Item 1.01 Entry into a Material Definitive Agreement
As previously disclosed, on February 13, 2018, GNC Holdings, Inc. (the Company) entered into a Securities Purchase Agreement (as amended from
time to time, the Securities Purchase Agreement) by and between the Company and Harbin Pharmaceutical Group Holdings Co., Ltd. (the Investor), pursuant to which the Company agreed to issue and sell to the Investor, and the
Investor agreed to purchase from the Company, 299,950 shares of a newly created series of convertible preferred stock of the Company, designed the Series A Convertible Preferred Stock (the Preferred Stock), for a purchase
price of $1,000 per share, or an aggregate of approximately $300 million (the Securities Purchase). The Preferred Stock is convertible into shares of the common stock of the Company (the Common Stock) at an initial
conversion price of $5.35 per share, subject to customary anti-dilution adjustments. Pursuant to the terms of the Securities Purchase Agreement, Investor assigned its interest in the Securities Purchase Agreement to Harbin Pharmaceutical Group Co.,
Ltd., a company incorporated in the Peoples Republic of China (Hayao).
Amendment to the Securities Purchase Agreement
On November 7, 2018, the Company and Hayao entered into an Amendment to the Securities Purchase Agreement (the Amendment),
pursuant to which (a) the Company and Hayao agreed to complete the Securities Purchase as follows: (i) 100,000 shares of Preferred Stock will be issued on November 9, 2018 for a total purchase price of $100,000,000 (the Initial
Issuance), (ii) 50,000 shares of Preferred Stock will be issued on December 28, 2018 for a total purchase price of $50,000,000 (the First Subsequent Issuance) and (iii) 149,950 shares of Preferred Stock will be issued on
February 13, 2019 for a total purchase price of $149,950,000 (the Second Subsequent Issuance and together with the Initial Issuance and the First Subsequent Issuance, the Issuances), (b) Hayao will be entitled to
designate two directors to the Board following the closing of the Initial Issuance, and an additional three directors (including at least two independent directors) upon completion of the Second Subsequent Issuance, and (c) the Outside Date (as
defined in the Securities Purchase Agreement) was amended to be February 13, 2019.
The foregoing description of the Amendment is only a summary,
does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, a copy of which is attached hereto as Exhibit 10.1 and is incorporated into this Current Report on Form
8-K
by reference in its entirety.
Stockholders Agreement
Pursuant to the Amendment and in order to set forth the rights and obligations of Hayao upon the Initial Issuance, the Company and Hayao agreed to amend the
Form of Stockholders Agreement attached as Exhibit D to the Securities Purchase Agreement filed with the Securities and Exchange Commission (the SEC) on February 13, 2018 on a Current Report on Form
8-K
as Exhibit 10.1 thereto (such amended form agreement, the Stockholders Agreement). The following is a summary description of the Stockholders Agreement:
Directors
. In connection with the Stockholders Agreement and pursuant to the terms of the Bylaws (defined below), the Board will increase its size to
ten directors. Under the Stockholders Agreement, until the Sunset Date, Hayao will have the right to designate up to two directors (each an Investor Designee) to the Board. Sunset Date is defined in the Stockholders Agreement
to mean (i) prior to the First Subsequent Closing, the date upon which Hayaos ownership percentage of Common Stock is less than its ownership percentage as of immediately following the Initial Issuance (without taking into account any
decrease in such percentage as a result of actions taken by the Company or any exercise, exchange or conversion of any securities of the Company) and (ii) following the First Subsequent Closing, the date on which Hayao holds less than fifteen
percent (15%) of the outstanding Common Stock of the Company. Each of the Investor Designees is required to be reasonably satisfactory to the Companys Nominating and Corporate Governance Committee.
Voting Requirements
. Until the Sunset Date, the Stockholders Agreement generally requires Hayao to vote its shares as follows:
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In elections of directors, Hayao is required to vote its shares in favor of each of the Investor Designee or the
Boards nominees or, in the case of a contested election, either for the Boards nominees or otherwise in the same proportion as the shares owned by other stockholders are voted; and
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