-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SM3CB9KlDWp0LUY7wlfgQTg/cCzffLfTCNrp30Mkjm2J4S1dJIyr4EIo2kTu2l6R //lueJuKNg4mdppXcIQ/hA== 0000950128-97-000482.txt : 19970211 0000950128-97-000482.hdr.sgml : 19970211 ACCESSION NUMBER: 0000950128-97-000482 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19970207 EFFECTIVENESS DATE: 19970207 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL NUTRITION COMPANIES INC CENTRAL INDEX KEY: 0000880120 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-FOOD STORES [5400] IRS NUMBER: 043056351 STATE OF INCORPORATION: DE FISCAL YEAR END: 0202 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-21397 FILM NUMBER: 97521066 BUSINESS ADDRESS: STREET 1: 921 PENN AVE CITY: PITTSBURGH STATE: PA ZIP: 15222 BUSINESS PHONE: 4122884600 MAIL ADDRESS: STREET 1: 921 PENN AVENUE CITY: PITTSBURGH STATE: PA ZIP: 15222 S-8 1 GENERAL NUTRITION COMPANIES, INC. 1 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 issuer as specified in its charter) Delaware 04-3056351 -------- ---------- State of Incorporation (IRS Employer Identification Number) 921 Penn Avenue, Pittsburgh, Pennsylvania 15222 (412) 288-4600 -------------------------------------------------------------- (Address and telephone number of principal executive offices) GENERAL NUTRITION COMPANIES, INC. 1996 Management and Director Stock Option Plan 1996 Management and Director Stock Purchase Plan Stock Option Agreement ---------------------- (Full Titles of the Plans) James M. Sander, Esquire Vice President - Law, Chief Legal Officer & Secretary 921 Penn Avenue Pittsburgh, PA 15222 (412) 288-4619 -------------- (Name, Address and telephone number of agent for service) -------------- CALCULATION OF REGISTRATION FEE
Proposed Proposed Title of Maximum Maximum Securities Amount Offering Aggregate Amount of to be to be Price Offering Registration Registered Registered (1) Per Share Price Fee (2) - ---------- -------------- ---------- ------------- ------- Common Stock, 2,225,000 15.50 $ 34,487,500 $10,451 par value $.01 625,000 18.60 11,625,000 3,523 per share 50,000 16.875 843,750 256 2,100,000 17.75 37,275,000 11,295 535,028 12.48 6,677,450 2,024 464,972 17.75 8,253,253 2,501 125,000 16.875 2,109,375 639 ---------- ------------ --------- 6,125,000 $101,271,328 $30,689
(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 and option agreements to which this Registration Statement relates. (2) The registration fee has been calculated with respect to 2,564,972 of the shares registered on the basis of the average of the high and low sale price ($17.75) on the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), on February 3, 1997; and with respect to the remaining 3,560,028 shares on the basis of the offering price thereof under the foregoing employee benefit plans and stock option. 2 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. 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 3, 1996 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report, which is incorporated herein by reference and has been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. 2 3 With respect to the unaudited interim financial information for the Twelve Weeks Ended April 27, 1996 and April 29, 1995, Twelve Weeks Ended July 20, 1996 and July 22, 1995, and the Twelve Weeks Ended October 12, 1996 and October 14, 1995, which are 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 reports included in the Company's Quarterly Reports on Form 10-Q for the quarters ended April 27, 1996, July 20, 1996 and October 12, 1996 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 authorization 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. 3 4 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. 4 5 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 5 6 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 he 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 ------ ----------- 4A General Nutrition Companies, Inc. 1996 Management and Director Stock Purchase Plan 4B General Nutrition Companies, Inc. 1996 Management and Director Stock Option Plan 4C Stock Option Agreement 6 7 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. Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. 7 8 (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 labilities (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. 8 9 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, State of Pennsylvania, on February 7, 1997. 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.
Signature Title Date - --------- ----- ---- /s/ JERRY D. HORN Chairman of the Board and Director February 7, 1997 - -------------------------- Jerry D. Horn /s/ WILLIAM E. WATTS President, Chief Executive Officer and Director February 7, 1997 - -------------------------- William E. Watts /s/ EDWIN J. KOZLOWSKI Executive Vice President, Chief Financial February 7, 1997 - -------------------------- Officer, and Treasurer (Principal Financial and Edwin J. Kozlowski Accounting Officer) /s/ THOMAS R. SHEPHERD Director February 7, 1997 - -------------------------- Thomas R. Shepherd /s/ W. HARRISON WELLFORD Director February 7, 1997 - -------------------------- W. Harrison Wellford /s/ RONALD L. ROSSETTI Director February 7, 1997 - -------------------------- Ronald L. Rossetti /s/ DAVID LUCAS Director February 7, 1997 - -------------------------- David Lucas
9 10 EXHIBIT INDEX Sequential Page Number Description Number ------ ----------- ------ 4A General Nutrition Companies, Inc. 1996 Management and Director Stock Purchase Plan. 4B General Nutrition Companies, Inc. 1996 Management and Director Stock Option Plan. 4C 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." EX-4.A 2 GENERAL NUTRITION COMPANIES, INC. 1 Exhibit 4.A GENERAL NUTRITION COMPANIES, INC. 1996 MANAGEMENT AND DIRECTOR STOCK PURCHASE PLAN 1. Purpose The purposes of the plan are to encourage senior management of General Nutrition Companies, Inc. (the "Company") and its affiliates and directors of the Company to own shares of the Company's stock and thereby to align their interests more closely with the interests of the other shareholders of the Company, to encourage the highest level of senior management and director performance, and to provide a financial incentive that will help attract and retain the most qualified senior management and directors. 2. Definitions The following words or terms, when used herein, shall have the following respective meanings: (a) "Account" means the Management and Director Stock Purchase Account established for a Participant under Section 7 hereunder. (b) "Base Market Price" shall mean the average stock price used for establishing the quarterly Purchase Price and determined by calculating the average of the high and low sales prices of the common stock for the first five trading days of each of the three months of the previous calendar quarter. If the shares of Common Stock are listed on any national securities exchange, or traded on the National Association of Securities Dealers Automated Quotation System ("NASDAQ") National Market System, the Base Market Price shall be calculated using the largest such exchange, or if not traded on an exchange, the NASDAQ National Market System. If the 1 2 shares of Common Stock are not then listed on any such exchange or the NASDAQ National Market System, the Base Market Price per share of Common Stock shall be calculated using the mean between the closing "Bid" and the closing "Asked" prices, if any, as reported in the National Daily Quotation Service for such day. If the Base Market Price cannot be determined under the preceding sentences, it shall be determined in good faith by the Board of Directors. (c) "Basic Compensation" shall mean the regular rate of salary or wages in effect immediately prior to a Purchase Period, but shall exclude bonuses, severance or payments of a similar kind, contributions by the applicable employer to benefit plans and benefits paid under such plans, and amounts paid in reimbursement for employee business expenses. For non-employee directors Base Compensation shall mean their annual director fees and meeting attendance fees. (d) "Board of Directors" shall mean the Board of Directors of General Nutrition Companies, Inc. (e) "Code" shall mean the Internal Revenue Code of 1986, as amended. (f) "Committee" shall mean the Compensation Committee of the Board of Directors. (g) "Company" shall mean General Nutrition Companies, Inc., a Delaware Corporation. (h) "Common Stock" shall mean shares of the Company's common stock with a par value of $.01 per share. (i) "Effective Date" shall mean August 22, 1996 (the date upon which the Plan was adopted by the Board of Directors of the Company). 2 3 (j) "Exercise Date" shall mean the last day of a Purchase Period; provided, however, that if such date is not a business day, "Exercise Date" shall mean the immediately preceding business day. (k) "Participant shall mean a director of the Company or an Employee who is selected by the Committee to receive benefits under the Plan and who has elected to participate in the Plan under Section 6 hereunder. (l) "Plan" shall mean the 1996 Management and Director Stock Purchase Plan. (m) "Purchase Loan" means an extension of credit to the Participant by the Company evidenced by the Purchase Note and secured by a pledge of the shares of Common Stock purchased by the Participant. (n) "Purchase Note" means a promissory note including the terms set forth in Section 8. (o) "Purchase Price" shall mean 80% of the Base Market Price for the relevant Purchase Period multiplied by the number of shares purchased. (p) Except as provided below, there shall be four quarterly "Purchase Periods" in each full fiscal year during which the Plan is in effect. Such Purchase Period shall commence on the 1st business day of each fiscal quarter and end on the 5th business day of each fiscal quarter. For example, the first Purchase Period after adoption of the Plan shall commence on October 14, 1996, and end on October 18, 1996. 3. Grant of Option to Purchase Shares. Each Participant shall be granted an option effective on the first day of each Purchase Period to Purchase shares of Common Stock. The term of the option shall be the length of the Purchase Period. 3 4 4. Shares. There shall be 1,000,000 shares of Common Stock reserved for issuance to and purchase by Participants under the Plan, subject to adjustment as herein provided. The shares of Common Stock subject to the Plan shall be either shares of authorized but unissued Common Stock or shares of Common Stock acquired by the Company and held as treasury shares. Shares of Common Stock not purchased under an option terminated pursuant to the provisions of the Plan may again be subject to options granted under the Plan. 5. Administration. 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 substantiation 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 4 5 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. 6. Election to Participate. (a) Election Process. A Participant may elect to become a Participant in the Plan for a Purchase Period by completing and filing with James M. Sander, the Corporate Secretary, a "Stock Purchase Plan Enrollment" form prior to the first day of the Purchase Period for which the election is made. Such Stock Purchase Plan Enrollment form shall be in such form as shall be determined by the Board of Directors or the Committee. The election to participate shall be effective for the Purchase Period for which it is made. There is no limit on the number of Purchase Periods for which a Participant may elect in the Plan, however, the aggregate purchases under the Plan by a Participant may not exceed two times his/her then current Base Compensation; provided however that non-officer (below Vice Presidents) and non-directors may participate only to fifty percent (50%) of their Base Compensation. Options granted to Participants who have failed to execute a Stock Purchase Plan Enrollment form or pay the Purchase Price within the time periods prescribed by the Plan will automatically lapse. (b) Minimum Stockholding Requirement. The Compensation Committee of the Board of Directors established a minimum stockholding requirement for members of senior management with the initial guideline set by the Committee of one times annual salary, which initial guideline would be in effect for at least two years and thereafter reviewed by the Committee every two years thereafter. To participate in this Plan a Participant agrees that to the extent that the Participant has not met the minimum stockholding requirements set forth by the Committee, then incentive 5 6 compensation otherwise paid to the employee in cash will be paid instead 50% in cash and 50% in Common Stock until the minimum stockholding requirement is met. The portion of the individual incentive compensation that is paid in stock will be reduced to meet the tax withholding obligations pursuant to the applicable standard tax withholding rate, and the net amount will be converted into an election to purchase shares of Common Stock under the Plan. A Stock Purchase Plan Enrollment form will be submitted for the next Purchase Date and the purchase on the next Exercise Date. This automatic election shall be repeated for subsequent payments of incentive compensation until the minimum stockholding requirement is met. 7. Employee Stock Purchase Account and Payment for Shares. (a) An Employee Stock Purchase Account will be established for each Participant in the Plan for bookkeeping purposes. Prior to the applicable Exercise Date a Participant who has filed a completed Stock Purchase Plan Enrollment form must pay to the Company in cash or immediately available funds the full amount of the Purchase Price multiplied by the applicable number of shares, together with the applicable withholding taxes amount. Payment of up to one half of the Purchase Price and withholding tax may be made by delivery of an approved Purchase Note; provided however, the aggregate amount loaned to the Participant under this Plan may not exceed at any time one times the Participant's Base Compensation. However, prior to the purchase of shares in accordance with Section 9 or withdrawal from or termination of the Plan in accordance with the provisions hereof, the Company may use for any valid corporate purpose all amounts deposited under the Plan and credited for bookkeeping purposes to his Account. (b) The Company shall be under no obligation to pay interest on funds credited to a Participant's Account, whether upon purchase of shares in accordance with Section 9 or upon distribution in the event of withdrawal from or termination of the Plan as herein provided. 6 7 8. Purchase Loan. (a) The Company shall extend a Purchase Loan to a Participant upon the Exercise Date to match actual cash paid into the Participant's Account for the applicable Purchase Period and subject to the terms and conditions set forth in this Section 8. The original principal amount of the Purchase Loan shall be up to fifty percent (50%) of the Purchase Price of shares purchased on the Exercise Date plus the standard withholding tax amount, if the Participant requests such additional loan amount. However, the aggregate amount of the Purchase Loan outstanding is limited to and may not in any event exceed one times the Participant's then current Base Compensation. Such Purchase Loan shall be evidenced by the Purchase Note. The obligations of each Participant under a Purchase Note shall be unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by any change in the existence, structure or ownership of the Company, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Company or its assets or the market value of the Common Stock or any resulting release or discharge of any obligation of the Company or the existence of any claim, set-off or other rights which any participant may have at any time against the Company or any other person, whether in connection with the Plan or with any unrelated transactions, provided that nothing herein shall prevent the assertion of any such claim by separate suit or counterclaim. Notwithstanding anything to the contrary in this Section 8, the Company shall not be required to make any Purchase Loan to a Participant if the making of such Purchase Loan will (i) cause the Company to violate any covenant or similar provision in any indenture, loan agreement or other agreement, or (ii) violate any applicable federal, state or local law, provided, that the failure to make such Purchase Loan shall be deemed to revoke the exercise of the related Purchase Award unless otherwise specified by the Participant. 7 8 (b) Security. Payment of the Purchase Note shall be secured by a pledge of all of the shares of Common Stock acquired by the Participant upon the Exercise Date to which the Purchase Loan relates. The Participant shall effect such pledge by delivering to the Company (i) the certificate or certificates for the shares of Common Stock acquired, accompanied by a duly executed stock power in blank, (ii) a properly executed stock pledge agreement, and (iii) such other documents as may be required by the Committee. A Participant shall always have the right to sell shares of Common Stock acquired pursuant to the Plan provided that (i) such sales must be made in open-market transactions or at a price not less than the Market Price on the Trading Day prior to the date of sale, (ii) the Company shall have a security interest in the proceeds of such sale to the extent of any outstanding Purchase Loan, and (iii) the proceeds of any such sale are utilized in the manner to satisfy any of the applicable prepayment Sections. Prior to payment in full of the outstanding balance on the Purchase Note (including accrued and unpaid interest), no shares of Common Stock pledged to the Company under the stock pledge agreement shall be released except as made available under Section 10 or as are made available upon satisfaction of a prepayment requirement. (c) Term. The term of the Purchase Loan for any Participant shall begin on such Participant's Purchase Date and, subject to prepayment as provided in subsections (e) and (g), have a final maturity date four (4) years from the date of the Purchase Loan. (d) Interest on the principal balance of the Purchase Loan will accrue annually, in arrears, at six percent (6%). Accrued interest shall be payable on a quarterly basis. (e) Forgiveness of Company Loan. The Company would forgive the principal of the loan at the rate of 25% per year, pursuant to the schedule set forth below, if the Company's stock price appreciates by 25% or more in the years following the purchase. Achievement of the hurdle will be 8 9 calculated based upon the stock's 15 day trailing trading average stock price during such year. (If the stock price did not appreciate by the 25% minimum in any one year, the Participant would get the benefit of a catch up if the stock price appreciated in the following year to the level required in such following year or on a cumulative basis over the course of the four-year period, however, reaching the hurdle, prior to the scheduled year does not accelerate the loan being forgiven.) For purposes of calculating the yearly period, the twelve month period following the Exercise Date for the applicable Purchase Period shall be used. The amount forgiven shall include accrued interest for the applicable quarter. The schedule for Loan Forgiveness is set forth below: SCHEDULE FOR LOAN FORGIVENESS
TARGET YEAR STOCK PRICE LOAN BALANCE FORGIVEN ---- ----------- --------------------- 1 $19.50 25% 2 $24.375 25% 3 $30.468 25% 4 $38.085 25%
(f) Change of Control. Upon a Change of Control prior to any outstanding balance (including accrued and unpaid interest) of the Participant's Purchase Loan (subject to any prepayments pursuant to Section 8) shall be forgiven. (g) Optional Prepayments. The Participant may prepay all or any portion of the Purchase Loan at any time. (h) Application of Prepayments. All prepayments made to the Company pursuant to this Section 8 shall first be applied to pay accrued interest on the Purchase Loan and then to reduce the principal balance due on the Purchase Loan. Any prepayment of the remaining balance of the Purchase Loan shall be applied to the principal payments due thereon in chronological order of maturity. 9 10 (i) Prepayment Obligations upon Termination of Service. Upon a termination of service by a Participant ("Termination of Service") from the Company or any of its affiliates, any outstanding balance on the Purchase Loan (including any accrued and unpaid interest) shall become due and payable on the later of (i) the 120th day following such Termination of Service or (ii) the 90th day following the first date on which the participant may sell the Common Stock purchased under the Plan without incurring liability under the federal securities laws, including Section 16 of the 1934 Act, (limited, in the case of Section 16, to liability relating to purchases or sales of Common Stock or any derivative security occurring prior to the Termination of Service). (j) Prepayment Obligations Other than Termination of Service. In the event a Participant sells shares of Common Stock acquired under the Plan prior to the earliest of (i) Termination of Service, (ii) a Change of Control or (iii) Loan Forgiveness, the Participant shall immediately prepay the Purchase Loan by the full pre-tax amount of the proceeds of such sale of such shares to the extent the current market value of the balance of shares held in the Participants Account is less than one times the Participant's then current Basic Compensation plus the aggregate Purchase Loan Amount. A transfer of a Participant's shares of Common Stock to a revocable trust as to which the Participant retains voting and investment power (which powers of revocation, voting and investment may be shared with the Participant's spouse) or a transfer to joint ownership with such Participant's spouse shall not be deemed a sale for purposes of this Section 8, although such shares shall remain pledged to secure the Purchase Loan and, solely for the purposes of this Plan, shall be deemed to be owned by the Participant. 10 11 9. Purchase of Shares. Each Participant in the Plan automatically and without any act on his part will be deemed to have exercised his option on each Exercise Date to the extent that the balance then in his Account under the Plan is sufficient to purchase at the Purchase Price whole shares of the Common Stock subject to his option. Any balance remaining in the Participant's Account shall be carried forward and credited for use in the next Purchase Period. If the Employee chooses not to participate in the next Purchase Period, any balance will be refunded to him in cash. The Company shall have the right to withhold from the Participant's regular wages any and all withholding taxes required to be withheld with respect to any income recognized by the Participant upon the purchase of shares hereunder, or at the Company's option, require that the Participant make payment to the Company of an amount necessary to meet such withholding tax obligations. 10. Sales of Stock. Sales of stock purchased under the Plan are permitted only when the current market value for the Company's Common Stock held in the Participant's account exceeds the minimum holding requirement in Section 6 plus any amount outstanding under a Purchase Loan. The limitation in the previous sentence shall not apply in the event the Employee has a Termination of Service with his/her applicable company or in the event a Hardship Withdrawal is granted by the Committee. The Employee cannot sell any amount of stock which would bring their cumulative holdings to less than one year's salary plus the amount of purchase loan outstanding, unless the employee left the Company or the Committee of the Board of Director's approved a specific "hardship" withdrawal. 11 12 11. Withdrawal. A Participant who has elected to purchase shares of Common Stock may cancel his election by written notice of cancellation delivered to the Corporate Secretary's office ("Cancellation"), but any such notice of Cancellation must be so delivered not later than one (1) business day before the relevant Exercise Date. A Participant will receive in cash, as soon as practicable after delivery of the Notice of Cancellation, the amount of cash credited to his Account during the Purchase Period. Any Participant who so withdrawals from the Plan may again become a Participant on subsequent Purchase Dates. Upon dissolution or liquidation of the Company or a merger or consolidation in which the Company is not the surviving entity every option outstanding hereunder shall terminate, in which event each Participant shall be refunded the amount of the cash then in his Account. 12. Hardship Withdrawal. In the event the Participant suffers a financial hardship, the Committee may, if it deems advisable in its sole and absolute discretion, authorize on behalf of the Participant as a hardship withdrawal a sale of Common Stock from a Participant's Account below the minimum stockholding requirement (the "Hardship Withdrawal"), in any portion of the Participant's Account up to, but not in excess of, the amount needed to cover the hardship, and shares sufficient to cover the outstanding balance on any Purchase Loan must remain in the Participant's Account. Financial Hardship shall mean dire financial need of the Participant caused by temporary or permanent disability or incapacity, medical expenses, educational expenses, for the Participant or his or her dependents, purchase of a principal residence, prevention of eviction from the Participant's principal residence, or a material reduction in family income for which no other resources are reasonably available. 12 13 13. Issuance of Stock and Sales of Stock. The shares of Common Stock purchased by a Participant shall, for all purposes, be deemed to have been issued and sold at the close of business on the Exercise Date. Prior to that date none of the rights or privileges of a stockholder of the Company, including the right to vote or receive dividends, shall exist with respect to such shares. Within a reasonable time after the Exercise Date, the Company shall issue and allocate to the account of the Participant the number of shares of Common Stock purchased by a Participant for the Purchase Period in book entry form (uncertificated shares), together with a statement setting forth the number of shares so purchased; which account shall be registered either in the Participant's name, jointly in the names of the Participant and his spouse, or otherwise as the participant shall designate in his Stock Purchase Plan Enrollment form. Such designation may be changed at any time by filing notice thereof with the Corporate Secretary. At any time shares held in a Participant's Account becomes available for sale by the Participant under the terms of this Plan, a Participant may request a withdrawal of all or a portion of the shares then available for sale and, standing in the Participant's name under the Plan. The request must be made by written notice to the Corporate Secretary or as may be required by the Committee. The minimum partial withdrawal is 10 shares of Common Stock. Provided, however, that Hardship Withdrawals approved by the Compensation Committee may be permitted. 14. 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 13 14 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. 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 14 15 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. (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. 15. Termination of Employment. (a) Upon a Participant's termination of employment for any reason, other than death, the entire balance credited to his Account shall be automatically refunded and any shares in excess of the aggregate Purchase Loan balance shall be released to the Participant. (b) Upon the death of a Participant, the entire balance in the deceased Participant's Account shall be paid in cash to the Participant's designated beneficiary, if any, under a group insurance plan of the Company covering such employee, or otherwise to his estate and any shares in excess of the loan balance released, as well. 15 16 16. No Guarantee of Continued Employment. Granting of an option under this Plan shall imply no right of continued employment with the Company for any Participant. 17. Notice. Any notice which a Participant files pursuant to this Plan shall be in writing and shall be delivered personally or by mail addressed to General Nutrition Companies, Inc., 921 Penn Avenue, Pittsburgh, Pennsylvania 15222, Attention James Sander, Corporate Secretary. Any notice to a Participant shall be conspicuously posted in the Company's principal office or shall be mailed addressed to the Participant at the address designated in the Stock Purchase Plan Enrollment Form or in a subsequent writing. 18. Government Approvals or Consents. This Plan and any offering and sales to Participants under it are subject to any governmental approvals or consents that may be or become applicable in connection therewith. Subject to the provisions of Section 19, the Board of Directors for the Company may make such changes in the Plan and include such terms in any offering under this Plan as may be necessary or desirable, in the opinion of counsel, to comply with the rules or regulations of any governmental authority, or to be eligible for tax benefits under the Code or the laws of any state. 16 17 19. Amendment of the Plan The Board of Directors may, without the consent of the Participants, amend the Plan at any time, provided that no such action shall adversely affect options theretofore granted hereunder, and provided that no such action by the Board of Directors without approval of the Company's stockholders may: increase the total number of shares of Common Stock which may be purchased by all Participants. For purposes of this Section 19, termination of the Plan by the Board of Directors pursuant to Section 19 shall not be deemed to be an action which adversely affects options theretofore granted hereunder. 20. Term of the Plan The Plan shall become effective on the Effective Date, provided that it is approved within twelve months after adoption by the Board of Directors at a duly-held stockholder's meeting by stockholders of the Company holding a majority of the Company's voting stock. The Plan shall continue in effect through August 22, 2006, provided, however, that the Board of Directors shall have the right to terminate the Plan at any time. In the event of the expiration of the Plan or its termination, all options then outstanding under the Plan shall automatically be canceled and the entire amount credited to the Account of each Participant hereunder shall be refunded to each such Participant. 17 EX-4.B 3 GENERAL NUTRITION COMPANIES, INC. 1 Exhibit 4.B 1996 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 Five Million (5,000,000) 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, 2,500,000 shares are initially available for grant hereunder and 2,500,000 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 August 22, 2000:
Market Price Additional Share Becoming Per Share Available for Grant ------------ ------------------------- $18.60 625,000 $22.32 625,000 $26.78 625,000 $32.14 625,000 --------- TOTAL: 2,500,000
2 (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 substantiation 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 2 3 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. 3 4 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 500,000 shares of Common Stock, taking into account shares which were the subject of options granted during such taxable year and subsequently terminated. 6. Option Grants; Option Agreement. Of the 2,500,000 shares initially available for the grant of options hereunder, 1,250,000 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. 4 5 The remaining 1,250,000 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 such four year period commencing on the date of grant, assuming that the market price per share of the Company's Common Stock achieves in such subsequent year the level which was not met in a previous year. Options with respect to the additional 2,500,000 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, 5 6 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 such four year period. 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 four year period commencing on the date of grant, such option shall be exercisable for a 30-day period commencing with the close of such four 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 6 7 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. 7 8 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. 8 9 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 on (i) the later of the last day of the third month after the date such optionee ceases to be a director or 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. 9 10 (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 10 11 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 11 12 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. 12 13 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. (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 14 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 14 15 (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 15 16 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 16 17 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. 17 18 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. 18 EX-4.C 4 GENERAL NUTRITION COMPANIES, INC. 1 Exhibit 4.C RAKOWSKI GENERAL NUTRITION COMPANIES, INC. STOCK OPTION AGREEMENT AND STOCK OPTION AGREEMENT entered into as of the 7th day of January, 1997 by and between General Nutrition Companies, Inc., a Delaware corporation with a principal place of business at 921 Penn Avenue, Pittsburgh, Pennsylvania 15222 (the "Company"), and Richard Rakowski (the "Optionee"). WHEREAS, the Company desires to grant the Optionee a non-qualified stock option to acquire shares of the Company's Common Stock, $.01 par value per share ("Common Stock") as compensation for the consulting and design services provided to the Company and its affiliates; and ACCORDINGLY, in consideration of the premises and of the mutual covenants and agreements contained herein, the Company and the Optionee hereby agree as follows: 1. GRANT OF OPTION. The Company hereby irrevocably grants to the Optionee a non-qualified stock option (the "Option") subject to the terms and conditions set forth herein, to purchase all or any part of an aggregate of 125,000 shares of Common Stock ("Shares") on the terms and conditions hereinafter set forth. 2. PURCHASE PRICE. The purchase price ("Purchase Price") for the Shares covered by the Option shall be $16.875 per Share subject to adjustment as called for herein. 3. OPTION VESTING SCHEDULE. (a) Subject to the other terms of this option agreement regarding exercisability of Options, eight percent (8%) of the Options to Purchase shares shall vest and may be exercised each time the Orlando Prototype Alive Store achieves or exceeds on a period (the Company's 28 day accounting cycle pursuant to its fiscal year) basis a 20% operating profit (pre-tax operating profit on a fully absorbed at the store level basis but excluding allocation of corporate overhead costs) on at least a 30%, or whatever percentage increase, when combined with that stores first years increase over the previous GNC store is equal to or greater than a 50% increase in overall same store sales for that Prototype Store over that stores 13 periods following the first anniversary date of its store opening as an Alive Store. (b) Subject to the other terms of this option agreement regarding exercisability of Options, eight percent (8%) of the Options to Purchase shares shall vest and may be exercised each time one of the Prototype Alive Stores achieve or exceed on a period basis within the first thirteen periods after the opening of the Prototype Store, other than the Orlando Store, a 20% operating profit (pre-tax operating profit on a fully absorbed at the store level basis but excluding allocation of corporate overhead costs) on at least a 50% increase in overall same store sales for that Prototype Store. The sales increase will be calculated by comparing the sales by period in the Prototype to the actual sales achieved by the GNC store for the prior year if it was a GNC store in the same mall prior to converting to the Prototype Store. (c) Sales and profit hurdles must be achieved individually. In determining profit increase at the Prototype locations depreciation will be calculated based on the projected buildout cost of the Alive Store concept on a rollout basis. If more than one Prototype Store meets the performance hurdle in any given month during the vesting period then an additional eight percent (8%) of the Options shall vest per each such store. 2 (d) An Option shall be exercisable on or after the date that the corporate secretary of the Company certifies in writing to the Company that the performance hurdle has been met for the applicable month. Any exercise shall be accompanied by a written notice to the Company specifying the number of shares as to which the Option is being exercised. (e) Notwithstanding the foregoing, Options will become vested and exercisable with respect to all Shares if, prior to the expiration of the vesting schedule period, there is (i) a sale or conveyance to another entity of all or substantially all of the property and assets of the Company or (ii) a change in control of the Company as defined in paragraph 8 below. 4. TERM OF OPTIONS; (a) The Option shall expire not more than five (5) years from the date of the granting thereof, but shall be subject to earlier termination as herein provided. 5. MANNER OF EXERCISE OF OPTION AND MANNER OF PAYMENT. (a) To the extent that the right to exercise the Option has accrued and is in effect, the Option may be exercised in full or in part by giving written notice to the Company stating the number of Shares exercised and accompanied by payment in full for such Shares. Payment shall be wholly in cash or by certified check. Upon such exercise, delivery of a certificate for paid-up, non-assessable Shares shall be made at the principal office of the Company to the person exercising the Option, not more than thirty (30) days from the date of receipt of the notice by the Company. (b) The Company shall at all times during the term of the Option reserve and keep available such number of Shares of its common stock as will be sufficient to satisfy the requirements of the Option. The Optionee shall not have any of the rights of a stockholder of the Company in respect of the Shares until one or more certificates for such Shares shall be delivered to him or her upon the due exercise of the Option. (c) Payment of the exercise price may be made by delivery of (i) cash or a check payable to the order of the Company in an amount equal to the exercise price of such options. (d) To the extent that the right to purchase shares under an option has accrued and is in effect, options may be exercised in full at one time or in part from time to time, by giving written notice, signed by the person or persons exercising the option, to the Company, stating the number of shares with respect to which the option is being exercised, accompanied by payment in full for such shares as provided in subparagraph (c) above. Upon such exercise, delivery of a certificate for paid-up non-assessable shares shall be made at the principal office of the Company to the person or persons exercising the option at such time, during ordinary business hours, after five (5) but not more than thirty (30) days from the date of receipt of the notice by the Company, as shall be designated in such notice, or at such time, place and manner as may be agreed upon by the Company and the person or persons exercising the option. (e) To the extent that an option to purchase shares is not exercised by an optionee when it becomes initially exercisable, it shall not expire but shall be carried forward and shall be exercisable, on a cumulative basis, until the expiration of the exercise period. No partial exercise may be made for less than ten (10) full shares of Common Stock. 3 6. NON-TRANSFERABILITY. Except as provided below, the right of the Optionee to exercise the Option shall not be assignable or transferable by the Optionee otherwise than by will or the laws of descent and distribution, and the Option may be exercised during the lifetime of the Optionee only by him or her. The Option shall be null and void and without effect upon the bankruptcy of the Optionee or upon any attempted assignment or transfer, except as hereinabove provided, including without limitation any purported assignment, whether voluntary or by operation of law, pledge, hypothecation or other disposition attachment, trustee process or similar process, whether legal or equitable, upon the Option. 7. REPRESENTATION LETTER AND INVESTMENT LEGEND. (a) In the event that for any reason the Shares to be issued upon exercise of the Option shall not be effectively registered under the Securities Act of 1933 (the "1933 Act"), upon any date on which the Option is exercised in whole or in part, the person exercising the Option shall give a written representation to the Company and the Company shall place an "investment legend", so-called, upon any certificate for the Shares issued by reason of such exercise. (b) The Company shall be under no obligation to qualify Shares or to cause a registration statement or a post-effective amendment to any registration statement to be prepared for the purposes of covering the issue of Shares. 8. ADJUSTMENTS ON CHANGES IN CAPITALIZATION AND CHANGE IN CONTROL. Adjustments on Changes in Capitalization and the like shall be made in accordance with the following provisions. (a) In the event that the outstanding shares of the Common Stock of the Company are changed into or exchanged for a different number or kind of shares or other securities of the Company or of another corporation by reason of any reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, combination of shares, or dividends payable in capital stock, appropriate adjustment shall be made in the number and kind of shares as to which outstanding options or portions thereof then unexercised shall be exercisable, to the end that the proportionate interest of the optionee shall be maintained as before the occurrence of such event; such adjustment in outstanding options shall be made without change in the total price applicable to the unexercised portion of such options and with a corresponding adjustment in the option price per share. (b) In addition, unless otherwise determined by the Board or the Committee in its sole discretion, in the case of any (i) sale or conveyance to another entity of all or substantially all of the property and assets of the Company or (ii) a Change in Control (as hereinafter defined) of the Company, the purchaser(s) of the Company's assets or stock may, in his, her or its discretion, deliver to the optionee the same kind of consideration that is delivered to the stockholders of the Company as a result of such sale, conveyance or Change in Control, or the Board of Directors may cancel all outstanding options in exchange for consideration in cash or in kind which consideration in both cases shall be equal in value to the value of those shares of stock or other securities the optionee would have received had the option been exercised (to the extent then exercisable) and no disposition of the shares acquired upon such exercise been made prior to such sale, conveyance or Change in Control, less the option price therefor. Upon receipt of such consideration by the optionee, his or her option shall immediately terminate and be of no further force and effect. The value of the stock or other securities the optionee would have received if the option had been exercised shall be determined in good faith by the Board of Directors of the Company, and in the case of shares of the Common Stock of the Company, in accordance with the provisions below. If such shares are then listed on any national securities exchange, the fair market value shall be the mean between the high and low sales prices, if any, on the largest such exchange on the business day immediately preceding the date of the grant of the option or, if none, shall be determined by taking a weighted average of the means between the highest and lowest sales prices on the nearest date before and the nearest date after the date of grant in 4 accordance with Treasury Regulations Section 25.2512-2. If the shares are not then listed on any such exchange, the fair market value of such shares shall be the mean between the high and low sales prices, if any, as reported in the National Association of Securities Dealers Automated Quotation System National Market System ("NASDAQ/NMS") for the business day immediately preceding the date of the grant of the option, or, if none, shall be determined by taking a weighted average of the means between the highest and lowest sales on the nearest date before and the nearest date after the date of grant in accordance with Treasury Regulations Section 25.2512-2. If the shares are not then either listed on any such exchange or quoted in NASDAQ/NMS, the fair market value shall be the mean between the average of the "Bid" and the average of the "Ask" prices, if any, as reported in the National Daily Quotation Service for the business day immediately preceding the date of the grant of the option, or, if none, shall be determined by taking a weighted average of the means between the highest and lowest sales prices on the nearest date before and the nearest date after the date of grant in accordance with Treasury Regulations Section 25.2512-2. If the fair market value cannot be determined under the preceding three sentences, it shall be determined in good faith by the Board or the Committee. (c) The Board shall also have the power and right to accelerate the exercisability of any options, notwithstanding any limitations in this Agreement upon such a sale, conveyance or Change in Control. A "Change in Control" shall be deemed to have occurred if any person, or any two or more persons acting as a group, and all affiliates of such person or persons, shall acquire shares of the Company's then outstanding Common Stock of the Company, in one or more transactions, or series of transactions, such that following such transaction or transactions, such person or group and affiliates beneficially own twenty (20%) percent or more of the Company's Common Stock outstanding. (d) Upon dissolution or liquidation of the Company, all options granted herein shall terminate, but the optionee shall have the right, immediately prior to such dissolution or liquidation, to exercise his or her option to the extent then exercisable. (e) If by reason of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization, or liquidation, the Board of Directors shall authorize the issuance or assumption of a stock option or stock options in a transaction to which Section 424(a) of the Code applies, then, the Board or Committee may grant an option or options upon such terms and conditions as it may deem appropriate for the purpose of assumption of the old option, or substitution of a new option for the old option, in conformity with the provisions of such Section 424(a) of the Code and the Regulations thereunder. (f) No fraction of a share shall be purchasable or deliverable upon the exercise of any option, but in the event any adjustment hereunder of the number of shares covered by the option shall cause such number to include a fraction of a share, such fraction shall be adjusted to the nearest smaller whole number of shares. 9. RESTRICTIONS ON ISSUE OF SHARES. (a) Notwithstanding the provisions of Section 5, the Company may delay the issuance of shares covered by the exercise of any option and the delivery of a certificate for such shares until one of the following conditions shall be satisfied: (i) The shares with respect to which such option has been exercised are at the time of the issue of such shares effectively registered or qualified under applicable Federal and state securities acts now in force or as hereafter amended; or 5 (ii) Counsel for the Company shall have given an opinion, which opinion shall not be unreasonably conditioned or withheld, that such shares are exempt from registration and qualification under applicable Federal and state securities acts now in force or as hereafter amended. (b) It is intended that all exercises of options shall be effective, and the Company shall use its best efforts to bring about compliance with the above conditions within a reasonable time, except that the Company shall be under no obligation to qualify shares or to cause a registration statement or a post-effective amendment to any registration statement to be prepared for the purpose of covering the issue of shares in respect of which any option may be exercised, except as otherwise agreed to by the Company in writing. 10. PURCHASE FOR INVESTMENT; RIGHTS OF HOLDER ON SUBSEQUENT REGISTRATION. Unless the shares to be issued upon exercise of an option have been effectively registered under the Securities Act of 1933, as now in force or hereafter amended, the Company shall be under no obligation to issue any shares covered by any option unless the person who exercises such option, in whole or in part, shall give a written representation and undertaking to the Company which is satisfactory in form and scope to counsel for the Company and upon which, in the opinion of such counsel, the Company may reasonably rely, that he or she is acquiring the shares issued pursuant to such exercise of the option for his or her own account as an investment and not with a view to, or for sale in connection with, the distribution of any such shares, and that he or she will make no transfer of the same except in compliance with any rules and regulations in force at the time of such transfer under the Securities Act of 1933, or any other applicable law, and that if shares are issued without such registration, a legend to this effect may be endorsed upon the securities so issued. In the event that the Company shall, nevertheless, deem it necessary or desirable to register under the Securities Act of 1933 or other applicable statutes any shares with respect to which an option shall have been exercised, or to qualify any such shares for exemption from the Securities Act of 1933 or other applicable statutes, then the Company may take such action and may require from each optionee such information in writing for use in any registration statement, supplementary registration statement, prospectus, preliminary prospectus or offering circular as is reasonably necessary for such purpose and may require reasonable indemnity to the Company and its officers and directors and controlling persons from such holder against all losses, claims, damages and liabilities arising from such use of the information so furnished and caused by any untrue statement of any material fact therein or caused by the omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made. 11. RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as a shareholder with respect to any Shares which may be purchased by exercise of this Option unless and until a certificate or certificates representing such Shares are duly issued and delivered to the Optionee. Except as otherwise expressly provided herein, no adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 12. WITHHOLDING TAXES. Whenever Shares are to be issued upon exercise of this Option, the Company shall have the right to require the Optionee to remit to the Company an amount sufficient to satisfy all Federal, state and local tax requirements, if any, prior to the transfer of the Shares delivery transfer of any certificate or certificates for such Shares. 13. MODIFICATION OF OUTSTANDING OPTIONS. The Board or the Committee may authorize the amendment of any outstanding option with the consent of the optionee when and subject to such conditions as are deemed to be in the best interest of the Company. 6 14. NOTICES. Any communication or notice required or permitted to be given under the Plan shall be in writing, and mailed by registered or certified mail or delivered by hand, if to the Company, to its principal place of business, attention: President, and, if to an optionee, to the address as appearing on the records of the Company. IN WITNESS WHEREOF, the Company has caused this Agreement to be executed and its corporate seal to be hereto affixed by its officer thereunto duly authorized, and the Optionee has hereunto set his or her hand and seal, all as of the day and year first above written. GENERAL NUTRITION COMPANIES, INC. By: ------------------------------- Title: President OPTIONEE ------------------------------- RICHARD RAKOWSKI EX-5 5 GENERAL NUTRITION COMPANIES, INC. 1 Exhibit 5 February 7, 1997 General Nutrition Companies, Inc. 921 Penn 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 1996 Management and Director Stock Purchase plan and Management and Director Stock Option Plan and the option granted pursuant to the Stock Option Agreement. 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 6,125,000 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 1996 Management and Director Stock Purchase Plan, the Management and Director Stock Option Plan, and the Stock Option Agreement 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, James M. Sander EX-15 6 GENERAL NUTRITION COMPANIES, INC. 1 Exhibit 15 DELOITTE & TOUCHE LLP - -------------- 2500 One PPG Place Telephone: (412) 338-7200 Pittsburgh, Pennsylvania 15222-5401 Facsimile: (412) 338-7380 February 6, 1997 General Nutrition Companies, Inc. 921 Penn Avenue Pittsburgh, Pennsylvania 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 April 27, 1996 and April 29, 1995, July 20, 1996 and July 22, 1995, October 12, 1996 and October 14, 1995, as indicated in our reports dated May 13, 1996, August 5, 1996, and November 22, 1996, respectively, because we did not perform an audit, we expressed no opinion on that information. We are aware that our reports referred to above, which were included in your Quarterly Reports on Form 10-Q for the quarters ended April 27, 1996, July 20, 1996 and October 12, 1996, are being used in this Registration Statement. We also are aware that the aforementioned reports, pursuant to rule 436(c) under the Securities Act of 1933, are 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. - --------------- DELOITTE TOUCHE TOHMATSU INTERNATIONAL - --------------- EX-23 7 GENERAL NUTRITION COMPANIES, INC. 1 Exhibit 23 DELOITTE & TOUCHE LLP - -------------- 2500 One PPG Place Telephone: (412) 338-7200 Pittsburgh, Pennsylvania 15222-5401 Facsimile: (412) 338-7380 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 21, 1996, incorporated by reference in the Annual Report on Form 10-K of General Nutrition Companies, Inc. for the year ended February 3, 1996 and to the reference to us under the heading "Interests of Named Experts and Counsel" in this Registration Statement. Pittsburgh, Pennsylvania February 6, 1997 - --------------- DELOITTE TOUCHE TOHMATSU INTERNATIONAL - --------------- -----END PRIVACY-ENHANCED MESSAGE-----