As filed with the Securities and Exchange Commission on February 15, 1996.
SEC Registration No.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________
NATURAL ALTERNATIVES INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
______________
Delaware 84-1007839
(State or Other Jurisdiction of Incorporation) (I.R.S. Employer
Identification No.)
1185 Linda Vista Drive, Suite D, San Marcos, California 92069
(Address of Principal Executive Office) (Zip Code)
______________
1994 Nonqualified Stock Option Plan
(Full title of Plan)
______________
Mark A. Le Doux, President
1185 Linda Vista Drive, Suite D
San Marcos, California 92069
(Name and address of agent for service)
(619) 744-7340
(Telephone Number, Including Area Code, of Agent of Service)
______________
Copies of all correspondence to:
Timothy J. Fitzpatrick
Fisher Thurber, Ltd.
4225 Executive Square, Suite 1600
La Jolla, California 92037-1483
(619) 535-9400
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------------
Proposed
Proposed Maximum
Title of Maximum Aggregate
Securities to be Amount to be Offering Price Offering Amount of
Registered Registered (1) Per Share (2) Price (2) Registration Fee
- -------------------------------------------------------------------------------------
Common Stock
par value of 500,000
$0.01 per share shares $9.75 $4,875,000 $1,681.03
- -------------------------------------------------------------------------------------
(1) There is also being registered hereunder such additional undetermined
number of shares of Common Stock which may be issued from time to time as a
result of the anti-dilution provisions of the Plans.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(h) based on the average of the high and low prices of the Common
Stock of the Company as reported on February 6, 1996 on the American Stock
Exchange.
This Form S-8 contains 6 sequentially numbered pages. The Exhibit Index
appears at sequentially numbered page 3.
NATURAL ALTERNATIVES INTERNATIONAL, INC.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Not required to be filed with the Securities and Exchange Commission (the
"Commission") pursuant to Form S-8 adopted under the Securities Act of 1933,
as amended (the "Securities Act").
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents filed by Natural Alternatives International, Inc,. (the
"Company") with the Commission pursuant to the Securities and Exchange Act of
1934, as amended (the "Exchange Act"), are incorporated herein by reference:
(a) The Company's Annual Report of Form 10-K for the fiscal year ended June
30, 1995 filed pursuant to Section 13(a) or 15(d) of the Exchange Act.
(b) The Quarterly Reports on Form 10-Q's for the quarters ended September 30,
1995 and December 31, 1995, filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the registrant
document referred to in (a) above.
(c) The description of the common stock, no par value, of the Company
contained in a registration statement filed under Section 12 of the Exchange
Act, including any amendments or reports filed for the purpose of updating
such description.
All documents which the Company files pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act, subsequent to the date of this Registration State-
ment and prior to the filing of a post-effective amendment which indicates that
all securities offered have been sold or which deregisters all securities
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part thereof from the date of the filing
of such documents.
Item 4. Description of Securities
Inapplicable.
1
Item 5. Interest of Named Experts and Counsel
David A. Fisher is a Partner with Fisher Thurber, Ltd., legal counsel to the
Company, and the beneficial owner of an option to purchase 20,000 shares of
Common Stock of the Company at $4.625 per share.
Item 6. Indemnification of Directors and Officers
The statutes, charter provisions, Bylaws, Indemnification Agreements, or other
arrangements under which any controlling person, director or officer of the
Registrant is insured or indemnified in any manner against any liability
which he may incur in his capacity as such, are as follows:
The Delaware Corporate Law (the "Code") permits the Company to indemnify an
officer or director who was or is a party or is threatened to be made a party
to any proceeding because of his or her position, if the officer or director
acted in good faith and in a manner he or she reasonably believed to be in
the best interests of the Company. The Code authorizes the Company to
advance expenses incurred in defending any such proceedings under certain
circumstances, and if the officer or director is successful on the merits, it
authorizes the Company to indemnify the officer or director against all
expenses, including attorneys' fees, incurred in connection with any such
proceeding. The Company's Bylaws and Certificate of Incorporation provide
that the Company shall have the power to indemnify its officers and directors
in accordance with the Code.
The Code permits the Company to limit the personal liability of its directors
for monetary damages for breaches of fiduciary duty as a director, except for
breaches that involve the director's duty of loyalty, acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of law, acts involving unlawful dividends or stock redemptions or
transactions from which the director derived an improper personal benefit.
Under the Company's Certificate of Incorporation and By-Laws and in
accordance with Section 145 of the Delaware law, the Company 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 Company, a derivative action) for reason of the fact that
such person is or was a director or officer of the Company, against expenses
(including attorneys' fees, judgments, fines, amounts paid in settlement in
connection with such action, suit or proceeding if such person acted in good
faith in a manner the person reasonably believed to be in or not opposed to
the best interests of the Company and, with respect to any criminal action or
proceeding, had no reasonable cause to believe was unlawful. A similar
standard of care is applicable in the case of derivative actions, except that
indemnification only extends to expenses (including attorney's fees) incurred
in connection with defense or settlement of such an action and then, where
the person is judged to be liable to the Company, only if and to the extent
that the Court of Chancery of the State of Delaware or the court in which
such action was brought, determines that such person is fairly and reasonably
entitled to such indemnity and then only for such expenses that the court
shall deem proper.
2
The Company's By-laws provide that the Company shall pay for the expenses
incurred by the indemnified director or officer in defending the proceedings
specified above, in advance of their final disposition, provided the person
agrees to reimburse the Company if it is ultimately determined that such
person is not entitled to indemnification. The Company may also, by action of
its Board, provide indemnification to any person who is or was one of its
employees or agents, or any person who is or was serving at the request of
the Company as a director, officer, partner, member, employee or agent of
another corporation, partnership, joint venture, trust, committee or other
enterprise to the same degree as the foregoing indemnification of directors
and officers. The Company has entered into indemnity agreements with each of
its current directors and executive officers, which provide for
indemnification to the fullest extent permitted by Delaware law, including,
by reason or action or inaction occurring in the past and in circumstances in
which indemnification and the advancement of expenses are discretionary under
Delaware law.
The Company presently has in effect a claims-made policy of directors and
officers liability insurance protecting its directors and officers against
liability by reason of their having or having been directors or officers.
The directors and officers liability portion of such policy covers all
directors and officers of the Company and of subsidiary companies.
Item 7. Exemption From Registration Claimed.
Inapplicable.
Item 8. Exhibits.
The following exhibits are filed pursuant to Item 601 of Regulation S-K:
Exhibit No. Title
- ----------- ------------------------------------------------------------
3.1 Certificate of Incorporation of Registrant filed with the
Delaware Secretary of State on October 26, 1989 (1)
3.2 Certificate of Amendment to the Certificate of Incorporation
filed with the Delaware Secretary of State on April 5, 1991
(1)
3.3 Certificate of Merger of Natural Alternatives International,
Inc. (a Colorado corporation) into Natural Alternatives
International, Inc. (A Delaware corporation) filed with the
Delaware Secretary of State March 5, 1990 (1)
3.4 Bylaws of the Registrant (1)
4.1 1994 Nonqualified Stock Option Plan (2)
3
5.1 Opinion of Fisher Thurber, Ltd. including consent of such
counsel (2)
23.1 Consent of KPMG Peat Marwick LLP (2)
23.2 Consent of Fisher Thurber, Ltd. (Included in Exhibit 5.1) (2)
_______________________
(1) Incorporated by reference to the exhibits filed with the Form S-1
Registration Statement (File No. 33-44292) filed on December 21, 1992.
(2) Filed herewith.
Item 9. Undertakings.
A. The undersigned Registrant hereby undertakes:
(1) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amend-
ment any of the securities being registered which remain unsold at the term-
ination of the offering.
B. The undersigned registrant hereby undertakes that, for the purpose 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.
4
C. Insofar as indemnification of liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of 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.
5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
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 San Marcos, State of California, on the 2nd day of
February, 1996.
NATURAL ALTERNATIVES INTERNATIONAL, INC.
BY: /s: Mark A. Le Doux
--------------------------
Mark A. Le Doux, President
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.
Signatures Title Date
/s: Mark A. Le Doux President, Chief Executive February 2, 1996
- ---------------------------- Officer and Director
Mark A. Le Doux
/s: William P. Spencer Executive Vice President, February 2, 1996
- ---------------------------- Chief Financial Officer
William P. Spencer And Director
/s: Marie A. Le Doux Secretary and Director February 2, 1996
- ----------------------------
Marie A. Le Doux
/s: William R. Kellas Director February 2, 1996
- ----------------------------
William R. Kellas
/s: Lee G. Weldon Director February 2, 1996
- ----------------------------
Lee G. Weldon
6
NATURAL ALTERNATIVES INTERNATIONAL, INC.
1994 NONQUALIFIED STOCK OPTION PLAN
1. Purpose of the Plan. The purpose of the Natural Alternatives
International, Inc. 1994 Nonqualified Stock Option Plan is to enable Natural
Alternatives International, Inc. to provide an incentive to eligible
employees, consultants, officers and directors, whose present and potential
contributions are important to the continued success of the Company, to
afford these individuals the opportunity to acquire a proprietary interest in
the Company, and to enable the Company to enlist and retain in its employment
qualified personnel for the successful conduct of its business. It is
intended that this purpose will be effected through the granting of stock
options.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or such of its Committees as shall be
administering the Plan, in accordance with Section 5 of the Plan.
(b) "Applicable Laws" means the legal requirements relating to the
administration of stock option plans under applicable securities laws,
Delaware corporate law and the Code.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a Committee appointed by the Board in accordance
with Section 5 of the Plan.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means Natural Alternatives International, Inc., a Delaware
corporation.
(h) "Consultant" means any person, including an advisor, engaged by the
Company or a Parent or Subsidiary to render services and who is compensated
for such services, provided that the term "Consultant" shall not include
Directors who are paid only a director's fee by the Company or who are not
compensated by the Company for their services as Directors.
(i) "Continuous Status as an Employee or Consultant" means that the
employment or consulting relationship is not interrupted or terminated by the
Company, any parent or Subsidiary. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of: (i) any leave of
absence approved by the Board, including sick leave, military leave, or any
other personal leave; or (ii) transfers between locations of the Company or
between the Company, its Parent, its Subsidiaries or its successor.
(j) "Director" means a member of the Board.
1
(k) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(l) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(n) "Fair Market Value" means, as of any date, the value of Common Stock
determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the
National Market System of the National Association of Securities Dealers,
Inc. Automated Quotation ("NASDAQ") System, the Fair Market Value of a Share of
Common Stock shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in Common Stock) on the last mar-
ket trading day prior to the day of determination, as reported in such source
as the Administrator deems reliable;
(ii) If the Common stock is quoted on the NASDAQ System (but not
on the National Market System thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value
of a Share of Common Stock shall be the mean between the high bid and low
asked prices for the Common Stock on the last market trading day prior to the
day of determination, as reported in such source as the Administrator deems
reliable;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(o) "Nonqualified Stock Option" means the options granted pursuant to
this 1994 Nonqualified Stock Option Plan.
(p) "Notice of Grant" means a written notice evidencing certain terms
and conditions of an individual Option. The Notice of Grant is part of the
Option Agreement.
(q) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(r) "Option" means a stock option granted pursuant to the Plan.
(s) "Option Agreement" means a written agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the
Plan.
(t) "Option Exchange Program" means a program whereby outstanding options
are surrendered in exchange for options with a lower exercise price.
(u) "Optioned Stock" means the Common Stock subject to an Option.
2
(v) "Optionee" means an Employee or Consultant who holds an outstanding
Option.
(w) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(c) of the Code.
(x) "Plan" means this 1994 Nonqualified Stock Option Plan.
(y) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor
rule thereto, as in effect when discretion is being exercised with respect to
the Plan.
(z) "Share" means a share of the Common Stock, as adjusted in accordance
with Section 9 of the Plan.
(aa) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Eligibility. Nonqualified Stock Options may be granted to Employees,
Consultants and Directors. If otherwise eligible, an Employee, Consultant or
Director who has been granted an Option may be granted additional Options.
4. Stock Subject to the Plan. Subject to the provisions of Section 9 of the
Plan, the total number of Shares reserved and available for distribution under
the Plan is 500,000 Shares. Subject to Section 9 of the Plan, if any Shares
that have been optioned under an Option cease to be subject to such Option
(other than through exercise of the Option), or if any Option granted hereunder
is forfeited or any such award otherwise terminates prior to the issuance of
Common Stock to the participant, the shares that were subject to such Option
shall again be available for distribution in connection with future Option
grants under the Plan; provided, however, that Shares that have actually been
issued under the Plan, upon exercise of an Option, shall not in any event be
returned to the Plan and shall not become available for future distribution
under the Plan.
5. Administration.
(a) Composition of Administrator. The Plan shall be administered by the
Compensation Committee of the Board of Directors or such other committee of the
Board of Directors consisting of at least two members, as it shall determine
("Committee").
(b) Authority. The Committee shall have the full authority and discre-
tion to determine, consistent with the provisions of the Plan, the persons to
be granted an Option, the times at which Option shall be granted, the number of
shares of common stock covered by each Option, the Option price, the method
of payment for each Option, the term of each Option, and all other terms and
conditions thereof.
(c) Indemnification. In addition to such other rights of indemnification
they may have as Directors or as members of the Committee, members of the
Board of Directors and of the Committee shall be indemnified by the Company
against reasonable expenses, including attorneys' fees, actually and necessari-
ly incurred in connection with the defense of any action, suit or proceeding,
or in connection with any appeal therein, to which they are, or any of them
may be, a party by reason of any action taken or failure to act under or in
connection with the Plan, or any option (and/or related right) granted there-
under, and
3
against all amounts paid by them in settlement thereof (provided such
settlement is approved by independent legal counsel selected by the Company),
or paid by them in satisfaction of a judgment of any such action, suit or
proceeding, except in relation to matters as to which it shall be adjudged in
such action, suit or proceeding that such person is liable for negligence or
misconduct in his duties; provided that within sixty (60) days after the
institution of such action, suit or proceeding, such person shall offer the
Company, in writing, the opportunity at its own expense, to handle and defend
the same.
(d) Effect of Administrator's Decision. The Administrator's decisions,
determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.
(e) Rules. The Board shall fill all vacancies, however caused, in the
Committee. The Board may, from time to time, appoint additional members to
the Committee, and may at any time remove one or more Committee members and
substitute others. One member of the Committee shall be selected by the Board
as chairman. The Committee shall hold its meetings at such times and places as
it shall deem advisable. All determinations of the Committee shall be made
by a majority of its members, either in person or participating by conference
telephone at a meeting, or by written consent. The Committee may appoint a
secretary and make such rules and regulations for the conduct of its business
as it shall deem advisable, and shall keep minutes of its meetings.
6. Duration of the Plan. The Plan shall remain in effect until terminated
by the Board under the terms of the Plan.
7. Options.
(a) Options. The Administrator, in its discretion, may grant Options to
eligible participants. Each Option shall be evidenced by a Notice of Grant
which shall expressly identify the Options as Nonqualified Stock Options, and
be in such form and contain such provisions as the Administrator shall from
time to time deem appropriate. Without limiting the foregoing, the Admini-
strator may at any time authorize the Company, with the consent of the res-
pective recipients, to issue new Options in exchange for the surrender and
cancellation of outstanding Options. Option agreements shall contain the
following terms and conditions:
(i) Exercise Price; Number of Shares. The per Share exercise price
for the Shares issuable pursuant to an Option shall be such price as is
determined by the Administrator, provided however, that it shall not be less
than one hundred percent (100%) of the Fair Market Value of the Common Stock on
January 24, 1995 the date the Options were granted by action of the Board of
the Company.
The Notice of Grant shall specify the number of Shares to which it
pertains.
(ii) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator will determine the terms and conditions to be
satisfied before Shares may be purchased, including the dates on which Shares
subject to the Option may first be purchased. The Administrator may specify
that an Option may not be exercised until the completion of the service period
specified at the time of grant; provided, however, no more than 250,000
shares of the Optioned Stock may be exercised prior to September 24, 1995. Any
such period is referred to herein as the "waiting period." At the time an
Option is granted, the Administrator shall fix the period within which the
Option may be exercised, which shall not be earlier than the end of the waiting
period, if any.
4
(iii) Form of Payment. The consideration to be paid for the Shares
to be issued upon exercise of an Option, including the method of payment,
shall be determined by the Administrator and may consist entirely of:
(1) cash;
(2) check;
(3) promissory note with such terms and conditions as determined
by the Board;
(4) other Shares which (1) in the case of Shares acquired upon
exercise of an option, have been owned by the Optionee for more than six months
on the date of surrender, and (2) have a Fair Market Value on the date of
surrender not greater than the aggregate exercise price of the Shares as to
which said Option shall be exercised;
(5) delivery of a properly executed exercise notice together with
such other documentation as the Administrator and any broker approved by the
Company, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price;
(6) any combination of the foregoing methods of payment; or
(7) such other consideration and method of payment for the issu-
ance of Shares to the extent permitted by Applicable Laws.
(iv) Other Provisions. Each Option granted under the Plan may
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator.
(v) Buy-Out Provisions. The Administrator may at any time offer on
behalf of the Company to buy out, for a payment in cash or Shares, an Option
previously granted, based on such terms and conditions as the Administrator
shall establish and communicate to the Optionee at the time that such offer is
made; provided, however, that buy-out offers made to Insiders may only be
payable in cash.
(b) Method of Exercise.
(i) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator and as shall be permissible under the
terms of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator and permitted
by the Option Agreement consist of any consideration and method of payment
allowable under subsection 7(a)(iii) of the Plan. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
5
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights
as a shareholder shall exist with respect to the Optioned Stock, notwithstan-
ding the exercise of the Option. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 9 of the Plan.
Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter shall be available, both for purposes
of the Plan and for sale under the Option, by the number of Shares as to
which the Option is exercised.
(ii) Rule 16b-3. Options granted to individuals subject to Section
16 of the Exchange Act ("Insiders") shall, to the extent practicable,
desirable, or as determined by the Administrator, comply with the applicable
provisions of Rule 16b-3 and may contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum
exemption from Section 16 of the Exchange Act with respect to Plan transactions.
(iii) Termination of Employment or Consulting Relationship. In the
event an Optionee's Continuous Status as an Employee or Consultant terminates
(other than upon the Optionee's death or Disability), the Optionee may
exercise his or her Option, but only within such period of time as is deter-
mined by the Administrator at the time of grant, not to exceed five (5) years
from the date of such termination, and only to the extent that the Optionee was
entitled to exercise it at the date of such termination (but in no event later
than the expiration of the term of such Option as set forth in the Option
Agreement). To the extent that Optionee was not entitled to exercise an
Option at the date of such termination, and to the extent that the Optionee
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.
(iv) Disability of Optionee. In the event an Optionee's Continuous
Status as an Employee or Consultant terminates as a result of the Optionee's
Disability, the Optionee may exercise his or her Option, but only within such
period of time following the date of termination due to Disability not exceed-
ing ten (10) years as is determined by the Administrator, and only to the
extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). To the extent that Optionee
was not entitled to exercise an Option at the date of such termination, and
to the extent that the Optionee does not exercise such Option (to the extent
otherwise so entitled) within the time specified herein, the Option shall
terminate.
(v) Death of Optionee. In the event of an Optionee's death, the
Optionee's estate or a person who acquired the right to exercise the deceased
Optionee's Option by bequest or inheritance may exercise the Option, but only
within ten (10) years following the date of death, and only to the extent that
the Optionee was entitled to exercise it at the date of death (but in no event
later than the expiration of the term of such Option as set forth in the
Option Agreement). To the extent that Optionee was not entitled to exercise an
Option at the date of death, and to the extent that the Optionee's estate or a
person who acquired the right to exercise such Option does not exercise such
Option (to the extent otherwise so entitled) within the time specified herein,
the Option shall terminate.
8. Non-Transferability of Options and Rights. Options may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee.
6
9. Adjustments Upon Changes in Capitalization, Dissolution, Merger, Asset
Sale or Change of Control.
(a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock
covered by each such outstanding Option, shall be proportionately adjusted for
any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without
receipt of consideration by the Company; provided, however, that conversion
of any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made
by the Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock subject to an
Option.
(b) Dissolution or Liquidation. In the event of the proposed dissolution
or liquidation of the Company, to the extent that an Option has not been
previously exercised, it will terminate immediately prior to the consummation
of such proposed action. The Board may, in the exercise of its sole discretion
in such instances, declare that any Option shall terminate as of a date fixed
by the Board and give each Optionee the right to exercise his or her Option
as to all or any part of the Optioned Stock, including Shares as to which the
Option would not otherwise be exercisable.
(c) Merger or Asset Sale. Subject to the provisions of paragraph (d)
hereof, in the event of a merger of the Company with or into another
corporation, or the sale of substantially all of the assets of the Company,
each outstanding Option shall be assumed or an equivalent Option substituted
by the successor corporation or a Parent or Subsidiary of the successor
corporation. In the event that the successor corporation does not agree to
assume the Option or to substitute an equivalent option, the Administrator
shall, in lieu of such assumption or substitution, provide for the Optionee
to have the right to exercise the Option as to all or a portion of the
Optioned Stock, including Shares as to which it would not otherwise be
exercisable. If the Administrator makes an Option exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee that the Option shall be exercisable
for a period of fifteen (15) days from the date of such notice, and the
Option will terminate upon the expiration of such period. For the purposes of
this paragraph, the Option shall be considered assumed if, immediately follow-
ing the merger or sale of assets, the Option confers the right to purchase, for
each share of Optioned Stock subject to the Option immediately prior to the
merger or sale of assets, the consideration (whether stock, cash, or other
securities or property) received in the merger or sale of assets by holders
of Common Stock for each Share held on the effective date of the transaction
(and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets was not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation and the
participant, provide for the consideration to be received upon the exercise of
the Option, for each Share of Optioned Stock subject to the Option, to be
solely common stock of the successor corporation or its Parent equal in Fair
Market Value to the per share consideration received by holders of Common
Stock in the merger or sale of assets.
7
(d) Change in Control. In the event of a "Change in Control" of the
Company, as defined in paragraph (e) below, then the following acceleration
and valuation provisions shall apply:
(i) Except as otherwise determined by the Board, in its discretion,
prior to the occurrence of a Change in Control, any Options outstanding on
the date such Change in Control is determined to have occurred that are not
yet exercisable and vested on such date shall become fully exercisable and
vested;
(ii) Except as otherwise determined by the Board, in its discretion,
prior to the occurrence of a Change in Control, all outstanding Options, to
the extent they are exercisable and vested (including Options that shall
become exercisable and vested pursuant to subparagraph (i) above), shall be
terminated in exchange for a cash payment equal to the Change in Control
Price, (reduced by the exercise price, if any, applicable to such Options).
These cash proceeds shall be paid to the Optionee or, in the event of death of
an Optionee prior to payment, to the estate of the Optionee or to a person
who acquired the right to exercise the Option by bequest or inheritance.
(e) Definition of "Change in Control". For purposes of this Section 9, a
"Change in Control" means the happening of any of the following:
(i) When any "person" as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, a Subsidiary or a Company
employee benefit plan, including any trustee of such plan acting as trustee)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company represen-
ting fifty percent (50%) or more of the combined voting power of the Company's
then outstanding securities entitled to vote generally in the election of
directors; or
(ii) The shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the
shareholders of the Company approve an agreement for the sale or disposition
by the Company of all or substantially all the Company's assets; or
(iii) A change in the composition of the Board of Directors of the
Company, as a result of which fewer than a majority of the directors are
Incumbent Directors. "Incumbent Directors" shall mean directors who either
(A) are directors of the Company as of the date the Plan is approved by the
directors, or (B) are elected, or nominated for election, to the Board of
Directors of the Company with the affirmative votes of at least a majority of
the Incumbent Directors at the time of such election or nomination (but shall
not include an individual whose election or nomination is in connection with
an actual or threatened proxy contest relating to the election of directors
of the Company).
(f) Change in Control Price. For purposes of this Section 9, "Change in
Control Price" shall be, as determined by the Board, (i) the highest Fair
Market Value of a Share within the 60-day period immediately preceding the
date of determination of the Change in Control Price by the Board (the "60-Day
Period"), or (ii) the highest price paid or offered per Share, as determined
by the Board, in any bona fide transaction or bona fide offer related to the
Change in Control of the Company, at any time within the 60-Day Period, or (iii)
8
such lower price as the Board, in its discretion, determines to be a
reasonable estimate of the fair market value of a Share.
10. Date of Grant. The date of grant of an Option shall be, for all
purposes, the date on which the Administrator makes the determination
granting such Option, or such other later date as is determined by the
Administrator. Notice of the determination shall be provided to each Optionee
within a reasonable time after the date of such grant.
11. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.
(b) Shareholder Approval. The Company may, in the discretion of the
Board of Directors, obtain shareholder approval of the Plan, or any Plan
amendment to the extent necessary and desirable to comply with Rule 16b-3 (or
any successor rule or statute or other applicable law, rule or regulation,
including the requirements of any exchange or quotation system on which the
Common Stock is listed or quoted). Such shareholder approval, if required,
shall be obtained in such a manner and to such a degree as is required by the
applicable law, rule or regulation.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee
and the Company.
12. Stock Withholding to Satisfy Withholding Tax Obligations.
(a) Ability to Use Stock to Satisfy Withholding. At the discretion of
the Administrator, Optionees may satisfy withholding obligations as provided in
this Section 12. When an Optionee incurs tax liability in connection with
the award, vesting or exercise of an Option, which tax liability is subject to
tax withholding under applicable tax laws (including federal, state and local
laws), the Optionee may satisfy the withholding tax obligation (up to an
amount calculated by applying such Optionee's maximum marginal tax rate) by
electing to have the Company withhold from the Shares to be issued upon
award, vesting or exercise of the Option that number of Shares, or by
delivering to the Company that number of previously owned Shares, having a Fair
Market Value equal to the amount required to be withheld. The Fair Market
Value of the Shares to be withheld or delivered, as the case may be, shall be
determined on the date that the amount of tax to be withheld is determined (the
"Tax Date").
(b) Election to Have Stock Withheld. All elections by an Optionee to have
Shares withheld or to deliver previously owned Shares pursuant to this
Section 12 shall made in writing in a form acceptable to the Administrator
and shall be subject to the following restrictions:
(i) the election must be made on or prior to the applicable Tax
Date;
(ii) all elections shall be subject to the consent or disapproval of
the Administrator; and
9
(iii) if the Optionee is an Insider, the election may, at the
discretion of the Board, comply with the applicable provisions of Rule 16b-3
and may, at the discretion of the Board, be subject to such additional
conditions or restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
(c) Section 83(b) Elections. In the event that (i) an election to have
Shares withheld is made by an Optionee, (ii) no election is filed under
Section 83(b) of the Code by such Optionee and (iii) the Tax Date is deferred
under Section 83 of the Code, the Optionee shall receive the full number of
Shares with respect to which the Option has been awarded, has vested or has
been exercised, as the case may be, but such Optionee shall be
unconditionally obligated to tender back to the Company the proper number of
Shares on the Tax Date.
13. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the exer-
cise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, Applicable
Laws, and the requirements of any stock exchange or quotation system upon which
the Shares may then be listed or quoted, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
(b) Investment Representations Re: Federal Securities Laws. The shares
of Common Stock underlying this Option, as of the date hereof, have not been
registered under the 34 Act and the Corporation has no plans to register
them. The Optionee represents that if this Option is exercised in whole or in
part at a time when there is not in effect, under the 34 Act, a registration
statement applicable to the shares issuable upon exercise, then the purchase
of such shares is expressly conditioned upon the following representations,
warranties and covenants:
(i) Any shares purchased upon exercise of this Option shall be
acquired for the Optionee's account for investment only, and not with a view
to, or for sale in connection with, any distribution of the shares in
violation of the 34 Act, or any rule or regulation under the 34 Act. Further,
the Optionee either has a pre-existing personal or business relationship with
the Corporation or any of its officers, directors or controlling persons, or
by reason of Optionee's business or financial experience, or the business or
financial experience of their professional advisors who are unaffiliated with
and not compensated by the Corporation, they could reasonably be assumed to
have the capacity to protect their own interests in connection with the grant,
exercise and sale of the Option Shares.
(ii) The Optionee has had such opportunity as he or she has deemed
adequate to obtain from representatives of the Corporation such information
as is necessary to permit the Optionee to evaluate the merits and risks of
his or her investment in the Corporation.
(iii) The Optionee is able to bear the economic risk of holding
shares acquired pursuant to the exercise of the Option for an indefinite
period.
(iv) The Optionee understands that:
10
(1) the shares acquired pursuant to the exercise of the Option
will not be registered under the 34 Act or under any state securities laws and
are "restricted securities" within the meaning of Rule 144 under the 34 Act;
(2) such shares cannot be sold, transferred or otherwise disposed
of unless they are subsequently registered under the 34 Act;
(3) in any event, the exemption from registrations under Rule 144
will not be available for at least two (2) years, and even then will not be
available unless a public market then exists for the Common Stock, adequate
information concerning the Corporation is then available to the public, and
other terms and conditions of Rule 144 are complied with; and
(4) there is now no registration statement on file with the
Securities and Exchange Commission with respect to the 1994 Nonqualified Plan
of the Corporation and the Corporation has no obligation or current intention
to register any shares acquired pursuant to the exercise of this Option under
the 34 Act.
By making payment upon exercise of this Option, the Optionee shall be
deemed to have reaffirmed, as of the date of such payment, the representations
made in this Section 7.2.
(c) Legend On Stock Certificates. All stock certificates representing
shares of Common Stock issued to the Optionee upon exercise of this Option
shall have affixed thereto a legend substantially in the following form, in
addition to any other legends required by applicable state law:
The shares of stock represented by this
certificate have not been registered under the
Securities Act of 1933, or under the
securities laws of any state, and may not be
transferred, sold or otherwise disposed of in
the absence of an effective registration
statement with respect to the shares
evidenced by this certificate, filed and made
effective under the Securities Act of 1933,
and registration or exemption under state
securities laws, or an opinion of counsel
satisfactory to the Corporation to the effect
that registration under such Act and state
securities laws is not required.
14. Liability of Company.
(a) Inability to Obtain Authority. The inability of the Company to ob-
tain authority form any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
(b) Grants Exceeding Allotted Shares. If the Optioned Stock covered by
an Option exceeds, as of the date of grant, the number of Shares which may be
issued under the Plan without additional shareholder approval, such Option
may be void in the discretion of the Board of Directors, with respect to such
11
excess Optioned Stock, unless if required or determined desirable by the
Board, shareholder approval of an amendment sufficiently increasing the
number of Shares subject to the Plan is timely obtained in accordance with
Section 11(b) of the Plan.
15. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall
be sufficient to satisfy the requirements of the Plan.
12
Fisher Thurber, LTD.
4225 Executive Square Suite 1600
La Jolla, CA 92037-1483
February 6, 1996
Natural Alternatives International, Inc.
1185 Linda Vista Drive, Suite D
San Marcos, CA 92069
Re: Form S-8 Registration Statement
Ladies and Gentlemen:
We have acted as your counsel in the preparation of a Registration Statement
on Form S-8 (the "Registration Statement") to be filed with the Securities
and Exchange Commission to register 500,000 shares of common stock, $.01 par
value per share (the "Common Stock"), of Natural Alternatives International,
Inc. (NAI), a Delaware corporation (the "Company"), issuable pursuant to the
NAI 1994 Nonqualified Stock Option Plan (the "Plan").
For purposes of rendering this opinion, we have made such legal and factual
examinations as we have deemed necessary under the circumstances and, as part
of such examination, we have examined among other things, originals and
copies, certified or otherwise, identified to our satisfaction, of such
documents, corporate records and other instruments as we have deemed
necessary or appropriate. For the purposes of such examination, we have
assumed the genuineness of all signatures on original documents and the
conformity to original documents of all copies submitted to us.
On the basis of and relying upon the foregoing examination and assumptions,
we are of the opinion that, assuming the Registration Statement shall have
become effective pursuant to the provisions of the Securities Act of 1933, as
amended, the shares of Common Stock being offered under the Plan,
when issued in accordance with the Registration Statement and the provisions of
the Plan, will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
FISHER THURBER, LTD.
By: /s: David A. Fisher
--------------------------
David A. Fisher
KPMG Peat Marwick LLP
Independent Auditors' Consent
The Board of Directors
Natural Alternatives International, Inc.
We consent to incorporation by reference in the registration statement on Form
S-8 of Natural Alternatives International, Inc. of our report dated September
5, 1995, relating to the consolidated balance sheets of Natural Alternatives
International, Inc. and subsidiaries as of June 30, 1995 and 1994, and the
related consolidated statements of income, stockholders' equity, and cash
flows for each of the years in the three-year period ended June 30, 1995, and
related schedule, which report appears in the June 30, 1995 annual report on
Form 10-K of Natural Alternatives International, Inc.
/s: KPMG Peat Marwick LLP
San Diego, California
February 2, 1996
