SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
GENERAL NUTRITION COMPANIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 04-3056351
State of Incorporation (IRS Employer Identification Number)
300 Sixth Avenue, Pittsburgh, Pennsylvania 15222 (412) 288-4600
(Address and Telephone Number of Principal Executive Offices)
GENERAL NUTRITION COMPANIES, INC.
1998 Management and Director Stock Option Plan
and Stock Option Agreement
(Full Title of the Plan)
James M. Sander, Esquire
Vice President - Law, Chief Legal Officer & Secretary
300 Sixth Avenue
Pittsburgh, PA 15222
(412) 288-4619
(Name, Address and Telephone Number of Agent for Service)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
CALCULATION OF REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum
Each of Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered (1) Per Share Price Fee (2)
- ----------------------------------------------------------------------------------------------------------------------------------
Common Stock,
par value $.01 1,000,000 $17.50 $17,500,000 $4,865
per share
(1) Also registered hereunder are such additional number of shares of common stock, presently indeterminable, as may be
necessary to satisfy the antidilution provisions of the Plans to which this Registration Statement relates.
(2) The registration fee has been calculated on the basis of the offering price thereof under the foregoing stock option plan.
</TABLE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The Company hereby incorporates by reference the documents listed in (a)
through (c) below. In addition, all documents subsequently filed by the Company
pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of
1934 (prior to the filing of a Post-Effective Amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold) shall be deemed to be incorporated by reference in this
Registration Statement and to be a part thereof from the date of filing of such
documents.
(a) The Company's latest annual report filed pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 or the latest Prospectus contained
in the Company's Registration Statement on Form S-3 or filed pursuant to the
Rule 424(b) under the Securities Act of 1933, which contains audited financial
statements for the Company's latest fiscal year for which such statements have
been filed.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 since the end of the fiscal year covered by the
annual report, the Prospectus, or the effective Registration Statement referred
to in (a) above.
(c) The description of the Company's Common Stock which is contained in the
Registration Statement filed by the Company under the Securities Exchange Act of
1934, including any amendment or report filed for the purpose of updating such
description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), and 15(d)
of the Exchange Act subsequent to the effective date of this Registration
Statement, prior to the filing of a post-effective amendment to this
Registration Statement indicating that all securities offered hereby have been
sold or deregistering all securities then remaining unsold, shall be deemed to
be incorporated by reference herein and to be a part hereof from the date of
filing of such documents. Any statement contained herein or in any document
incorporated or deemed to be incorporated by reference herein and to be a part
hereof from the date of filing of such documents. Any statement contained herein
or in any document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed to constitute a part of this
Registration Statement, except as so modified or superseded.
Item 4. Description of Securities
Inapplicable
Item 5. Interests of Named Experts and Counsel
The consolidated financial statements incorporated in this registration
statement by reference from the Company's Annual Report on Form 10-K for the
year ended February 6, 1999 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is incorporated herein by
reference.
With respect to the unaudited interim financial information for the Twelve
Weeks Ended May 1, 1999 and April 25, 1998, which is incorporated herein by
reference, Deloitte & Touche LLP have applied limited procedures in accordance
with professional standards for a review of such information. However, as stated
in their report included in the Company's Quarterly Report on Form 10-Q for the
quarter ended May 1, 1999 and incorporated by reference herein, they did not
audit and they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their reports on such information should
be restricted in light of the limited nature of the review procedure applied.
Deloitte & Touche LLP are not subject to the liability provisions of Section 11
of the Securities Act of 1933 for their reports on the unaudited interim
financial information because those reports are not "reports" or a "part" of the
registration statement prepared or certified by an accountant within the meaning
of sections 7 and 11 of the Act.
The validity of the authorized issuance of the Common Stock offered hereby
will be passed upon for the Company by James M. Sander, its Vice President-Law,
Chief Legal Officer and Secretary.
Item 6. Indemnification of Directors and Officers
Article TENTH of the Certificate of Incorporation of the Company provides
as follows:
No director shall be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director
notwithstanding any provisions of law imposing such liability; provided however,
that, to the extent provided by applicable law, this provision shall not
eliminate the liability of a director (i) for any breach of the director's duty
of loyalty to the corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the General Corporation Law of Delaware, or
(iv) of any transaction from which the director derived an improper personal
benefit.
Section 145 of the General Corporation Law of the State of Delaware permits
the indemnification and insurance of the corporation's directors and officers
under certain circumstances.
Article 10 of the By-laws of the Company provides as follows:
ARTICLE 10
INDEMNIFICATION
Section 10.1 Third Party Actions. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 10.2 Derivative Actions. The Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Corporation unless and only to
the extent that the Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication of
liability, but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
Section 10.3 Expenses. To the extent that a director, officer, employee or
agent of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Sections 10.1 and 10.2,
or in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith.
Section 10.4 Authorization. Any indemnification under Sections 10.1 and
10.2 (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in Sections 10.1 and 10.2.
Such determination shall be made (a) by the Board of Directors by a majority
vote of a quorum consisting of directors who were not parties to such action,
suit or proceeding, or (b) if such a quorum is not obtainable, or, even if
obtainable, a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (c) by the stockholders.
Section 10.5 Advance Payment of Expenses. Expenses incurred by an officer
or director in defending a civil or criminal action, suit or proceeding may be
paid by the Corporation in advance of the final disposition of such action, suit
or proceeding as authorized by the Board of Directors in the specific case upon
receipt of an undertaking by or on behalf of such officer or director to repay
such amount unless it shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized in this Article 10. Such expenses
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
Section 10.6 Non-Exclusiveness. The indemnification provided by this
Article 10 shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Section 10.7 Insurance. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article 10.
Section 10.8 Constituent Corporations. The Corporation shall have power to
indemnify any person who is or was a director, officer, employee or agent of a
constituent corporation absorbed in a consolidation or merger with this
Corporation or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, in the same manner as hereinabove
provided for any person who is or was a director, officer, employee or agent of
the Corporation, or is or was servicing at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise.
Section 10.9 Additional Indemnification. In addition to the foregoing
provisions of this Article 10, the Corporation shall have the power, to the full
extent provided by law, to indemnify any person for any act or omission of such
person against all loss, cost, damage and expense (including attorneys' fees) if
such person is determined (in the manner prescribed in Section 10.4 hereof) to
have acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interest of the Corporation.
Item 7. Exemption from Registration Claimed
Inapplicable
Item 8. Exhibits
Number Description
4 General Nutrition Companies, Inc. 1998 Management and Director
Stock Option Plan and Form of Stock Option Agreement.
5 Opinion of James M. Sander, Esquire, Vice President-Law, Chief
Legal Officer and Secretary, as to legality of shares being registered and
consent
15 Letter from Deloitte & Touche LLP regarding unaudited interim
financial information
23 Consent of Deloitte & Touche LLP
Item 9. Undertakings
The undersigned Registrant hereby undertakes the following:
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
registration statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that
is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes, that, insofar as
indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person for the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Pittsburgh, Commonwealth of Pennsylvania, on July 14,
1999.
GENERAL NUTRITION COMPANIES, INC.
By:/s/William E. Watts
William E. Watts
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Signature Title Date
/s/Jerry D. Horn Chairman of the Board and Director July 14, 1999
Jerry D. Horn
/s/William E. Watts President, Chief Executive Officer and Director July 14, 1999
William E. Watts
/s/Edwin J. Kozlowski Executive Vice President, Chief Financial July 14, 1999
Edwin J. Kozlowski Officer, and Treasurer (Principal Financial and
Accounting Officer)
/s/Thomas R. Shepherd Director July 14, 1999
Thomas R. Shepherd
/s/W. Harrison Wellford Director July 14, 1999
W. Harrison Wellford
/s/Ronald L. Rossetti Director July 14, 1999
Ronald L. Rossetti
/s/David Lucas Director July 14, 1999
David Lucas
Director
Edward G. Beimfohr
</TABLE>
EXHIBIT INDEX
Number Description
4 General Nutrition Companies, Inc. 1998 Management
and Director Stock Option Plan and Form of Stock Option
Agreement.
5 Opinion of James M. Sander, Esquire, Vice President-Law,
Chief Legal Officer and Secretary, as to legality of shares
being registered and consent.
15 Letter from Deloitte & Touche LLP Regarding Unaudited
Interim Financial Information
23 Consents of Experts - included in Registration Statement
under heading "Independent Auditors' Consent."
EXHIBIT 4
1998 MANAGEMENT AND DIRECTOR
STOCK OPTION PLAN
GENERAL NUTRITION COMPANIES, INC.
1. Purpose of the Plan.
This stock option plan (the "Plan") is intended to encourage ownership of
the stock of General Nutrition Companies, Inc. (the "Company") by officers and
key employees of the Company and its subsidiaries, and directors of the Company,
to induce qualified personnel to enter and remain in the employ of the Company
or its subsidiaries and otherwise to provide additional incentive for optionees
to promote the success of its business.
2. Stock Subject to the Plan.
(a) The total number of shares of the authorized but unissued or Treasury
shares of the common stock, $.01 par value, of the Company ("Common Stock")
for which options may be granted under the Plan shall not exceed Two
Million Five Hundred Thousand (2,500,000) shares, subject to adjustment as
provided in Section 12 hereof.
(b) Of the total number of shares for which options may be granted under
the Plan, 1,000,000 shares are initially available for grant hereunder and
1,500,000 will become available for grant hereunder if the market price per
share of the Company's Common Stock reaches the following levels on or
prior to January 23, 2004:
Market Price Additional Share Becoming
Per Share Available for Grant
$41.55 500,000
$49.86 500,000
$59.83 500,000
TOTAL: 1,500,000
(c) If an option granted or assumed hereunder shall expire or terminate for
any reason without having been exercised in full, the unpurchased shares
subject thereto shall again be available for subsequent option grants under
the Plan.
(d) Stock issuable upon exercise of an option granted under the Plan may be
subject to such restrictions on transfer, repurchase rights or other
restrictions as shall be determined by the Board of Directors.
3. Administration of the Plan.
The Plan shall be administered by the Board of Directors or by a committee
(the "Committee") consisting of two or more members of the Company's Board of
Directors, to whom the Board may (except as provided in Section 5 hereof)
delegate its authority hereunder. The decision of the Board or of the Committee
as to all questions of interpretation and application of the Plan shall be
final, binding and conclusive on all persons. The Board or the Committee shall
have the authority to adopt, amend and rescind such rules and regulations as, in
its opinion, may be advisable in the administration of the Plan. The Board or
the Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any option agreement granted hereunder in the
manner and to the extent it shall deem expedient to carry the Plan into effect
and shall be the sole and final judge of such expediency. No Board or Committee
member shall be liable for any action or determination made in good faith.
If any such Committee is appointed, the Board may from time to time appoint
a member or members of the Committee in substitution for or in addition to the
member or members then in office and may fill vacancies on the Committee however
caused. The Committee shall choose one of its members as Chairman and shall hold
meetings at such times and places as it shall deem advisable. A majority of the
members of the Committee shall constitute a quorum and any action may be taken
by a majority of those present and voting at any meeting. Any action may also be
taken without the necessity of a meeting by a written instrument signed by a
majority of the Committee.
4. Type of Options.
Options granted pursuant to the Plan shall be authorized by action of the
Board or the Committee and may be designated in the sole discretion of the Board
or the Committee as either incentive stock options meeting the requirements of
Section 422 of the Code or non-qualified options which are not intended to meet
the requirements of Section 422 of the Code. Options designated as incentive
stock options that fail to continue to meet the requirements of Section 422 of
the Code shall be redesignated as non-qualified options automatically without
further action by the Board or the Committee on the date of such failure to
continue to meet the requirements of Section 422 of the Code.
5. Eligibility.
Options designated as incentive stock options may be granted only to
officers and key employees of the Company or of any subsidiary corporation
(herein called "subsidiary" or "subsidiaries"), as defined in Section 424 of the
Code and the Treasury Regulations promulgated thereunder (the "Regulations").
Options designated as non-qualified options may be granted to directors of the
Company and officers and key employees of the Company or of any of its
subsidiaries.
Option grants to directors who are not otherwise employees of the Company
or a subsidiary shall be made by the Board of Directors.
In determining the eligibility of an individual to be granted an option, as
well as in determining the number of shares to be optioned to any individual,
the Committee shall take into account the position and responsibilities of the
individual being considered, the nature and value to the Company or its
subsidiaries of his or her service and accomplishments, his or her present and
potential contribution to the success of the Company or its subsidiaries, and
such other factors as the Committee may deem relevant.
No option designated as an incentive stock option shall be granted to any
optionee of the Company or any subsidiary if such optionee owns, immediately
prior to the grant of an option, stock representing more than 10% of the voting
power or more than 10% of the value of all classes of stock of the Company or a
parent or a subsidiary, unless the purchase price for the stock under such
option shall be at least 110% of its fair market value at the time such option
is granted and the option, by its terms, shall not be exercisable more than five
years from the date it is granted. In determining the stock ownership under this
paragraph, the provisions of Section 424(d) of the Code shall be controlling. In
determining the fair market value under this paragraph, the provisions of
Section 7 hereof shall apply. The maximum number of shares of Common Stock with
respect to which an option or options may be granted to any optionee in any one
taxable year of the Company shall not exceed 150,000 shares of Common Stock,
taking into account shares which were the subject of options granted during such
taxable year and subsequently terminated or repriced.
6. Option Grants; Option Agreement.
Of the 1,000,000 shares initially available for the grant of options
hereunder, 500,000 shall be available for grant at exercise prices determined by
the Board or the Committee, which prices shall not be less than the fair market
value of the Company's Common Stock at the time of grant. Such options shall
vest on a daily basis over the four years commencing on the date of grant.
The remaining 500,000 shares initially available for grant hereunder shall
be granted at exercise prices determined by the Board or the Committee, which
prices shall not be less than the fair market value of the Company's Common
Stock at the time of grant. Such options shall vest at the rate of 25% per year
over the four year period commencing on the date of grant, provided that the
market price per share of the Company's Common Stock achieves specified levels
of appreciation during such four year period. Such appreciation must equal or
exceed 20% in each year commencing with the date of grant of each option.
Notwithstanding any such appreciation, except as set forth in the following
sentence, no more than 25% of the shares available for issuance under such
option shall vest in any one year. If in a given year the market price per share
of the Company's Common Stock fails to achieve the specified level, the shares
which fail to vest in that year may vest in a subsequent year within the six
year period commencing on the date of grant.
Options with respect to the additional 1,500,000 shares which may become
available for grant hereunder pursuant to Section 2(b) hereof shall be granted
at exercise prices equal to the price per share which was required in order to
make such shares available for grant under such Section 2(b). Options for the
purchase of 50% of the shares which become available for amount for grant
pursuant to Section 2(b) hereof shall vest on a daily basis over the four year
period commencing on the date of grant. Options for the purchase of the
remaining 50% of such shares shall vest at the rate of 25% per year over the
four year period commencing on the date of grant if the market price per share
of the Company's Common Stock appreciates at the rate of 20% or more in each
year of such four year period. In the event that the required level of stock
appreciation is not met in a given year, the shares which fail to vest in that
year may vest in a subsequent year if the level of stock appreciation which was
not met is achieved in a subsequent year within the six year period commencing
on the date of grant.
Notwithstanding the foregoing, if an option whose vesting is dependent upon
the achievement of specified levels of stock price appreciation has not been
fully vested by the close of the six year period commencing on the date of
grant, such option shall be exercisable for a 30-day period commencing with the
close of such six year period and thereafter shall terminate to the extent not
exercised.
Each option shall be evidenced by an option agreement (the "Agreement")
duly executed on behalf of the Company and by the optionee to whom such option
is granted, which Agreement shall comply with and be subject to the terms and
conditions of the Plan. The Agreement may contain such other terms, provisions
and conditions which are not inconsistent with the Plan as may be determined by
the Committee, provided that options designated as incentive stock options shall
meet all of the conditions for incentive stock options as defined in Section 422
of the Code. No option shall be granted within the meaning of the Plan and no
purported grant of any option shall be effective until the Agreement shall have
been duly executed on behalf of the Company and the optionee. More than one
option may be granted to an individual.
7. Option Price.
The option price or prices of shares of the Company's Common Stock for
options designated as non-qualified stock options shall be as determined by the
Board or the Committee, but, except as provided in Section 6 above, in no event
less than the fair market value of such Common Stock at the time the option is
granted. The option price or prices of shares of the Company's Common Stock for
incentive stock options shall be the fair market value of such Common Stock at
the time the option is granted as determined by the Board or the Committee in
accordance with the Regulations promulgated under Section 422 of the Code.
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 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.
8. Manner of Payment; Manner of Exercise.
(a) Options granted under the Plan may provide for the payment of the
exercise price 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, (ii)
shares of Common Stock of the Company owned by the optionee having a fair
market value equal in amount to the exercise price. Delivery of shares of
Common Stock of the Company owned by such optionee may be made only if such
payment does not result in a charge to earnings for financial accounting
purposes as determined by the Board or the Committee. The fair market value
of any shares of the Company's Common Stock which may be delivered upon
exercise of an option shall be determined by the Board or the Committee in
accordance with Section 7 hereof.
(b) 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 (a) 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.
9. Exercise of Options.
Each option granted under the Plan shall, subject to Section 10(b) and
Section 12 hereof, be exercisable at such time or times and during such period
as shall be set forth in the Agreement; provided, however, that no option
granted under the Plan shall have a term in excess of ten (10) years from the
date of grant.
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.
10. Term of Options; Exercisability.
(a) Term.
(1) Each option shall expire not more than ten (10) years from the
date of the granting thereof, but shall be subject to earlier
termination as herein provided.
(2) Except as otherwise provided in this Section 10, an option granted
to any employee optionee who ceases to be an employee of the Company
or one of its subsidiaries shall terminate (i) on the later of the
last day of the third month after the date such optionee ceases to be
an employee of the Company or one of its subsidiaries or the third
business day after the Plan is approved by the Stockholders under
Section 19 hereof or (ii) on the date on which the option expires by
its terms, whichever occurs first.
(3) If such termination of employment is as a result of termination
for cause such option will terminate on the date the optionee ceases
to be an employee of the Company or one of its subsidiaries.
(4) If such termination of employment is because the optionee has
become permanently disabled (within the meaning of Section 22(e)(3) of
the Code), such option shall terminate on the last day of the twelfth
month from the date such optionee ceases to be an employee, or on the
date on which the option expires by its terms, whichever occurs first.
(5) An option granted to a director shall terminate on the last day of
the third month after such director ceases to serve as a director.
(6) In the event of the death of any optionee (whether employee or
director), any option granted to such optionee shall terminate on the
last day of the twelfth month from the date of death, or on the date
on which the option expires by its terms, whichever occurs first.
(b) Exercisability.
An option granted to a director or an employee optionee who ceases to be a
director or an employee of the Company or one of its subsidiaries shall be
exercisable only to the extent that the right to purchase shares under such
option has accrued and is in effect on the date such optionee ceases to be a
director or an employee of the Company or one of its subsidiaries, provided
however that an option granted to a director who does not stand for reelection
to the Board of Directors upon the expiration of such director's term of office
shall be exercisable as to the full amount of the shares covered by such option,
notwithstanding the provisions of such option concerning vesting.
11. Options Not Transferrable.
The right of any optionee to exercise any option granted to him or her
shall not be assignable or transferrable by such optionee otherwise than by will
or the laws of descent and distribution, and any such option shall be
exercisable during the lifetime of such optionee only by him or her. Any option
granted under the Plan shall be null and void and without effect upon the
bankruptcy of the optionee to whom the option is granted, or upon any attempted
assignment or transfer, except as herein 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 such option. Notwithstanding the
foregoing, any option granted under the Plan (other than an incentive stock
option) may provide (if the Board or the Committee in its sole discretion
decides to include such a provision), that the optionee shall be entitled to
make a transfer of all or any part of such option to members of his immediate
family or a trust for the benefit of such persons, following notice to the
Secretary of the Company and approval by the Board or the Committee in its sole
discretion, provided that (in the case of options granted to persons subject to
Section 16 of the Securities Exchange Act of 1934 at the time of grant), any
such provision shall by its terms be inoperative and no such transfer shall be
permitted except when transfers to members of the optionee's immediate family or
a trust for the benefit of such persons are permissible under the conditions to
the availability of the exemption afforded by Regulation 16b-3 promulgated under
the Securities Exchange Act of 1934.
12. Recapitalizations, Reorganizations and the Like.
(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 options may be granted under the Plan and 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 or the Committee 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 or the Committee of the Company, and in
the case of shares of the Common Stock of the Company, in accordance with the
provisions of Section 7 hereof. The Board or the Committee shall also have the
power and right to accelerate the exercisability of any options, notwithstanding
any limitations in this Plan or in the Agreement upon such a sale, conveyance or
Change in Control. Upon such acceleration, any options or portion thereof
originally designated as incentive stock options that no longer qualify as
incentive stock options under Section 422 of the Code as a result of such
acceleration shall be redesigned as non-qualified stock options. 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. Upon
the occurrence of a Change in Control, all options under the plan outstanding on
the date on which the Change in Control occurs will immediately become
exercisable in full.
(c) Upon dissolution or liquidation of the Company, all options granted
under this Plan shall terminate, but each optionee (if at such time in the
employ of or a director of the Company of any of its subsidiaries) shall have
the right, immediately prior to such dissolution or liquidation, to exercise his
or her option to the extent then exercisable.
(d) If by reason of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization, or liquidation, the Board or the
Committee 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,
notwithstanding any other provision of the Plan, the 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, and any such option shall not reduce the
number of shares otherwise available for issuance under the Plan.
(e) 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.
13. No Special Employment Rights.
Nothing contained in the Plan or in any option granted under the Plan shall
confer upon any option holder any right with respect to the continuation of his
or her employment by the Company (or any subsidiary) or interfere in any way
with the right of the Company (or any subsidiary), subject to the terms of any
separate employment agreement to the contrary, at any time to terminate such
employment or to increase or decrease the compensation of the option holder from
the rate in existence at the time of the grant of an option. Whether an
authorized leave of absence, or absence in military or government service, shall
constitute termination of employment shall be determined by the Board or the
Committee at the time.
14. Withholding.
The Company's obligation to deliver shares upon the exercise of any
non-qualified option granted under the Plan shall be subject to the option
holder's satisfaction of all applicable Federal, state and local income, excise,
employment and other tax withholding requirements. The Company and employee may
agree to withhold shares of Common Stock purchased upon exercise of an option to
satisfy the above-mentioned withholding requirements.
15. Restrictions on Issue of Shares.
(a) Notwithstanding the provisions of Section 8, 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
(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.
16. Purchase for Investment; Rights of Holder on Subsequent Registration.
Unless the shares to be issued upon exercise of an option granted under the
Plan 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.
17. Loans.
The Company may not make loans to optionees to permit them to exercise
options.
18. 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 and in accordance with the
purposes of this Plan.
19. Approval of Stockholders.
The Plan shall be subject to approval by the vote of stockholders holding
at least a majority of the voting stock of the Company present, or represented,
and entitled to vote at a duly held stockholders' meeting, or by written consent
of a majority of all the stockholders, within twelve (12) months after the
adoption of the Plan by the Board of Directors and shall take effect as of the
date of adoption by the Board upon such approval. The Board or the Committee may
grant options under the Plan prior to such approval, but any such option shall
become effective as of the date of grant only upon such approval, and,
accordingly, no such option may be exercisable prior to such approval.
20. Termination and Amendment of Plan.
Unless sooner terminated as herein provided, the Plan shall terminate ten
(10) years from the date upon which the Plan was duly adopted by the Board of
Directors of the Company. The Board of Directors may at any time terminate the
Plan or make such modification or amendment thereof as it deems advisable;
provided, however, that except as provided in Section 20, the Board of Directors
may not, without the approval of the stockholders of the Company obtained in the
manner stated in Section 19, increase the maximum number of shares for which
options may be granted or change the designation of the class of persons
eligible to receive options under the Plan or change the provisions of Section 6
regarding criteria for vesting of options. The Board or the Committee may grant
options to persons subject to Section 16(b) of the Securities and Exchange Act
of 1934 after an amendment to the Plan by the Board of Directors requiring
stockholder approval under Section 20, but any such option shall become
effective as of the date of grant only upon such approval and accordingly, no
such option may be exercisable prior to such approval. Termination or any
modification or amendment of the Plan shall not, without the consent of an
optionee, affect his or her rights under an option theretofore granted to him or
her.
21. Reservation of Stock.
The Company shall at all times during the term of the Plan reserve and keep
available such number of shares of stock as will be sufficient to satisfy the
requirements of the Plan and shall pay all fees and expenses necessarily
incurred by the Company in connection therewith.
22. Limitation of Rights in the Option Shares.
An optionee shall not be deemed for any purpose to be a stockholder of the
Company with respect to any of the options except to the extent that the option
shall have been exercised with respect thereto and, in addition, a certificate
shall have been issued theretofore and delivered to the optionee.
23. 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.
EXHIBIT 5
July 14, 1999
General Nutrition Companies, Inc.
300 Sixth Avenue
Pittsburgh, PA 15222
Gentlemen:
I am Vice President - Law, Chief Legal Officer and Secretary of General
Nutrition Companies, Inc. (the "Company") and as such counsel I am familiar with
the corporate proceedings taken in connection with the Company's 1998 Management
and Director Stock Option Plan.
As such counsel, I have examined the corporate records of the Company,
including its Restated Certificate of Incorporation, By-Laws, minutes of
meetings of its Board of Directors and Stockholders and such other documents as
I have deemed necessary as a basis for the opinion herein expressed.
Based upon the foregoing, and having regard for such legal considerations
as I deem relevant, I am of the opinion that:
1. The Company is duly organized and validity existing under the laws of
the State of Delaware.
2. The Company has authorized the issuance of 200,000,000 shares of Common
Stock with $.01 par value per share (the "Common Stock").
3. The outstanding capital stock of the Company has been duly authorized,
constitutes validly issued fully-paid and non-assessable shares of capital
stock of the Company and no personal liability attaches to any of the
shares.
4. The shares of Common Stock issuable upon the exercise of options duly
granted pursuant to the 1998 Management and Director Stock Option Plan,
when issued in accordance with the terms thereof, will be validly issued,
fully-paid, and non-assessable shares of capital stock of the Company to
which no personal liability will attach.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement on Form S-8 and to the reference to me in the caption
"Interest of named Experts and Counsel" in the Registration Statement.
Sincerely,
/s/ James M. Sander
James M. Sander
EXHIBIT 15
July 14, 1999
General Nutrition Companies, Inc.
300 Sixth Avenue
Pittsburgh, Pennsylvania 15222
Dear Sirs:
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of General Nutrition Companies, Inc. and subsidiaries for the
periods ended May 1, 1999 and April 25, 1998 as indicated in our report dated
May 17, 1999; because we did not perform an audit, we expressed no opinion on
that information.
We are aware that our report referred to above, which was included in your
Quarterly Report on Form 10-Q for the quarter ended May 1, 1999 is incorporated
by reference in this Registration Statement.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
Yours truly,
Deloitte & Touche LLP
Pittsburgh, Pennsylvania
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
General Nutrition Companies, Inc. on Form S-8 of our report dated March 3, 1999
(April 22, 1999 as to Note 19 to the consolidated financial statements),
appearing in the Annual Report on Form 10-K of General Nutrition Companies, Inc.
for the year ended February 6, 1999 and to the reference to us under the heading
"Interests of Named Experts and Counsel" in this Registration Statement.
Deloitte & Touche LLP
Pittsburgh, Pennsylvania
July 14, 1999
