L.L.P. AS INDEPENDENT AUDITORS.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of the registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership with the SEC. Officers, directors and greater than
ten-percent stockholders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on
a review of the copes of such forms furnished to the Company, or written
representations that no Forms 5 were required, the Company believes that
during 1999, its officers, directors and greater than ten percent
beneficial owners complied with all applicable Section 16(a) filing
requirements.
EXPENSES OF SOLICITATION
All expenses of this solicitation, including the cost of preparing
and mailing this Proxy Statement, will be borne by the Company. In
addition to solicitation by use of the mails, proxies and voting
instruments may be solicited by directors, officers and employees of the
Company in person or by telephone, telegram or other means of
communication. Such directors, officers and employees will not be
additionally compensated but may be reimbursed for reasonable out-of-pocket
expenses in connection with such solicitation. Arrangements will also be
made with brokers, custodians, nominees and fiduciaries for forwarding
proxy solicitation materials to beneficial owners of shares held of record
by such custodians, nominees and fiduciaries, and the Company will
reimburse such custodians, nominees and fiduciaries for reasonable expenses
incurred in connection therewith.
PROCEDURE FOR SUBMITTING STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, stockholders may
present proper proposals for inclusion in the Company's proxy statement and
for consideration at the next annual meeting of its stockholders by
submitting their proposals to the Company in a timely manner. In order to
be so included for the next Annual Meeting, stockholder proposals must be
received by the Company no later than December 31, 2000, and must otherwise
comply with the requirements of Rule 14a-8. In addition, the Company's By-
laws establish an advance notice procedure with regard to certain matters,
including stockholder proposals not included in the Company's proxy
statement, to be brought before an annual meeting of stockholders. In
general, notice must be received by the Secretary of the Company not less
than 70 days nor more than 120 days prior to the anniversary date of the
immediately preceding annual meeting and must contain specified information
concerning the matters to be brought before such meeting and concerning the
stockholder proposing such matters. If the date of the annual meeting is
more than 30 days earlier or more than 60 days later than such anniversary
date, notice must be received not earlier than the 120th day prior to such
annual meeting and not later than the close of business on the later of the
70th day prior to such annual meeting or the 10th day following the day on
which public announcement of the date of such meeting is first made. If a
stockholder who has notified the Company of his intention to present a
proposal at an annual meeting does not appear or send a qualified
representative to present his proposal at such meeting, the Company need
not present the proposal for a vote at such meeting.
The Board of Directors does not intend to present, and does not have
any reason to believe that others will present, any item of business at the
Annual Meeting other than those specifically set forth in the notice of the
meeting. However, if other matters are presented for a vote, the proxies
will be voted as to such matters in accordance with the judgment of the
persons acting under the proxies.
BY ORDER OF THE BOARD OF DIRECTORS,
Scott Rudolph
Chairman of the Board, President and
Chief Executive Officer
March 13, 2000
APPENDIX A
INCENTIVE STOCK OPTION PLAN
1. Purpose of the Plan.
The purpose of the NBTY, Inc. Incentive Stock Option Plan
(hereinafter the "Plan") is to provide for the granting of stock options to
officers, directors, affiliates and employees of NBTY, Inc. and its
Subsidiaries in recognition of the valuable services provided, and
contemplated to be provided, by such individuals. The general purpose of
the Plan is to promote the interests of NBTY, Inc. and its stockholders and
to reward dedicated individuals of NBTY, Inc. and its Subsidiaries by
providing them additional incentives to continue and increase their efforts
with respect to, and to remain in the service of, NBTY, Inc. or its
Subsidiaries.
2. Certain Definitions.
The following terms (whether used in the singular or plural) have the
meanings indicated when used in the Plan:
(a) "Act" means the Omnibus Budget Reconciliation Act of 1993, as
amended.
(b) "Agreement" means the incentive stock option agreement specified
in Section 10.
(c) "Approved Transaction" means any transaction in which the Board
(or, if approval of the Board is not required as a matter of law, the
stockholders of NBTY, Inc.) shall approve (i) any consolidation or merger
of NBTY, Inc. in which NBTY, Inc. is not the continuing or surviving
corporation or pursuant to which shares of Common Stock would be
converted into cash, securities or other property, other than a merger of
NBTY, Inc. in which the holders of Common Stock immediately prior to the
merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, or (ii) any sale,
lease, exchange, or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of NBTY,
Inc., or (iii) the adoption of any plan or proposal for the liquidation or
dissolution of NBTY, Inc.
(d) "Award" means grants of Options under this Plan.
(e) "Board" means the Board of Directors of NBTY, Inc.
(f) "Board Change" means, during any period of two consecutive
years, individuals who at the beginning of such period constituted the
entire Board ceased for any reason to constitute a majority thereof unless
the election, or the nomination for election by NBTY, Inc.'s stockholders,
of each new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of the
period.
(g) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute or statutes thereto. Reference to
any specific Code section shall include any successor section.
(h) "Committee" means the Committee comprised of members of the
Board appointed pursuant to Section 4.
(i) "Common Stock" means the common stock par value $.008 per share,
of NBTY, Inc.
(j) "NASDAQ" means the NASDAQ National Market.
(k) "Control Purchase" means any transaction in which any person (as
such term is defined in Sections 13(d) and 14(d)(2) of the Exchange Act),
corporation or other entity (other than NBTY or any employee benefit plan
sponsored by NBTY, Inc. or any of its Subsidiaries) (i) shall purchase any
Common Stock (or securities convertible into or exchangeable for Common
Stock) for cash, securities or any other consideration pursuant to a tender
offer or exchange offer, without the prior consent of the Board, or (ii)
shall become the "beneficial owner" (as such term is defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of NBTY,
Inc. representing 20% or more of the combined voting power of the then
outstanding securities of NBTY, Inc. ordinarily (and apart from the rights
accruing under special circumstances) having the right to vote in the
election of directors (calculated as provided in Rule 13d-3(d) in the case
of rights to acquire NBTY Inc.'s securities).
(l) "Effective Date" means the date the Plan becomes effective
pursuant to Section 14.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor statute or statutes thereto.
Reference to any specific Exchange Act section shall include any successor
section.
(n) "Fair Market Value" of a share of Common Stock means the average
of the high and low sales prices of a share of Common Stock on NASDAQ on
the date in question except as otherwise provided in Section 6.1.
(o) "Holder" means an employee of NBTY, Inc. or any of its
Subsidiaries who has received an option under this Plan.
(p) "ISO" means an incentive stock option within the meaning of
Section 422(b) of the Code.
(q) "Option" means any ISO granted pursuant to this Plan.
(r) "Plan" has the meaning ascribed thereto in Section 1.
(s) "Subsidiary" of a person means any present or future subsidiary
of such person as such term is defined in Section 425 of the Code and any
present or future trade or business, whether or not incorporated,
controlled by or under common control with such person. An entity shall be
deemed a Subsidiary of a person only for such periods as the requisite
ownership or control relationship is maintained.
(t) "NBTY" means NBTY, Inc., a Delaware corporation, and any
successor hereto.
(u) "Total Disability" means a permanent and total disability as
defined in Section 22(e)(3) of the Code.
(v) "Individual" means an officer, director, affiliate or employee
of NBTY, Inc. or any of its subsidiaries.
3. Stock Subject to the Plan.
3.1 Number of Shares. Subject to the provisions of Section 12 and
this Section 3, the maximum number of shares of Common Stock in respect of
which Awards may be granted under the Plan is 4,000,000 shares. If and to
the extent that any Option shall expire, terminate or be canceled for any
reason without having been exercised (or without having been considered to
have been exercised as provided in Section 6, the shares of Common Stock
subject to such expired, terminated or canceled portion of the Option shall
again become available for purposes of the Plan.
3.2 Character of Shares. Shares of Common Stock deliverable under
the terms of the Plan may be, in whole or in part, authorized and unissued
shares of Common Stock or issued shares of Common Stock held in NBTY's
treasury, or both.
3.3 Reservation of Shares. NBTY shall at all times reserve a number
of shares of Common Stock (authorized and unissued Common Stock, issued
Common Stock held in NBTY's treasury, or both) equal to the maximum number
of shares that may be subject to outstanding options and future options
under the Plan.
4. Administration.
4.1 Powers. The Plan shall be administered by the Board or a
committee of the Board. Subject to the express provisions of the Plan, the
Board or such committee shall have plenary authority, in its discretion, to
grant Options under the Plan and to determine the terms and conditions
(which need not be identical) of all Options so granted, including without
limitation, (a) the individuals to whom, and the time or times at which
Options shall be granted or awarded, (b) the number of shares to be subject
to each Option, (c) when an Option can be exercised and whether in whole or
in installments, and (d) the form, terms and provisions of any Agreement
(which terms may be amended, subject to Section 13.2).
4.2 Factors to Consider. In making determinations hereunder, the
Board may take into account the nature of the services rendered by the
respective individuals, their dedication and past contributions to NBTY and
its Subsidiaries, their present and potential contributions to the success
of NBTY and its Subsidiaries and such other factors as the Board in its
discretion shall deem relevant.
4.3 Interpretation. Subject to express provisions of the Plan, the
Board shall have plenary authority to interpret the Plan, to prescribe,
amend and rescind the rules and regulations relating to it and to make all
other determinations deemed necessary or advisable for the administration
of the Plan. The determinations of the Board on the matters referred to in
this Section 4 shall be conclusive.
4.4 Delegation to Committee. Notwithstanding anything to the
contrary contained herein, the Board may at any time, or from time to time,
appoint a Committee and delegate to such Committee the authority of the
Board to administer the Plan, including to the extent provided by the
Board, the power to further delegate such authority. Upon such appointment
and delegation, any such Committee shall have all the powers, privileges
and duties of the Board in the administration of the Plan to the extent
provided in such delegation, except for the power to appoint members of the
Committee and to terminate, modify or amend the Plan. The Board may from
time to time appoint members of any such Committee in substitution for or
in addition to members previously appointed, may fill vacancies in such
Committee and may discharge such Committee.
Any such Committee shall hold its meetings at such times and places
as it shall deem advisable. A majority of members shall constitute a
quorum and all determinations shall be made by a majority of such quorum.
Any determination reduced to writing and signed by all of the members shall
be fully as effective as if it had been made by a majority vote at a
meeting duly called and held.
5. Eligibility.
5.1 General. Options may be granted to (a) employees, officers,
directors and affiliates of NBTY or any of its Subsidiaries and (b)
prospective employees of NBTY or any of its Subsidiaries. The exercise of
Options granted to a prospective employee shall be conditioned upon such
person becoming an employee of NBTY or any of its Subsidiaries. For
purposes of the Plan, the term "prospective employee" shall mean any person
who holds an outstanding offer of employment on specific terms from NBTY or
any of its Subsidiaries. Options may be granted to employees who hold or
have held Options under this Plan or any similar or other Options under any
plan of NBTY or its Subsidiaries.
5.2 Special ISO Rule. No ISO shall be granted to an individual who,
at the time the ISO is granted, owns (or is considered as owning within the
meaning of Section 424 of the Code) stock possessing more than 10% of
the total combined voting power of all classes of stock of NBTY or any
Subsidiary, unless at the time such ISO is granted, the option price is at
least 110% of the Fair Market Value of the Common Stock subject to the ISO
and the ISO by its terms is not exercisable after the expiration of five
years from the date it is granted.
6. Options.
6.1 Option Prices. Subject to Section 5.2, the purchase price of
the Common Stock under each Option shall be determined by the Board and set
forth in the applicable Agreement, but shall not be less than 100% of the
Fair Market Value of the Common Stock on the date of grant.
6.2 Term of Options. The term of each Option shall be for such
period as the Board shall determine, as set forth in the applicable
Agreement, but not more than 10 years from the date of grant (except as
provided in Section 5.2).
6.3 Exercise of Options. An Option granted under the Plan shall
become (and remain) exercisable during the term of the Option to the extent
provided in the applicable Agreement and this Plan and, unless the
Agreement otherwise provides, may be exercised to the extent exercisable,
in whole or in part, at any time and from time to time during such term;
provided, however, that subsequent to the grant of an Option, the Board, at
any time before complete termination of such Option, may accelerate the
time or times at which such Option may be exercised in whole or in part
(without reducing the term of such Option). The Agreement may contain
conditions precedent to the exercisability of Options, including without
limitation, the achievement of minimum performance criteria.
6.4 Manner of Exercise. Payment of the Option purchase price shall
be made in cash or in whole shares of Common Stock already owned by the
person exercising an Option or, partly in cash and partly in such Common
Stock; provided, however, that such payment may be made in whole or in part
in shares of Common Stock only if and to the extent permitted by the
applicable Agreement. Shares of Common Stock delivered upon exercise of an
option shall be priced at the fair market value on the day of such
delivery. An Option shall be exercised by written notice to NBTY upon such
terms and conditions as provided in the Agreement. NBTY shall effect the
transfer of the shares of Common Stock purchased under the Option as soon
as practicable, and within a reasonable time thereafter such transfer shall
be evidenced on the books of NBTY. No Holder exercising an Option shall
have any of the rights of a stockholder of NBTY with respect to shares of
Common Stock subject to an Option granted under the Plan until due exercise
and full payment has been made. No adjustment shall be made for cash
dividends or other rights for which the record date is prior to the date of
such due exercise and full payment.
7. Termination of Association.
7.1. General. If a Holder's association shall terminate prior to
the complete exercise of an Option (or deemed exercise thereof, as provided
in Section 6.3), then such Option shall thereafter be exercisable in
accordance with the provisions of the applicable Agreement (including the
provisions of any other agreement referred to in the Agreement); provided,
however, that (a) no Option may be exercised after the scheduled expiration
date of such Option; (b) if the Holder's association terminates by reason
of death or Total Disability, the Option shall remain exercisable for a
period of at least one year following such termination (but no later than
the scheduled expiration of such Option); and (c) any termination for cause
will be treated in accordance with the provisions of Section 7.2.
7.2 Termination for Cause. If a Holder's association with NBTY or
any of its Subsidiaries shall be terminated for cause by NBTY or such
Subsidiary prior to the exercise of any Option, then all Options held by
such Holder shall immediately terminate. For the purposes of this Section
7.2, cause shall have the meaning ascribed thereto in any agreement to
which the Holder is a party. In the absence of an agreement, cause shall
include but not be limited to, insubordination, dishonesty, incompetence,
moral turpitude, other misconduct of any kind and the refusal to perform
his duties and responsibilities for any reason other than illness or
incapacity; provided, however, that if such termination occurs within 12
months after an Approved Transaction, Control Purchase or Board Change,
termination for cause in the absence of an employment agreement shall mean
only a felony conviction for fraud, misappropriation or embezzlement.
7.3 Special Rule. Notwithstanding any other provision of the Plan,
the Board may provide in the applicable Agreement that the Option shall
become and/or remain exercisable at rates and times at variance with the
rules otherwise herein set forth; provided, however, that any such
Agreement provisions at variance with the exercisability rules otherwise
set forth herein shall be effective only if reflected in the terms of an
employment agreement approved or ratified by the Board.
7.4 Miscellaneous. The Board may determine whether any given leave
of absence constitutes a termination by that individual.
8. Right of Company to Terminate Association.
Nothing contained in the Plan or in any Option shall confer on any
Holder any right to continue in the employ of NBTY or any of its
Subsidiaries or interfere in any way with the right of NBTY or a Subsidiary
to terminate the association of the Holder at any time, with or without
cause; subject, however, to the provisions of any association agreement
between the Holder and NBTY or any of its Subsidiaries.
9. Non-alienation of Benefits.
Unless otherwise set forth herein, no right or benefit under the Plan
shall be subject to anticipation, alienation, sale, assignment,
hypothecation, pledge, exchange, transfer, encumbrance or charge, and any
attempt to anticipate, alienate, sell, assign, hypothecate, pledge,
exchange, transfer, encumber or charge the same shall be void, No right or
benefit hereunder shall in any manner be liable for or subject to the
debts, contracts, liabilities or torts of the person entitled to such
benefits.
10. Written Agreement.
Each grant of an Option shall be evidenced by a stock option
agreement, which shall designate the Options granted thereunder as ISO's in
such form and containing such terms and provisions not inconsistent with
the provisions of the Plan as the Board from time from time to time shall
approve; provided, however, that such Option may be evidenced by a single
agreement. The effective date of the granting of an Option shall be the
date on which the Board approves such grant. Each grantee of an Option
shall be notified promptly of such grant and a written Agreement shall be
promptly executed and delivered by NBTY and the grantee, provided that such
grant of Options shall terminate if such written Agreement is not signed by
such grantee (or his attorney) and delivered to NBTY within 90 days after
the date the Agreement is sent to such grantee for signature. Any such
written Agreement may contain (but shall not be required to contain) such
provisions as the Board deems appropriate to ensure that the penalty
provisions of Section 4999 of the Code will not apply to any stock or cash
received from NBTY or any of its Subsidiaries by the Holder or a transferee
of such Holder if the Option or any part thereof, has been transferred
pursuant to Section 20.
11. Adjustment Upon Changes in Capitalization, etc.
In the event of any stock split, dividend, distribution, combination,
reclassification or recapitalization that changes the character or amount
of the Common Stock while any portion of any Option theretofore granted
under the Plan is outstanding but unexercised, the Board shall make such
adjustments in the character and number of shares subject to such Option
and, in the Option price, as shall be applicable, equitable and appropriate
in order to make such Option immediately after any such change, as nearly
as may be practicable, equivalent to such Option immediately prior to any
such change. If any merger, consolidation or similar transaction affects
the Common Stock subject to any unexercised Option theretofore granted
under the Plan, the Board or any surviving or acquiring corporation shall
take such action as is equitable and appropriate to substitute a new Option
for such Option or to assume such Option in order to make such new or
assumed Option, as nearly as may be practicable, equivalent to the old
Option. If any such change or transaction shall occur, the number and kind
of shares for which Options may thereafter be granted under the Plan shall
be adjusted to give effect thereto.
12. Right of First Refusal.
The Agreements may contain such provisions as the Board shall
determine to the effect that if a Holder, or such other person exercising
an Option, elects to sell all or any shares of Common Stock that such
Holder or other person acquired upon the exercise of an Option awarded
under the Plan, then such Holder or other person shall not sell such shares
unless such Holder or other person shall have first offered in writing to
sell such shares to NBTY at Fair Market Value on a date specified in such
offer (which date shall be at least three business days and not more than
10 business days following the date of such offer). In any such event,
certificates representing shares issued upon exercise of Options shall bear
a restrictive legend to the effect that transferability of such shares is
subject to the restrictions contained in the Plan and the applicable
Agreement and NBTY may cause the registrar of its Common Stock to place a
stop transfer order with respect to such shares.
13. Termination and Amendment.
13.1 General. Unless the Plan shall theretofore have been
terminated as hereinafter provided, no Options may be granted under the
Plan on or after the tenth anniversary of the Effective Date. The Board
may at any time prior to the tenth anniversary of the Effective Date
terminate the Plan, and the Board may at any time modify or amend the Plan
in such respects as it shall deem advisable; provided, however, that any
such modification or amendment shall comply with all applicable laws,
applicable stock exchange listing requirements.
13.2 Modification. Except as otherwise set forth herein, no
termination, modification or amendment of the Plan may, without the consent
of the person to whom any Option shall theretofore have been granted (or a
transferee of such person if the Option, or any part thereof, has been
transferred pursuant to Section 20), adversely affect the rights of such
person with respect to such Option. No modification, extension, renewal or
other change in any Option granted under the Plan shall be made after the
grant of such Option, unless the same is consistent with the provisions of
the Plan. With the consent of the Holder (or a transferee of such Holder
if the Option, or any part thereof, has been transferred pursuant to
Section 20) and subject to the terms and conditions of the Plan (including
Section 13), the Board may amend outstanding Agreements with any Holder (or
any such transferee), including without limitation, any amendment which
would (a) accelerate the time or times at which the Option may be exercised
and/or (b) extend the scheduled expiration date of the Option. Without
limiting the generality of the foregoing, the Board may but solely with the
Holder's consent, agree to cancel any Option under the Plan held by such
Holder and issue a new Option in substitution therefor, provided that the
Option so substituted shall satisfy all of the requirements of the Plan as
of the date such new Option is granted.
14. Effectiveness of the Plan.
The Plan shall become effective upon notification by the affirmative
vote of a majority of the votes duly case thereon, either in person or by
proxy, by the holders of voting securities of NBTY entitled to vote
thereon, voting together as a single class, at a duly called and held
meeting of stockholders of NBTY.
15. Government and Other Regulations
The obligation of NBTY with respect to Options shall be subject to
all applicable laws, rules and regulations and such approvals by any
governmental agencies as may be required, including, without limitation,
the effectiveness of any registration statement required under the
Securities Act of 1933, and the rules and regulations of any securities
exchange on which the Common Stock may be listed. For so long as the
Common Stock is registered under the Exchange Act, NBTY shall use its
reasonable efforts to comply with any legal requirements (a) to maintain a
registration statement in effect under the Securities Act of 1933, as
amended, with respect to all shares of Common Stock that may be issued to
Holders under the Plan, and (b) to file in a timely manner all reports
required to be filed by it under the Exchange Act.
16. Withholding.
NBTY's obligation to deliver shares of Common Stock or pay cash in
respect of any Option under the Plan shall be subject to applicable
federal, state and local tax withholding requirements.
17. Separability.
If any of the terms or provisions of this Plan conflict with the
requirements of applicable law or applicable rules and regulations
thereunder, including the requirements of Section 162(m) of the Code, Rule
16b-3 under the Exchange Act and/or Section 422 of the Code, then such
terms or provisions shall be deemed inoperative to the extent necessary to
avoid the conflict with applicable law, or applicable rules and
regulations, without invalidating the remaining provisions hereof. If this
Plan does not contain any provisions required to be included herein under
Section 422 of the Code, such provision shall be deemed to be incorporated
herein with the same force and effect as if such provision had been set out
at length herein; provided, further, that to the extent any option which is
intended to qualify as an ISO cannot so qualify, such Option, to that
extent, shall be deemed to be a Nonqualified Stock Option for all purposes
of the Plan.
18. Non-Exclusivity of the Plan.
Neither the adoption of the Plan by the Board nor the submission of
the Plan to the stockholders of NBTY for approval shall be construed as
creating any limitations on the power of the Board to adopt such other
incentive arrangements as it may deem desirable, including, without
limitation, the granting of stock options and the awarding of stock and
cash otherwise than under the Plan, and such arrangements may be either
generally applicable or applicable only in specific. cases.
19. Exclusion from Pension and Profit-Sharing Computation.
By acceptance of an Option, each Holder shall be deemed to have
agreed that such Option is special incentive compensation that will not be
taken into account, in any manner, as salary, compensation or bonus in
determining the amount of any payment under any pension, retirement or
other employee benefit plan of NBTY or any of its Subsidiaries. In
addition, each beneficiary of a deceased Holder shall be deemed to have
agreed that such Option will not affect the amount of any life insurance
coverage, if any, provided by NBTY or any of its Subsidiaries on the life
of the Holder which is payable to such beneficiary under any life insurance
plan covering employees of NBTY or any of its Subsidiaries.
20. Beneficiaries.
Each Holder may designate any person(s) or legal entity(ies),
including his or her estate, as his or her beneficiary under the Plan.
Such designation shall be made in writing on a form filed with the
Secretary of NBTY or his or her designee and may be revoked or changes by
such Holder at any time by filing written notice of such revocation or
change with the Secretary of NBTY or his or her designee. If no person
shall be designated by a Holder as his or her beneficiary or if no person
designated as a beneficiary survives such Holder, the Holder's beneficiary
shall be his or her estate.
21. Governing Law.
The Plan shall be governed by, and construed in accordance with, the
laws of the State of New York.
NBTY, INC.
90 Orville Drive
Bohemia, New York 11716
Annual Meeting of Shareholders to be held on
April 10, 2000 at 10:00 A.M.
The undersigned hereby appoints Harvey Kamil and Michael C. Duban as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them, to represent and vote, as designated on the reverse, all shares of
Common Stock of NBTY, INC. (the "Company") held of record by the undersigned
on March 10, 2000, at the Annual Meeting of Stockholders to be held on April
10, 2000 at 10:00 AM, EST, or any adjournment thereof.
(To be Signed on Reverse Side.)
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Shareholders
NBTY, INC.
April 10, 2000
PROXY VOTING INSTRUCTIONS
TO VOTE BY MAIL
- ---------------
Please date, sign and mail your proxy card in the envelope provided as soon
as possible.
TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
- --------------------------------------------
Please call toll-free 1-800-PROXIES and follow the instructions. Have your
control number and the proxy card available when you call.
TO VOTE BY INTERNET
- -------------------
Please access the web page at "www.voteproxy.com" and follow the on-screen
instructions. Have you control number available when you access the web page.
YOUR CONTROL NUMBER IS ------> ____________________
Please Detach and Mail in the Envelope Provided
A [X] Please mark your
votes as in this
example.
DIRECTORS RECOMMEND A VOTE FOR ELECTION OF DIRECTORS AND A VOTE FOR PROPOSALS
2 AND 3.
FOR WITHHOLD
ALL NOMINEES ALL NOMINEES
1. ELECTION OF [ ] [ ] Nominees: Aram Garabedian
DIRECTORS: Bernard Owen
Alfred Sacks
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE
FOR ANY INDIVIDUAL NOMINEE, PLACE AN "X" IN THE
WITHHOLD BOX ABOVE AND STRIKE A LINE THROUGH
THE NOMINEES NAME LISTED AT RIGHT.
FOR AGAINST ABSTAIN
2. TO APPROVE THE ADOPTION OF AN [ ] [ ] [ ]
INCENTIVE STOCK OPTION PLAN
3. RATIFICATION OF INDEPENDENT [ ] [ ] [ ]
ACCOUNTANTS
PLEASE PROMPTLY DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
"NOTE" SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
MEETING OR ANY ADJOURNMENT THEREOF.
- ------------------------- --------- -------------------------- ---------
Signature Date Signature if Held Jointly Date
(NOTE: Please sign exactly as your name appears hereon. Executors,
administrators, trustees, etc. should so indicate when signing, giving full
title as such. If signer is a corporation, execute in full corporate name
by authorized officer. If more persons, all should sign.)
