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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
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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).
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(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.
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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
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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
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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.
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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.
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(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
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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.
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(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.
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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.
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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.
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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
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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
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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.
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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.
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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.
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