As filed with the Securities and Exchange Commission on October 22, 1998
Registration No. 333-07883
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 1
TO FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
REXALL SUNDOWN, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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FLORIDA 59-1688986
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
6111 BROKEN SOUND PARKWAY, NW
BOCA RATON, FLORIDA 33487
(561) 241-9400
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
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RICHARD WERBER, ESQ.
VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
REXALL SUNDOWN, INC.
6111 BROKEN SOUND PARKWAY, NW
BOCA RATON, FLORIDA 33487
(561) 241-9400
(Name, Address, Including Zip Code, and Telephone Number, Including Area
Code, of Agent for Service)
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COPIES OF COMMUNICATIONS TO:
PAUL BERKOWITZ, ESQ.
GREENBERG, TRAURIG, P.A.
1221 BRICKELL AVENUE
MIAMI, FLORIDA 33131
(305) 579-0500
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933 (the "Securities Act"), other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_| _______________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_| _______________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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PROSPECTUS
1,000,000 SHARES
REXALL SUNDOWN, INC.
REXALL SHOWCASE INTERNATIONAL
DISTRIBUTOR STOCK OPTION PLAN
COMMON STOCK
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The Rexall Sundown, Inc. Rexall Showcase International
Distributor Stock Option Plan (the "Plan") described herein offers
eligible independent distributors of Rexall Showcase International, Inc.
("Rexall Showcase"), a wholly-owned subsidiary of Rexall Sundown, Inc. (the
"Company"), an opportunity to acquire shares of the common stock, par value
$.01 per share (the "Common Stock") of the Company.
Shares of the Common Stock of the Company for the Plan will be made
available by the Company on the terms described herein and may be newly issued
shares or previously issued shares purchased in the open market.
The Common Stock is listed on the Nasdaq National Market under the
symbol "RXSD." On October 21, 1998, the last reported sale price of the Common
Stock was $18.8125.
This Prospectus relates to an aggregate of 1,000,000 shares of Common
Stock offered hereby and registered for sale under the Plan. It is recommended
that this Prospectus be retained for future reference.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED IN EVALUATING AN INVESTMENT IN THE SHARES.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is October 22, 1998
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied (at prescribed rates) at the public reference facilities maintained by
the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and
at the following regional offices of the Commission: Seven World Trade Center,
Suite 1300, New York, New York 10048; 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and 3475 Lenox Road, N.E., Suite 1000, Atlanta, Georgia
30326. In addition, such reports, proxy statements and other information can be
obtained from the Commission's web site at http://www.sec.gov. Quotations
relating to the Company's Common Stock appear on the Nasdaq National Market.
Such reports, proxy statements and other information concerning the Company can
also be inspected at the offices of the National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on
Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the shares of Common Stock
offered hereby. This Prospectus, which is a part of the Registration Statement,
does not contain all the information set forth in, or annexed as exhibits to,
such Registration Statement, certain portions of which have been omitted
pursuant to rules and regulations of the Commission. For further information
with respect to the Company and the shares of Common Stock offered hereby,
reference is hereby made to such Registration Statement, including the exhibits
thereto. Copies of such Registration Statement, including exhibits, may be
obtained from the aforementioned public reference facilities of the Commission
upon payment of the prescribed fees, or may be examined without charge at such
facilities. Statements contained herein concerning any document filed as an
exhibit are not necessarily complete and, in each instance, reference is made to
the copy of such document filed as an exhibit to the Registration Statement.
Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission under
the Exchange Act are incorporated in and made a part of this Prospectus by
reference:
(a) the Company's Annual Report on Form 10-K for the fiscal year
ended August 31, 1997;
(b) the Company's Current Report on Form 8-K dated February 11,
1998, as amended on Form 8-K/A dated March 13, 1998;
(c) the Company's Current Report on Form 8-K dated September 29,
1998;
(d) the Company's Proxy Statement dated December 29, 1997;
(e) the Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended November 30, 1997, February 28, 1998 and May
31, 1998; and
(f) the description of the Common Stock contained in the Company's
Registration Statement on Form 8-A dated June 7, 1993
(Registration No. 0-21884).
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of this offering shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein, or in any other
subsequently filed documents, which also are incorporated or deemed to be
incorporated by reference herein, modifies or supersedes such
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statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not
presented herein or delivered herewith. The Company hereby undertakes to
provide, without charge, to each person, including any beneficial owner, to whom
a copy of this Prospectus is delivered, on the written or oral request of such
person, a copy of any or all of the information incorporated herein by
reference. Exhibits to any of such documents, however, will not be provided
unless such exhibits are specifically incorporated by reference into such
documents. The requests should be addressed to the Company's principal executive
offices: Attn: Secretary, 6111 Broken Sound Parkway, NW, Boca Raton, Florida
33487, telephone number (561) 241-9400.
THE COMPANY
Rexall Sundown, Inc. (the "Company") develops, manufactures, markets
and sells vitamins, nutritional supplements and consumer health products through
three channels of distribution: sales to retailers; direct sales through
independent distributors and mail order. The Company offers a broad line of
approximately 1,300 products consisting of approximately 1,900 stock keeping
units ("SKUs"), including vitamins in both multivitamin and single entity
formulas, minerals, herbals, homeopathic remedies, weight management products,
skin care products and over-the-counter ("OTC") pharmaceuticals. For its sales
to retailers, the Company employs a multi-brand strategy to access several
different classes of trade: Sundown(R) for mass merchandisers, drug storE chains
and supermarkets; Rexall(R) for independent drug stores; and Thompson(R) for
health food stores. In additiON, the Company markets and sells a comprehensive
line of diet and weight management products under the Richardson Labs(R) brand
to major retailers and distributors in the food, drug, mass and heath food
channels of trade. ThE Company's catalog and mail order sales of vitamins,
nutritional supplements and other products are made through its SDV division.
Direct sales of certain health and wellness products to independent distributors
are made through the Company's network marketing subsidiary, Rexall Showcase.
The Company's pharmaceutical and health services division sells over-the-counter
pharmaceutical products, vitamins and nutritional supplements to the managed
care industry under the Rexall Managed Care(R) tradename.
The Company was incorporated in the State of Florida in 1976. The
Company's executive offices are located at 6111 Broken Sound Parkway, NW, Boca
Baton, Florida 33487 and its telephone number is (561) 241-9400. As used herein,
the "Company" means Rexall Sundown, Inc. and its subsidiaries, except where the
context indicates otherwise.
RISK FACTORS
PROSPECTIVE PARTICIPANTS IN THE PLAN SHOULD CAREFULLY CONSIDER THE
SPECIFIC FACTORS SET FORTH BELOW, AS WELL AS THE OTHER INFORMATION CONTAINED IN
THIS PROSPECTUS BEFORE DECIDING TO PARTICIPATE IN THE PLAN.
THIS PROSPECTUS CONTAINS CERTAIN "FORWARD-LOOKING STATEMENTS" WITHIN
THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), WHICH REPRESENT THE COMPANY'S EXPECTATIONS OR BELIEFS,
INCLUDING, BUT NOT LIMITED TO, STATEMENTS CONCERNING INDUSTRY PERFORMANCE, THE
COMPANY'S OPERATIONS, ECONOMIC PERFORMANCE, FINANCIAL CONDITION, GROWTH AND
ACQUISITION STRATEGIES AND MARGINS AND GROWTH IN SALES OF THE COMPANY'S
PRODUCTS. FOR THIS PURPOSE, ANY STATEMENTS CONTAINED IN THIS PROSPECTUS THAT ARE
NOT STATEMENTS OF HISTORICAL FACT MAY BE DEEMED TO BE FORWARD-LOOKING
STATEMENTS. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, WORDS SUCH AS
"MAY," "WILL," "EXPECT," "BELIEVE," "ANTICIPATE," "INTEND," "COULD," "ESTIMATE"
OR "CONTINUE" OR THE NEGATIVE OR OTHER VARIATIONS THEREOF OR COMPARABLE
TERMINOLOGY ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE
STATEMENTS BY THEIR NATURE INVOLVE SUBSTANTIAL RISKS AND UNCERTAINTIES, CERTAIN
OF WHICH ARE BEYOND THE COMPANY'S CONTROL, AND ACTUAL RESULTS MAY DIFFER
MATERIALLY DEPENDING ON A VARIETY OF IMPORTANT FACTORS, INCLUDING THOSE
DESCRIBED BELOW UNDER THIS "RISK FACTORS" SECTION AND ELSEWHERE IN THIS
PROSPECTUS.
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UNCERTAINTY RELATED TO ACQUISITIONS
The Company intends to pursue the acquisition of complementary
products, product lines or businesses. Acquisitions involve a number of risks
that could adversely affect the Company's operating results, including the
diversion of management's attention, the assimilation of operations and
personnel of the acquired companies, the amortization of acquired intangible
assets and the potential loss of key employees of the acquired companies. There
can be no assurance that the Company will consummate future acquisitions on
satisfactory terms, if at all, that adequate financing will be available on
terms acceptable to the Company, if at all, that any acquired products, product
lines or businesses will be successfully integrated or that such products,
product lines or businesses will ultimately have a positive impact on the
Company, its financial condition or results of operations.
GOVERNMENT REGULATION
The manufacturing, processing, formulation, packaging, labeling and
advertising of the Company's products are subject to regulation by one or more
federal agencies, including the United States Food and Drug Administration
("FDA"), the Federal Trade Commission ("FTC"), the Consumer Product Safety
Commission, the United States Department of Agriculture, the United States
Postal Service, the United States Environmental Protection Agency and the
Occupational Safety and Health Administration. These activities are also
regulated by various agencies of the states and localities, as well as foreign
countries, in which the Company's products are sold. In particular, the FDA
regulates the safety, labeling and distribution of dietary supplements,
including vitamins, minerals, herbs, food, OTC and prescription drugs and
cosmetics. The regulations that are promulgated by the FDA relating to the
manufacturing process are known as Current Good Manufacturing Practices
("CGMPs"), and are different for drug and food products. In addition, the FTC
has overlapping jurisdiction with the FDA to regulate the labeling, promotion
and advertising of vitamins, OTC drugs, cosmetics and foods.
The Dietary Supplement Health and Education Act of 1994 ("DSHEA") was
enacted on October 25, 1994. DSHEA amends the Federal Food, Drug and Cosmetic
Act by defining dietary supplements, which include vitamins, minerals,
nutritional supplements and herbs, as a new category of food separate from
conventional food. DSHEA provides a regulatory framework to ensure safe, quality
dietary supplements and the dissemination of accurate information about such
products. Under DSHEA, the FDA is generally prohibited from regulating the
active ingredients in dietary supplements as drugs unless product claims, such
as claims that a product may heal, mitigate, cure or prevent an illness, disease
or malady, trigger drug status.
DSHEA provides for specific nutritional labeling requirements for
dietary supplements and FDA's final regulations require that all dietary
supplements must be labeled in compliance with the regulations by no later than
March 23, 1999. DSHEA permits substantiated, truthful and non-misleading
statements of nutritional support to be made in labeling, such as statements
describing general well-being resulting from consumption of a dietary ingredient
or the role of a nutrient or dietary ingredient in affecting or maintaining a
structure or function of the body. The Company anticipates that the FDA will
finalize CGMPs which are specific to dietary supplements and require at least
some of the quality control provisions contained in the CGMPs for drugs. The
Company currently manufactures its vitamins and nutritional supplement products
in compliance with the applicable food CGMPs.
The FDA has finalized some of its regulations, including those
relating to nutritional labeling requirements. The FDA also has under
development additional regulations to implement DSHEA. Final labeling
regulations require expanded or different labeling for the Company's vitamin and
nutritional supplement products. The Company cannot determine what effect such
regulations, when fully implemented, will have on its business in the future.
Such regulations could, among other things, require the recall, reformulation or
discontinuance of certain products, additional recordkeeping, warnings,
notification procedures and expanded documentation of the properties of certain
products and scientific substantiation regarding ingredients, product claims,
safety or efficacy. Failure to comply with applicable FDA requirements can
result in sanctions being imposed on the Company or the manufacturers of its
products, including, warning letters, fines, product recalls and seizures.
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Governmental regulations in foreign countries where the Company plans
to commence or expand sales may prevent or delay entry into a market or prevent
or delay the introduction, or require the reformulation, of certain of the
Company's products.
Rexall Showcase is subject to regulation under various international,
state and local laws which include provisions regulating, among other things,
the operation of direct sales programs. In addition, many countries currently
have laws that would restrict or prohibit direct sales companies, such as Rexall
Showcase, from conducting business therein.
In addition, the Company cannot predict whether new domestic or
foreign legislation regulating its activities will be enacted. Such new
legislation could have a material adverse effect on the Company.
MANAGING AND MAINTAINING GROWTH
The Company is currently experiencing a period of rapid growth and
expansion which has placed, and could continue to place, a significant strain on
the Company's management, customer service and support operations, sales and
administrative personnel and other resources. In order to serve the needs of its
existing and future customers, the Company has substantially increased and will
continue to increase its workforce, which requires the Company to attract,
train, motivate and manage qualified employees. The Company's ability to manage
its planned growth requires the Company to continue to expand its operating,
management, information and financial systems, all of which may significantly
increase its operating expenses. If the Company fails to achieve its growth as
planned or is unsuccessful in managing its anticipated growth, there could be a
material adverse effect on the Company. In addition, the Company's retail
customers are not generally bound to purchase products from the Company for any
significant length of time. Although the Company has entered into agreements
with certain of its retail customers, these agreements can generally be canceled
on short notice without cause and with minimal or no liability to such
customers. The loss of a significant customer or a number of customers, or a
significant reduction in purchase volume by or financial difficulty of such
customers, for any reason, could have a material adverse effect on the Company.
EFFECT OF ADVERSE PUBLICITY
The Company's products consist of vitamins, minerals, herbs and other
ingredients that the Company regards as safe when taken as suggested by the
Company and that various scientific studies have suggested may offer health
benefits. While the Company conducts extensive quality control testing on its
products, the Company generally does not conduct or sponsor clinical studies
relating to the benefits of its products. The Company is highly dependent upon
consumers' perception of the overall integrity of its business, as well as the
safety and quality of its products and similar products distributed by other
companies which may not adhere to the same quality standards as the Company. The
Company could be materially adversely affected if any of the Company's products
or any similar products distributed by other companies should prove or be
asserted to be harmful to consumers or if scientific studies provide unfavorable
findings regarding the effectiveness of the Company's products. Rexall
Showcase's ability to attract and retain independent distributors could be
adversely affected by negative publicity relating to it or to other direct sales
organizations, or by the announcement by any governmental agency of
investigatory proceedings regarding the business practices of Rexall Showcase or
other direct sales organizations.
RELIANCE ON INDEPENDENT DISTRIBUTORS OF REXALL SHOWCASE
Rexall Showcase's sales are directly dependent upon the efforts of its
independent distributors, and any growth in sales volume will require an
increase in the productivity or the number of such distributors. As is typical
in the direct sales industry, there is turnover in distributors from year to
year, which requires the sponsoring and training of new distributors by existing
distributors in order to maintain the size of the distributor network. The
Company experiences seasonal decreases in distributor sponsoring and product
sales due to summer and winter holiday periods. Other factors such as general
economic conditions and negative publicity relating to Rexall Showcase or other
direct sales organizations could also adversely affect the ability of Rexall
Showcase to maintain or expand its distributor
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network. The loss of a key distributor or group of distributors could adversely
affect sales of Rexall Showcase products and impair Rexall Showcase's ability to
attract new distributors.
CENTRALIZED LOCATION OF MANUFACTURING OPERATIONS; AVAILABILITY OF RAW MATERIALS
The Company currently manufactures and packages substantially all of
its products at its manufacturing facilities in Boca Raton and Deerfield Beach,
Florida, and, until the opening of its distribution facility in Sparks, Nevada,
distributed all of its products from its two distribution facilities in Boca
Raton. Accordingly, any event resulting in the slowdown or stoppage of the
Company's manufacturing operations or distribution facilities in southern
Florida could have a material adverse effect on the Company. The Company
maintains business interruption insurance. There can be no assurance, however,
that such insurance will continue to be available at a reasonable cost or, if
available, will be adequate to cover any losses that may be incurred from an
interruption in the Company's manufacturing or distribution operations.
Most of the raw materials used in the Company's products are obtained
from third-party suppliers. Although the Company believes that all of its
sources for raw materials are reliable, any interruption of such supply could
have a material adverse effect on the Company.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
An element of the Company's future growth strategy is to increase the
distribution and sale of the Company's products into international markets. The
Company's existing and planned international operations are subject to political
and economic uncertainties, including, among others, inflation, risk of
renegotiation or modification of existing agreements or arrangements with
governmental authorities, transportation, tariffs, export controls, government
regulation, trademark availability and registration issues, currency exchange
rate fluctuations, foreign exchange restrictions which limit the repatriation of
investments and earnings therefrom, changes in taxation, hostilities or
confiscation of property. Changes related to these matters could have a material
adverse effect on the Company.
COMPETITION
The market for the sale of vitamins and nutritional supplements is
highly competitive. Competition is based principally upon price, quality of
products, customer service and marketing support. There are numerous companies
in the vitamin and nutritional supplement industry selling products to
retailers, such as mass merchandisers, drug store chains, independent drug
stores, supermarkets and health food stores. Most of these companies are
privately held and the Company is unable to precisely assess the size of such
competitors. No company is believed to control more than 10% of this market.
Although Rexall Showcase competes with other health and nutritional
food companies, the Company believes its primary competition stems from other
direct sales companies. The Company competes in the recruitment of independent
sales people with other network marketing organizations whose product lines may
or may not compete with the Company's products.
Certain of the Company's competitors are substantially larger than the
Company and have greater financial resources.
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PRODUCT LIABILITY CLAIMS
As a marketer of vitamin and nutritional supplements and other
products that are ingested by consumers or applied to their bodies, the Company
may be subjected to various product liability claims, including, among others,
that its products contain contaminants or include inadequate instructions as to
use or inadequate warnings concerning side effects and interactions with other
substances. While such claims to date have not been material to the Company and
the Company maintains product liability insurance, there can be no assurance
that product liability claims and the resultant adverse publicity will not have
a material adverse effect on the Company.
POTENTIAL YEAR 2000 ISSUES
The Company has designated Year 2000 issues as a priority and has
allocated appropriate resources in order to minimize the impact of Year 2000
date-related problems on its business. The Company has assembled an internal
task force which is headed by an information technology vice president to review
and evaluate the Year 2000 issue as it relates to its internal computer based
and non-computer based systems as well as third party computer systems including
those of its vendors. The scope of the Company's Year 2000 analysis encompasses
the Company's traditional enterprise-wide software, its mid-range and personal
computing systems, and its embedded microprocessor systems.
For the Company's internal computer and non-computer-based systems, the
task force will identify the scope of any Year 2000 problems, prepare test
scripts in order to determine whether these sytems will be Year 2000 compliant
and implement the test scripts by conducting appropriate testing in order to
confirm actual compliance. The Company expects to complete test scripts for all
of its internal computer-based systems by the end of October 1998. The task
force is currently in the process of identifying the applicable internal
non-computer systems which potentially may be affected by Year 2000.
In order to determine the state of readiness of third parties including
the Company's significant vendors to handle Year 2000 issues and whether it will
impact the Company's business, the Company has sent letters of inquiry to
substantially all of the third parties with whom it does business. The Company's
vendors are at various stages in analyzing this issue and the Company is in the
process of receiving and analyzing their responses to the Company's letter. The
Company expects to have identified any potential Year 2000 problems with its key
vendors by the beginning of 1999. The Company has not yet established any
contingency plans but will develop such plans as needed once it identifies the
scope and magnitude of any compliance issues with its vendors. There can be no
assurance that the systems of other companies on which the Company's systems
rely or interface will be timely converted, which failure by a key vendor could
prevent the Company's products from being distributed in a timely manner.
The Company has incurred and will continue to incur internal staff
costs as well as consulting and other expenses related to Year 2000 issues. If
any of the Company's internal systems or equipment are found to be non-compliant
with Year 2000, they will need to be upgraded or replaced. To date, none of
these costs have been material. The recent growth of the Company which prompted
it, in October, 1997, to install an enterprise-wide computer system which is
utilized for the Company's manufacturing, distribution, finance and sales
functions, substantially reduces the likelihood that the costs incurred by the
Company in becoming Year 2000 compliant will be material. This enterprise-wide
system is warranted to be Year 2000 compliant by the manufacturer and the
Company will confirm its compliance by subjecting this system to the same tests
as the Company's other internal computer-based systems. The Company does not
expect that the total costs involved in becoming Year 2000 compliant will be
material to the Company's financial position, results of operations or cash
flows.
CONCENTRATION OF OWNERSHIP; CERTAIN ANTI-TAKEOVER CONSIDERATIONS
The Company's directors and executive officers and certain of their
affiliates beneficially own approximately 49% of the outstanding Common Stock,
substantially all of which is beneficially owned or controlled by Carl DeSantis,
Dean DeSantis and Damon DeSantis. Accordingly, these shareholders will continue
to have the ability to elect all of
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the directors of the Company and to thereby direct or substantially influence
the management, policies and business operations of the Company and will have
the power to control the outcome of any matters submitted to a vote of the
Company's shareholders. The Company's Board of Directors has the authority to
approve the issuance of 5,000,000 shares of preferred stock and to fix the
rights, preferences, privileges and restrictions, including voting rights, of
those shares without any further vote or action by the Company's shareholders.
The rights of the holders of Common Stock will be subject to, and may be
adversely affected by, the rights of holders of any preferred stock that may be
issued in the future. Certain provisions of Florida law, as well as the issuance
of preferred stock, could delay or inhibit the removal of incumbent directors
and could delay, defer, make more difficult or prevent a merger, tender offer or
proxy contest, or any change in control involving the Company, as well as the
removal of management, even if such events would be beneficial to the interests
of the Company's shareholders, and may limit the price certain investors may be
willing to pay in the future for shares of Common Stock.
VOLATILITY OF STOCK PRICE
The price of the Common Stock has experienced significant volatility
over the past several years. Moreover, the stock market has from time to time
experienced extreme price and volume fluctuations which may be unrelated to the
operating performance of particular companies. Market conditions in the vitamin
and nutritional supplement industry and factors such as announcements of new
products by the Company, its competitors or third parties, and changes in
earnings estimates by analysts may have a significant effect on the price of the
Common Stock.
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DESCRIPTION OF THE REXALL SUNDOWN, INC.
REXALL SHOWCASE INTERNATIONAL
DISTRIBUTOR STOCK OPTION PLAN
The following is a description of the Plan offered to selected
independent distributors of Rexall Showcase. The description of the Plan is
subject to, and is qualified in its entirety by, the full text of the Plan which
has been filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. The Plan was approved by the Company's Board of
Directors on February 6, 1996 and has been subsequently amended. All capitalized
terms not otherwise defined in this Prospectus shall have the meaning ascribed
to them in the Plan.
PURPOSE AND ADVANTAGES OF THE PLAN
The purpose of the Plan is to provide an additional incentive to
participating distributors of Rexall Showcase (each, a "Distributor") by
enabling them to acquire a stock ownership interest in the Company, to attract
and retain persons of ability as independent Distributors of Rexall Showcase and
to entice such persons to exert their best efforts on behalf of Rexall Showcase.
PARTICIPATION
Any Distributor whose network marketing activities are exclusive to
Rexall Showcase will be eligible to receive Options under the Plan. The granting
of any Options under the Plan does not confer on the recipient any right to the
continuance of his or her status as a Distributor of Rexall Showcase and will
not restrict or in any way interfere with the Company's right to terminate its
relationship with a Distributor. No Distributor has the right to receive an
Option and the grant of an Option does not confer any right to receive future
Options. No Option confers on the holder thereof any right of a shareholder with
respect to any shares of Common Stock underlying the Option until the Option has
been exercised and the shares of Common Stock underlying such Option have been
paid for in full.
ADDITIONAL OPTIONS FOR DISTRIBUTORS
All Distributors will receive an Option to purchase an additional 200
Shares on or about July 1 of each year in which they have previously qualified
to receive Options under the Plan if (i) such Distributor qualifies for Options
under the Plan during the applicable Qualification Period, (ii) such Distributor
has at least 1,000 P.P. in the month such Distributor enrolls in the Plan, and
(iii) such Distributor becomes a Director within the first two full Commission
Months of enrolling as a Distributor.
DURATION
Options will be granted to Distributors for terms of five (5) years.
1997 STOCK OPTION PROGRAM
The number of Active Legs a Distributor had at the close of the June
1997 Commission Month was such Distributor's maximum qualification level for the
Qualification Period from July 1, 1997 to June 30, 1998. However, a Distributor
may also have the opportunity to qualify and receive Options at all lower
levels. For example, a Distributor with five Active Legs at the close of the
June 1997 Commission Month will enter the 1997 Qualification Period with the
opportunity to receive options based on five Active Legs. If the Distributor
fails to maintain the five Active Leg level throughout the year, the Distributor
may qualify for Options based on the four, three, or two Active Leg levels. All
qualification levels are based upon a Distributor's effective position within
the Rexall Showcase Compensation Plan.
9
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CONDITIONS FOR GRANTS OF OPTIONS UNDER THE 1997 STOCK OPTION PROGRAM
The following sets forth the conditions for the grant of Options under
the Plan for the Qualification Period from July 1, 1997 to June 30, 1998.
1. TWO ACTIVE LEGS. A Distributor whose Qualification Level is two
Active Legs will receive an Option to purchase 200 Shares if:
(a) Such Distributor has a minimum of two Active Director Legs for
all 12 months of the Qualification Period,
(b) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period, and
(c) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 10,000 with at
least 3,000 in each Leg and the two non-qualifying months, if
any, cannot be consecutive.
Such Option will become exercisable with respect to 25% of the Shares
subject to such Option on the initial grant date and 25% on the second,
third and fourth anniversary of the initial grant date if:
(i) Such Distributor has a minimum of two Active Director Legs for
all 12 months of the applicable Qualification Period,
(ii) Such Distributor has at least 1,000 G.P. for all 12 months of
the applicable Qualification Period, and
(iii) Such Distributor's Organizational Points in 10 of the 12
months of the applicable Qualification Period are as described
in Section 1(c) above.
2. THREE ACTIVE LEGS. A Distributor whose Qualification Level is three
Active Legs will receive an Option to purchase 500 Shares if:
(a) Such Distributor has a minimum of three Active Director Legs
for all 12 months of the Qualification Period,
(b) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period, and
(c) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 30,000 with at
least 5,000 in each of two Legs and the two non-qualifying
months, if any, cannot be consecutive.
Such Option will become exercisable with respect to 25% of the Shares
subject to such Option on the initial grant date and 25% on the second,
third and fourth anniversary of the initial grant date if:
(i) Such Distributor has a minimum of three Active Director Legs
for all 12 months of the applicable Qualification Period,
(ii) Such Distributor has at least 1,000 G.P. for all 12 months of
the applicable Qualification Period, and
(iii) Such Distributor's Organizational Points in 10 of the 12
months of the applicable Qualification Period are as described
in Section 2(c) above.
3. FOUR ACTIVE LEGS. A Distributor whose Qualification Level is four
Active Legs will receive an Option to purchase 900 Shares if:
(a) Such Distributor has a minimum of four Active Director Legs
for all 12 months of the Qualification Period,
(b) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period, and
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<PAGE>
(c) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 50,000 with
10,000 in one Leg and at least 5,000 in each of two other Legs
and the two non-qualifying months, if any, cannot be
consecutive.
Such Option will become exercisable with respect to 25% of the Shares
subject to such Option on the initial grant date and 25% on the second,
third and fourth anniversary of the initial grant date if:
(i) Such Distributor has a minimum of four Active Director Legs
for all 12 months of the applicable Qualification Period,
(ii) Such Distributor has at least 1,000 G.P. for all 12
months of the applicable Qualification Period, and
(iii) Such Distributor's Organizational Points in 10 of the 12
months of the applicable Qualification Period are as described
in Section 3(c) above.
4. FIVE ACTIVE LEGS. A Distributor whose Qualification Level is five
Active Legs will receive an Option to purchase 1,400 Shares if:
(a) Such Distributor has a minimum of five Active Director
Legs for all 12 months of the Qualification Period,
(b) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period, and
(c) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 75,000 with
10,000 in each of two Legs and at least 5,000 in each of two
other Legs and the two non-qualifying months, if any, cannot
be consecutive.
Such Option will become exercisable with respect to 25% of the Shares
subject to such Option on the initial grant date and 25% on the second,
third and fourth anniversary of the initial grant date if:
(i) Such Distributor has a minimum of five Active Director Legs
for all 12 months of the applicable Qualification Period,
(ii) Such Distributor has at least 1,000 G.P. for all 12
months of the applicable Qualification Period, and
(iii) Such Distributor's Organizational Points in 10 of the 12
months of the applicable Qualification Period are as described
in Section 4(c) above.
5. SIX ACTIVE LEGS. A Distributor whose Qualification Level is six
Active Legs will receive an Option to purchase 2,000 Shares if:
(a) Such Distributor has a minimum of six Active Director
Legs for all 12 months of the Qualification Period,
(b) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period, and
(c) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 150,000 with
25,000 in each of three Legs, 10,000 in one Leg and at least
5,000 in each of two other Legs and the two non-qualifying
months, if any, cannot be consecutive.
Such Option will become exercisable with respect to 25% of the Shares
subject to such Option on the initial grant date and 25% on the second,
third and fourth anniversary of the initial grant date if:
(i) Such Distributor has a minimum of six Active Director Legs
for all 12 months of the applicable Qualification Period,
(ii) Such Distributor has at least 1,000 G.P. for all 12
months of the applicable Qualification Period, and
(iii) Such Distributor's Organizational Points in 10 of the 12
months of the applicable Qualification Period are as
described Section 5(c) above.
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1996 STOCK OPTION PROGRAM
The number of Active Legs a Distributor had at the close of the June
1996 Commission Month will be such Distributor's minimum qualification level for
the Qualification Period from July 1, 1996 to June 30, 1997. For example, a
Distributor with five Active Legs at the close of the June 1996 Commission Month
only had the opportunity to qualify for Options based on five Active Legs and
above and not for Options based on four Active Legs. Distributors who had four
Active Legs or less for the June 1996 Commission Month had the opportunity to
qualify for Options based on four Active Legs or more. All qualification levels
are based upon a Distributor's effective position with the Rexall Showcase
Compensation Plan.
CONDITIONS FOR GRANTS OF OPTIONS UNDER THE 1996 STOCK OPTION PROGRAM
The following sets forth the conditions for the grant of Options under
the Plan during the Qualification Period from July 1, 1996 to June 30, 1997.
6. FOUR ACTIVE LEGS. A Distributor whose Qualification Level is four
Active Legs will receive an Option to purchase 1,000 Shares if:
(a) Such Distributor has a minimum of four Active Director
Legs for all 12 months of the Qualification Period,
(b) Such Distributor has at least 2,000 G.P. for all 12 months of
the Qualification Period, and
(c) Such Distributor's Organizational Points for 9 of the 12
months of the Qualification Period are at least 3,000 in each
of 2 Legs and at least 2,000 in one other Leg.
or, as of March 1, 1997:
(A) Such Distributor has a minimum of four Active Director Legs
for all 12 months of the Qualification Period,
(B) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period, and
(C) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 50,000 with
10,000 in one Leg and at least 5,000 in each of two other Legs
and the two non-qualifying months, if any, cannot be
consecutive.
Such Option will become exercisable with respect to 20% of the Shares
subject to such Option on the initial grant date and 20% on the first,
second, third and fourth anniversary of the initial grant date if:
(i) Such Distributor has a minimum of four Active Director
Legs for all 2 months of the applicable Qualification
Period,
(ii) Such Distributor has at least 2,000 G.P. for 9 of the 12
months of the applicable Qualification Period, and
(iii) Such Distributor's Organizational Points in 6 of the 12 months
of the applicable Qualification Period are as described in
Section 6(c) above.
or
(1) Such Distributor's active Director legs, G.P. and
Organizational Points are as described in 6(A) - (C) above for
the Four Active Leg level.
7. FIVE ACTIVE LEGS. A Distributor will receive an Option to purchase
1,500 Shares if:
(a) Such Distributor has a minimum of five active Director
Legs for all 12 months of the Qualification Period;
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<PAGE>
(b) Such Distributor has at least 2,000 G.P. for all 12 months of
the Qualification Period; and
(c) Such Distributor's Organizational Points for 9 of the 12
months of the Qualification Period are at least 5,000 in each
of 2 Legs and at least 2,000 in each of 2 other Legs.
or, as of March 1, 1997:
(A) Such Distributor has a minimum of five active Director legs
for all 12 months of the Qualification Period;
(B) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period; and
(C) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 75,000 with
10,000 in each of 2 legs and at least 5,000 in each of 2
other legs and the two non-qualifying months, if any, cannot
be consecutive.
Such Option will become exercisable with respect to 20% of the Shares
subject to such Option on the initial grant date and 20% on the first,
second, third and fourth anniversary date of the initial grant date if
either of the following requirements are met:
(i) Such Distributor has a minimum of five active Director Legs
for all 12 months of the applicable Qualification Period;
(ii) Such Distributor has at least 2,000 G.P. for 9 of the 12
months of the applicable Qualification Period; and
(iii) Such Distributor's Organizational Points in 6 of the 12 months
of the applicable Qualification Period are at least 5,000 in
each of 2 Legs and at least 2,000 in each of 2 other Legs.
or
(1) Such Distributor's active Director legs, G.P. and
Organizational Points are as described in 7(A) - (C) above for
the Five Active Leg level.
8. SIX ACTIVE LEGS. A Distributor will receive an Option to purchase
2,500 Shares if:
(a) Such Distributor has a minimum of six active Director
Legs for all 12 months of the Qualification Period;
(b) Such Distributor has at least 2,000 G.P. for all 12 months of
the Qualification Period; and
(c) Such Distributor's Organizational Points for 9 of the 12
months of the Qualification Period are at least 7,500 in each
of 2 Legs and at least 5,000 in each of 2 other Legs.
or, as of March 1, 1997:
(A) Such Distributor has a minimum of six active Director legs for
all 12 months of the Qualification Period;
(B) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period; and
(C) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 150,000 with
25,000 in each of 3 legs, 10,000 in 1 leg and at least 5,000
in each of 2 other legs and the two non-qualifying months, if
any, cannot be consecutive.
Such Option will become exercisable with respect to 20% of the Shares
subject to such Option on the initial grant date and 20% on the first,
second, third and fourth anniversary date of the initial grant date if
either of the following requirements are met:
(i) Such Distributor has a minimum of six active Director Legs
for all 12 months of the applicable Qualification Period;
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<PAGE>
(ii) Such Distributor has at least 2,000 G.P. for 9 of the 12
months of the applicable Qualification Period; and
(iii) Such Distributor's Organizational Points in 6 of the 12 months
of the applicable Qualification Period are at least 7,500 in
each of 2 Legs and at least 5,000 in each of 2 other Legs.
or
(1) Such Distributor's active Director legs, G.P. and
Organizational Points are as described in 8(A) - (C) above for
the Six Active Leg level.
9. TEN ACTIVE LEGS. A Distributor will receive an Option to purchase
5,000 Shares if:
(a) Such Distributor has a minimum of ten active Director
Legs for all 12 months of the Qualification Period;
(b) Such Distributor has at least 2,000 G.P. for all 12 months of
the Qualification Period; and
(c) Such Distributor's Organizational Points for 9 of the 12
months of the Qualification Period are at least 10,000 in each
of 2 Legs and at least 5,000 in each of 5 other Legs.
or, as of March 1, 1997:
(A) Such Distributor has a minimum of six active Director legs for
all 12 months of the Qualification Period;
(B) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period; and
(C) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 150,000 with
25,000 in each of 3 legs, 10,000 in 1 leg and at least 5,000
in each of 2 other legs and the two non-qualifying months, if
any, cannot be consecutive.
Such Option will become exercisable with respect to 20% of the Shares
subject to such Option on the initial grant date and 20% on the first,
second, third and fourth anniversary date of the initial grant date if
either of the following requirements are met:
(i) Such Distributor has a minimum of ten active Director Legs
for all 12 months of the applicable Qualification Period;
(ii) Such Distributor has at least 2,000 G.P. for 9 of the 12
months of the applicable Qualification Period; and
(iii) Such Distributor's Organizational Points in 6 of the 12 months
of the applicable Qualification Period are at least 10,000 in
each of 2 Legs and at least 5,000 in each of 5 other Legs.
or
(1) Such Distributor's active Director legs, G.P. and
Organizational Points are as described in 9(A) - (C) above for
the Six Active Leg level.
10. ADDITIONAL OPTIONS FOR PRESIDENTS CLUB MEMBERS. A Distributor who
is a member of the Presidents Club during either of the Bonus Pool periods
during the Qualification Period (July 1996 to December 1996 or January 1997 to
June 1997) will receive an Option to purchase 2,500 additional Shares if:
(a) Such Distributor has a minimum of six active Director
Legs for all 12 months of the Qualification Period;
(b) Such Distributor has at least 2,000 G.P. for all 12 months of
the Qualification Period; and
(c) Such Distributor's Organizational Points for 9 of the 12
months of the Qualification Period are at least 50,000 in 1
Leg, at least 30,000 in each of 2 other Legs and at least
5,000 in each of 3 additional Legs;
14
<PAGE>
or, as of March 1, 1997:
(A) Such Distributor has a minimum of six active Director legs for
all 12 months of the Qualification Period;
(B) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period; and
(C) Such Distributor's Organizational Point for 10 of the 12
months of the Qualification Period are at least 150,000 with
25,000 in each of 3 legs, 10,000 in 1 leg and at least 5,000
in each of 2 other legs and the two non-qualifying months, if
any, cannot be consecutive; provided, however, a Distributor
may only receive additional Options as a member of the
Presidents Club or the Chairman's Club, but not as a member of
both Clubs.
Such Option will become exercisable with respect to 20% of the Shares
subject to such Option on the initial grant date and 20% on the first,
second, third and fourth anniversary date of the initial grant date if
either of the following requirements are met:
(i) Such Distributor has a minimum of six active Director Legs
for all 12 months of the applicable Qualification Period;
(ii) Such Distributor has at least 2,000 G.P. for 9 of
the 12 months of the applicable Qualification Period; and
(iii) Such Distributor's Organizational Points in 6 of the 12 months
of the applicable Qualification Period are at least 50,000 in
1 Leg, at least 30,000 in each of 2 other Legs and at least
5,000 in each of 3 additional Legs.
or
(1) Such Distributor's active Director legs, G.P. and
Organizational Points are as described in 10(A) - (C) above
for the Six Active Leg level.
11. ADDITIONAL OPTIONS FOR CHAIRMAN'S CLUB MEMBERS. A Distributor who
is a member of the Chairman's Club during either of the Bonus Pool periods
during the Qualification Period (July 1996 to December 1996 or January 1997 to
June 1997) will receive an Option to purchase 5,000 additional Shares if:
(a) Such Distributor has a minimum of ten active Director
Legs for all 12 months of the Qualification Period;
(b) Such Distributor has at least 2,000 G.P. for all 12 months of
the Qualification Period; and
(c) Such Distributor's Organizational Points for 9 of the 12
months of the Qualification Period are at least 100,000 in 1
Leg, at least 50,000 in each of 2 other Legs and at least
5,000 in each of 5 additional Legs.
or, as of March 1, 1997:
(A) Such Distributor has a minimum of six active Director legs for
all 12 months of the Qualification Period;
(B) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period; and
(C) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 150,000 with
25,000 in each of 3 legs, 10,000 in 1 leg and at least 5,000
in each of 2 other legs and the two non-qualifying months, if
any, cannot be consecutive.
Such Option will become exercisable with respect to 20% of the Shares
subject to such Option on the initial grant date and 20% on the first,
second, third and fourth anniversary date of the initial grant date if
the following three requirements are met:
15
<PAGE>
(i) Such Distributor has a minimum of six active Director
legs for all 12 months of the Qualification Period;
(ii) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period; and
(iii) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 150,000 with
25,000 in each of 3 legs, 10,000 in 1 leg and at least 5,000
in each of 2 other legs and the two non-qualifying months, if
any, cannot be consecutive.
12. ADDITIONAL OPTIONS FOR AMBASSADORS CLUB MEMBERS. A Distributor who
is a member of the Ambassadors Club during either of the Bonus Pool periods
during the Qualification Period (July 1996 to December 1996 or January 1997 to
June 1997) will receive an Option to purchase 5,000 additional Shares if:
(a) Such Distributor has a minimum of ten active Director
Legs for all 12 months of the Qualification Period;
(b) Such Distributor has at least 2,000 G.P. for all 12 months of
the Qualification Period; and
(c) Such Distributor's Organizational Points for 9 of the 12
months of the Qualification Period are at least 100,000 in
each of 4 Legs, at least 50,000 in one other Leg and at least
5,000 in each of 5 more Legs.
or, as of March 1, 1997:
(A) Such Distributor has a minimum of six active Director legs for
all 12 months of the Qualification Period;
(B) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period; and
(C) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 150,000 with
25,000 in each of 3 legs, 10,000 in 1 leg and at least 5,000
in each of 2 other legs and the two non-qualifying months, if
any, cannot be consecutive.
Such Option will become exercisable with respect to 20% of the Shares
subject to such Option on the initial grant date and 20% on the first,
second, third and fourth anniversary date of the initial grant date if
the following three requirements are met:
(i) Such Distributor has a minimum of six active Director
legs for all 12 months of the Qualification Period;
(ii) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period; and
(iii) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 150,000 with
25,000 in each of 3 legs, 10,000 in 1 leg and at least 5,000
in each of 2 other legs and the two non-qualifying months, if
any, cannot be consecutive.
ADMINISTRATION
The Plan will be administered by the Company's Compensation/Stock
Option Committee, appointed by the Board (the "Committee") consisting of two or
more of the Company's directors. Any member of the Committee may be removed at
any time, with or without cause, by resolution of the Board and any vacancy
occurring in the membership of the Committee may be filled by appointment of the
Board.
In granting options to Distributors, the Committee shall follow the
guidelines set forth in the Plan. The Committee may from time to time in
granting options prescribe such other terms and conditions concerning such
options as it deems appropriate, including, without limitation, (i) prescribing
the date or dates on which the Option becomes exercisable, (ii) providing that
the Options accrue or become exercisable in installments over a period of years,
or upon the attainment of stated goals or both, or (iii) relating an Option to
the continued service as a Distributor for a specified period of time. The
Committee may, from time to time, adopt such rules and regulations as it deems
appropriate to administer the Plan, and make determinations and interpretations
concerning the application of the Plan's provisions, which interpretations and
determinations will be final and conclusive. The present members of the
16
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Committee are Stanley Leedy and Melvin Stith and their address is c/o the
Company, 6111 Broken Sound Parkway, NW, Boca Raton, Florida 33487.
SHARES OF STOCK OFFERED UNDER THE PLAN
The Company has reserved 1,000,000 Shares for issuance under the
Plan. The Shares have been registered with the Securities and Exchange
Commission (the "Commission"). The Shares are listed on the National Association
of Securities Dealers Automated Quotation National Market System ("Nasdaq NMS"),
under the symbol "RXSD."
The number of Shares issuable under the Plan is subject to
appropriate adjustment in the event of a stock split, reverse stock split,
consolidation of Shares, capital adjustment, payment of stock dividend or
distribution, or other increase or decrease in the Shares without receipt of
consideration. The Committee may make proportionate adjustments in the number of
Shares which are subject to purchase under outstanding Options and in the
exercise price per share upon the occurrence of such events. Notice of any
adjustment in any Shares or in any exercise price will be given by the Company
to each holder of an Option affected by the adjustment and such adjustment
(whether or not notice was received) will be binding on affected option holders.
Options granted pursuant to the Plan will be evidenced by an
agreement consistent with the terms and conditions of the Plan and grant of the
Option and will be binding on the Distributor and the Company. The agreement
will set forth the price at which the Option can be exercised, but in no event
will the Option price be less than the fair market value of the Shares at the
time the Option is granted.
The purchase price of the shares of Common Stock purchased pursuant
to the Options granted under the Plan will be 100% of the fair market value on
the date of grant of the Option and must be paid in full at the time the Option
is exercised. No Shares will be issued or transferred until full payment has
been received. Payment may be in cash, by certified or official bank check or by
money order; provided, further, however, that the Committee in its sole
discretion may accept a personal check in full or partial payment of any Shares.
TERMINATION OF DISTRIBUTOR STATUS AND TRANSFERABILITY OF OPTIONS
Options are only transferable by will and the laws of descent and
distribution. Options may not be assigned, transferred, pledged, alienated or
hypothecated in any manner during the Distributor's lifetime except as permitted
by the Plan. Neither the Plan nor any Options granted under the Plan shall
confer upon any person any right to continuance of status as a Distributor of
Rexall Showcase.
The unexercised portion of any Option shall automatically and without
notice terminate and become null and void at the time of the earliest to occur
of the following:
(a) immediately upon the termination of the Optionee's status as a
Distributor for any reason;
(b) immediately if Distributor's network marketing efforts are not
exclusive to Rexall Showcase; or
(c) three months after the date of termination of the Optionee's
status as a Distributor by reason of death of the Optionee if
the Optionee is an individual.
TERM, MODIFICATION AND TERMINATION OF PLAN
The Plan became effective on February 6, 1996 and will continue in
effect until February 5, 2006, unless earlier terminated by the Board. The Board
or the Committee may at any time and from time to time amend, modify suspend or
terminate the Plan or any Option.
17
<PAGE>
Upon the dissolution or liquidation of the Company, any unexercised
Options shall be deemed canceled. Otherwise all obligations of the Company under
the Plan shall be binding on any successor corporation whether by of merger,
consolidation or reorganization.
FEDERAL INCOME TAX CONSEQUENCES
Under the Internal Revenue Code of 1986, as amended, (the "Code"), a
Distributor incurs no tax liability on the grant of Options. The Distributor is,
however, required to recognize as income the spread, at the time of exercise,
between the fair market value of the shares received upon exercise and the
Option price.
Each Participant is advised to consult with a tax advisor to determine
the tax consequences of a particular transaction in the Participant's Account.
REGULATIONS APPLICABLE TO SHARES
The Plan is governed by the laws of the State of Florida and will be
construed pursuant to the requirements of the Code. If any law or regulation of
the Commission , or any regulation of any other commission or agency having
jurisdiction requires the Company or the Distributor to take any action with
respect to the Shares acquired by the exercise of an Option, then the date upon
which the Company delivers or causes to be delivered the certificate for the
Shares will be postponed until full compliance shall have been made with all
such requirements.
USE OF PROCEEDS
The Company is neither able to predict the number of Options granted to
Distributors nor the number of shares of Common Stock underlying such Options
that will ultimately be sold pursuant to the Plan or the prices at which such
shares will be sold. The net proceeds from the sale of shares of Common Stock
that are originally issued by the Company and offered pursuant to the Plan will
be used for general corporate purposes.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has authority under the Florida Business Corporation Act to
indemnify its directors and officers to the extent provided for in such statute.
The Company's Amended and Restated Articles of Incorporation provide that, to
the extent permitted by Florida law, the Company shall indemnify and shall
advance expenses on behalf of its officers and directors. Insofar as
indemnification for liabilities under the Securities Act may be permitted to
directors, officers or persons controlling the Company, pursuant to the
foregoing provisions, or otherwise, the Company has been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
The Company also maintains directors' and officers' liability insurance.
LEGAL MATTERS
The validity of the shares of Common Stock being offered hereby is
being passed upon for the Company by Greenberg, Traurig, Hoffman, Lipoff, Rosen
& Quentel, P.A., 1221 Brickell Avenue, Miami, Florida 33131.
EXPERTS
The financial statements of the Company incorporated by reference in
this Prospectus have been incorporated herein in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given upon their
authority of that firm as experts in accounting and auditing.
18
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EXHIBIT I
---------
REXALL SUNDOWN, INC.
REXALL SHOWCASE INTERNATIONAL
DISTRIBUTOR STOCK OPTION PLAN
1. PURPOSE. The purpose of this Plan is to provide an additional
incentive to participating Rexall Showcase International, Inc. ("Rexall
Showcase") Distributors (as hereinafter defined) by enabling them to acquire a
stock ownership interest in Rexall Sundown, Inc., a Florida corporation (the
"Company"), of which Rexall Showcase is a wholly-owned subsidiary, and to
attract and retain persons of ability as independent distributors of Rexall
Showcase and entice such persons to exert their best efforts on behalf of Rexall
Showcase. All capitalized items not otherwise defined herein shall have the
definition ascribed to them in the Rexall Showcase Compensation Plan as
currently in force and as amended from time to time.
2. DEFINITIONS. As used herein, the following terms shall have
the meaning indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Committee" shall mean the Compensation/Stock Option Committee
appointed by the Board or, if not appointed, the Board.
(c) "Common Stock" shall mean the Company's Common Stock, par
value $.01 per share.
(d) "Distributor" shall mean an individual, partnership or
corporation whose completed Distributor Application has been received and
accepted by Rexall Showcase and whose network marketing efforts are exclusive to
Rexall Showcase.
(e) "Fair Market Value" of a Share on any date of reference shall
be the "Closing Price" (as hereinafter defined) of the Common Stock on such date
(or, if such date is not a business day, on the immediately preceding business
day), unless the Committee in its sole discretion shall determine otherwise in a
fair and uniform manner. For the purpose of determining Fair Market Value, the
"Closing Price" of the Common Stock on any business day shall be (i) if the
Common Stock is listed or admitted for trading on any United States national
securities exchange, or if actual transactions are otherwise reported on a
consolidated transaction reporting system, the last reported sale price of
Common Stock on such exchange or reporting system, as reported in any newspaper
of general circulation, (ii) if the Common Stock is listed on the National
Association of Securities Dealers Automated Quotations System ("Nasdaq"), or any
similar system of automated dissemination of quotations of securities prices in
common use, the last reported sale price of Common Stock for such day on such
system, or (iii) if neither clause (i) or (ii) is applicable, the mean between
the high bid and low asked quotations for the Common Stock as reported by the
National Quotation Bureau, Incorporated if at least two securities dealers have
inserted both bid and asked quotations for Common Stock on at least five of the
ten preceding days.
(f) "Option" shall mean any stock option granted under this Plan.
(g) "Optionee" shall mean a Distributor to whom an Option is
granted under this Plan or any person who succeeds to the rights of such
Distributor under this Plan by reason of the death of such person.
(h) "Plan" shall mean this Rexall Sundown, Inc. Rexall Showcase
International Distributor Stock Option Plan.
(i) "Securities Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
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(j) "Share(s)" shall mean a share or shares of the Common Stock.
3. SHARES AND OPTIONS. The Company may grant to Optionees from
time to time Options to purchase an aggregate of up to One Million (1,000,000)
Shares from authorized and unissued Shares. If any Option granted under the Plan
shall terminate, expire, or be canceled or surrendered as to any Shares, new
Options may thereafter be granted covering such Shares.
4. CONDITIONS FOR GRANT OF OPTIONS.
(a) Each Option shall be evidenced by an option agreement that may
contain any term deemed necessary or desirable by the Committee, provided such
terms are not inconsistent with this Plan or any applicable law.
(b) In granting Options to Distributors, the Committee shall
follow the guidelines set forth on EXHIBIT A attached hereto, as amended from
time to time. The Committee may from time to time in granting Options prescribe
such other terms and conditions concerning such Options as it deems appropriate,
including, without limitation, (i) prescribing the date or dates on which the
Option becomes exercisable, (ii) providing that the Options accrue or become
exercisable in installments over a period of years, or upon the attainment of
stated goals or both, or (iii) relating an Option to the continued service as a
Distributor for a specified period of time.
(c) Neither the Plan nor any Option granted under the Plan shall
confer upon any person any right to continuance of status as a Distributor with
Rexall Showcase.
5. OPTION PRICE. The option price per Share of any Option shall be
any price determined by the Committee but shall not be less than the Fair Market
Value per Share.
6. EXERCISE OF OPTIONS. An Option shall be deemed exercised when
(a) the Company has received written notice of such exercise in accordance with
the terms of the Option, (b) full payment of the aggregate option price of the
Shares as to which the Option is exercised has been made, and (c) arrangements
that are satisfactory to the Committee in its sole discretion have been made for
the Optionee's payment to the Company of the amount that is necessary for the
Company to withhold in accordance with applicable Federal or state tax
withholding requirements. Unless further limited by the Committee in any Option,
the option price of any Shares purchased shall be paid in cash, by certified or
official bank check or by money order; provided, further, however, that the
Committee in its sole discretion may accept a personal check in full or partial
payment of any Shares. No Optionee shall be deemed to be a holder of any Shares
subject to and unless and until a stock certificate or certificates for such
Shares are issued to such person(s) under the terms of this Plan. No adjustment
shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights for which the
record date is prior to the date such stock certificate is issued, except as
expressly provided in Section 9 hereof.
7. EXERCISABILITY OF OPTIONS. Any Option shall become exercisable
in such amounts, at such intervals and upon such terms as the Committee shall
provide in such Option, except as otherwise provided in this Section 7. The
expiration date of an Option shall be determined by the Committee at the time of
grant, but in no event shall an Option be exercisable after the expiration of
ten (10) years from the date of grant of the Option.
8. TERMINATION OF OPTION PERIOD.
The unexercised portion of any Option shall automatically and
without notice terminate and become null and void at the time of the earliest to
occur of the following:
(a) immediately upon the termination of the
Optionee's status as a Distributor for any reason;
(b) immediately if Distributor's network marketing
efforts are not exclusive to Rexall Showcase; or
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(c) three months after the date of termination of the
Optionee's status as a Distributor by reason of death of the Optionee if the
Optionee is an individual.
9. ADJUSTMENT OF SHARES.
(a) If at any time while the Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the number
of issued and outstanding Shares through the declaration of a stock dividend or
through any recapitalization resulting in a stock split, combination or exchange
of Shares, then and in such event:
(i) appropriate adjustment shall be made in the maximum number
of Shares available for grant under the Plan, so that the same percentage of the
Company's issued and outstanding Shares shall continue to be subject to being so
optioned; and
(ii) appropriate adjustment shall be made in the number of
Shares and the exercise price per Share thereof then subject to any outstanding
Option, so that the same percentage of the Company's issued and outstanding
Shares shall remain subject to purchase at the same aggregate exercise price.
(b) Except as otherwise expressly provided herein, the issuance by
the Company of shares of its capital stock of any class, or securities
convertible into shares of capital stock of any class, either in connection with
a sale of Shares, or shares of any other class of capital stock of the Company,
or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of Shares or obligations of the Company convertible into such Shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to the number of or exercise price of Shares then subject
to outstanding Options granted under the Plan.
(c) Without limiting the generality of the foregoing, the
existence of outstanding Options granted under the Plan shall not affect in any
manner the right or power of the Company to make, authorize or consummate (i)
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issue by the Company of debt securities,
or preferred orpreference stock that would rank above the Shares subject to
outstanding Options; (iv) the dissolution or liquidation of the Company; (v) any
sale, transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
10. TRANSFERABILITY OF OPTIONS. Each Option shall provide that
such Option shall not be transferable by the Optionee otherwise than by will or
the laws of descent and distribution, and each Option shall be exercisable
during the Optionee's lifetime only by the Optionee.
11. ISSUANCE OF SHARES. As a condition of any sale or issuance of
Shares upon exercise of any Option, the Committee may require such agreements or
undertakings, if any, as the Committee may deem necessary or advisable to assure
compliance with any such law or regulation including, but not limited to, the
following:
(i) a representation and warranty by the Optionee to the
Company, at the time any Option is exercised, that he or she is acquiring the
Shares to be issued to him or her for investment and not with a view to, or for
sale in connection with, the distribution of any such Shares; and
(ii) a representation, warranty and/or agreement to be bound
by any legends that are, in the opinion of the Committee, necessary or
appropriate to comply with the provisions of any securities law deemed by the
Committee to be applicable to the issuance of the Shares and are endorsed upon
the Share certificates.
12. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Committee, which shall
consist of not less than two members of the Board. The Committee shall have all
of the powers of the Board with respect to the Plan. Any
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<PAGE>
member of the Committee may be removed at any time, with or
without cause, by resolution of the Board and any vacancy
occurring in the membership of the Committee may be filled by
appointment by the Board.
(b) The Committee, from time to time, may adopt rules and
regulations for carrying out the purposes of the Plan. The Committee's
determinations and its interpretation and construction of any provision of the
Plan shall be final and conclusive.
(c) Any and all decisions or determinations of the Committee shall
be made either (i) by a majority vote of the members of the Committee at a
meeting or (ii) without a meeting by the unanimous written approval of the
members of the Committee.
13. INTERPRETATION.
(a) If any provision of the Plan should be held invalid or illegal
for any reason, such determination shall not effect the remaining provisions
hereof, but instead the Plan shall be continued and enforced as if such
provision had never been included in the Plan.
(b) This Plan shall be governed by the laws of the State of
Florida.
(c) Headings contained in this Plan are for convenience only and
shall in no manner be construed as part of this Plan.
(d) Any reference to the masculine, feminine, or neuter gender
shall be a reference to such other gender as is appropriate.
14. AMENDMENT OF THE PLAN. Either the Board or the Committee may
from time to time amend the Plan or any Option.
15. EFFECTIVE DATE AND TERMINATION DATE. The Plan shall be
effective on February 6, 1996, the date of the approval of the Board and shall
terminate on February 5, 2006.
16. DOCUMENTS AVAILABLE TO PARTICIPANTS. Participants in the Plan
mayobtain from the Company without charge, upon written or oral request, a copy
of any and all documents filed with the United States Securities and Exchange
Commission pursuant to Section 13(a) or 15(d) of the Securities Exchange Act.
Such requests should be directed to the Company's Secretary, by writing to
Rexall Sundown, Inc., 6111 Broken Sound Parkway, N.W., Boca Raton, Florida
33487, or by telephone to (561) 241-9400. In addition, the Company will deliver
or cause to be delivered to participants in the Plan who do not otherwise
receive such material, copies of all reports, proxy statements, and other
communications distributed to its security holders generally.
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EXHIBIT A
---------
REXALL SUNDOWN, INC.
REXALL SHOWCASE INTERNATIONAL
DISTRIBUTOR STOCK OPTION PLAN
Subject to each and every one of the conditions and limitations set
forth in the Plan, Options shall be granted for the Qualification Period (as
hereinafter defined) pursuant to the following criteria:
1. DEFINITIONS. As used herein, the following terms shall have the
meaning indicated:
(a) "Active Leg" shall mean a Leg that contains an Active Director.
(b) "Ambassador's Club" shall have the definition contained in the
Rexall Showcase Compensation Plan.
(c) "Chairman's Club" shall have the definition contained in the Rexall
Showcase Compensation Plan.
(d) "Commissionable Volume (C.V.)" shall mean units of value used to
calculate compensation to Distributors. C.V. fluctuates on international orders
depending upon the applicable foreign currency exchange rate.
(e) "Director" shall have the definition contained in the Rexall
Showcase Compensation Plan.
(f) "Group Points (G.P.)" shall mean all Points earned from the
purchase of products from Rexall Showcase for retail sale by Distributors (not
yet Directors) in a Distributor's downline who are not under another downline
Director. This includes all Personal Points (P.P.) of such Distributor. Sales
Aid and Distributor Kit purchases are not included as part of Group Point (G.P.)
earnings.
(g) "Leg" shall mean a line of Distributors which begins with someone a
Distributor personally sponsors and continues below that Distributor. Each
individual personally sponsored by Distributor starts a new and separate leg.
(h) "Organizational Points" shall mean the total Group Points (G.P.) of
all Directors in a Director downline on which such Director is eligible to be
paid overrides. It also includes the Group Points (G.P.) of the Director being
paid.
(i) "Personal Points (P.P.)" shall mean all Points earned from products
personally purchased from Rexall Showcase for retail sale to others. Sales Aids
and Distributor Kit purchases are not included as part of Personal Points
(P.P.).
(j) "Points" shall mean a unit of measure earned through group and
personal sales efforts.
(k) "President's Club" shall have the definition contained in the
Rexall Showcase Compensation Plan.
(l) "Qualification Period" shall mean the July Commission Month through
the June Commission Month and for the vesting of Options, shall mean the
applicable July Commission Month through the next June Commission Month.
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(m) "Rexall Showcase Compensation Plan" shall mean the compensation
plan of Rexall Showcase as currently in force and as amended from time to time.
(n) All capitalized terms not otherwise defined herein shall have the
definition ascribed to them in the Rexall Showcase Compensation Plan.
2. ELIGIBILITY. Any Distributor whose network marketing activities are
exclusive to Rexall Showcase will be eligible to receive Options under the Plan.
3. ADDITIONAL OPTIONS FOR DISTRIBUTORS.
All Distributors will receive an Option to purchase an additional 200
Shares on July 1 of each year in which they have previously qualified to receive
Options under the Plan if (i) such Distributor qualifies for Options under the
Plan during the applicable Qualification Period, (ii) such Distributor has at
least 1,000 P.P. in the month such Distributor enrolls in the Plan, and (iii)
such Distributor becomes a Director within the first two full Commission Months
of enrolling as a Distributor.
4. PRICE. The purchase price of the shares of Common Stock purchased
pursuant to the Options granted under the Plan will be 100% of the Fair Market
Value on the date of grant of the Option.
5. DURATION. Options will be granted to Optionees for terms of five (5)
years.
1997 STOCK OPTION PROGRAM
The number of Active Legs a Distributor had at the close of the June
1997 Commission Month will be such Distributor's maximum qualification level for
the qualification period from July 1, 1997 to June 30, 1998. However, a
Distributor may also have the opportunity to qualify and receive Options at all
lower levels. For example, a Distributor with five Active Legs at the close of
the June 1997 Commission Month will enter the Qualification Period with the
opportunity to receive options based on five Active Legs. If the Distributor
fails to maintain the five Active Leg level throughout the year, the Distributor
may qualify for Options based on the four, three, or two Active Leg levels. All
Qualification Levels are based upon a Distributor's effective position within
the Rexall Showcase Compensation Plan.
6. GRANT AND VESTING OF OPTIONS FOR THE QUALIFICATION PERIOD OF JULY 1,
1997 TO JUNE 30, 1998.
6.1 TWO ACTIVE LEGS. A Distributor whose Qualification Level is
two Active Legs will receive an Option to purchase 200 Shares if:
(a) Such Distributor has a minimum of two Active Director
Legs for all 12 months of the Qualification Period,
(b) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period, and
(c) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 10,000 with at
least 3,000 in each Leg and the two non-qualifying months, if
any, cannot be consecutive.
Such Option will become exercisable with respect to 25% of the Shares
subject to such Option on the initial grant date and 25% on the second,
third and fourth anniversary of the initial grant date if:
(i) Such Distributor has a minimum of two Active Director
Legs or all 12 months of the Qualification Period,
(ii) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period, and
(iii) Such Distributor's Organizational Points in 10 of the 12
months of the Qualification Period are as described in Section
6.1(c) above.
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6.2 THREE ACTIVE LEGS. A Distributor whose Qualification Level is
three Active Legs will receive an Option to purchase 500 Shares if:
(a) Such Distributor has a minimum of three Active Director
Legs for all 12 months of the Qualification Period,
(b) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period, and
(c) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 30,000 with at
least 5,000 in each of two Legs and the two non-qualifying
months, if any, cannot be consecutive.
Such Option will become exercisable with respect to 25% of the Shares
subject to such Option on the initial grant date and 25% on the second,
third and fourth anniversary of the initial grant date if:
(i) Such Distributor has a minimum of three Active Director
Legs for all 12 months of the Qualification Period,
(ii) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period, and
(iii) Such Distributor's Organizational Points in 10 of the 12
months of the Qualification Period are as described in Section
6.2(c) above.
6.3. FOUR ACTIVE LEGS. A Distributor whose Qualification Level is
four Active Legs will receive an Option to purchase 900 Shares if:
(a) Such Distributor has a minimum of four Active Director
Legs for all 12 months of the Qualification Period,
(b) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period, and
(c) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 50,000 with
10,000 in one Leg and at least 5,000 in each of two other Legs
and the two non-qualifying months, if any, cannot be
consecutive.
Such Option will become exercisable with respect to 25% of the Shares
subject to such Option on the initial grant date and 25% on the second,
third and fourth anniversary of the initial grant date if:
(i) Such Distributor has a minimum of four Active Director
Legs for all 12 months of the Qualification Period,
(ii) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period, and
(iii) Such Distributor's Organizational Points in 10 of the 12
months of the Qualification Period are as described in Section
6.3(c) above.
6.4 FIVE ACTIVE LEGS. A Distributor whose Qualification Level is
five Active Legs will receive an Option to purchase 1,400 Shares if:
(a) Such Distributor has a minimum of five Active Director
Legs for all 12 months of the Qualification Period,
(b) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period, and
(c) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 75,000 with
10,000 in each of two Legs and at least 5,000 in each of two
other Legs and the two non-qualifying months, if any, cannot
be consecutive.
Such Option will become exercisable with respect to 25% of the Shares
subject to such Option on the initial grant date and 25% on the second,
third and fourth anniversary of the initial grant date if:
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(i) Such Distributor has a minimum of five Active Director
Legs for all 12 months of the Qualification Period,
(ii) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period, and
(iii) Such Distributor's Organizational Points in 10 of the 12
months of the Qualification Period are as described in Section
6.4(c) above.
6.5 SIX ACTIVE LEGS. A Distributor whose Qualification Level is
six Active Legs will receive an Option to purchase 2,000 Shares if:
(a) Such Distributor has a minimum of six Active Director
Legs for all 12 months of the Qualification Period,
(b) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period, and
(c) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 150,000 with
25,000 in each of three Legs, 10,000 in one Leg and at least
5,000 in each of two other Legs and the two non-qualifying
months, if any, cannot be consecutive.
Such Option will become exercisable with respect to 25% of the Shares
subject to such Option on the initial grant date and 25% on the second,
third and fourth anniversary of the initial grant date if:
(i) Such Distributor has a minimum of six Active Director
Legs for all 12 months of the Qualification Period,
(ii) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period, and
(iii) Such Distributor's Organizational Points in 10 of the 12
months of the Qualification Period are as described Section
6.5(c) above.
1996 STOCK OPTION PROGRAM
The number of Active Legs a Distributor had at the close of the June
1996 Commission Month will be such Distributor's minimum qualification level for
the Qualification Period from July 1, 1996 to June 30, 1997. For example, a
Distributor with five Active Legs at the close of the June 1996 Commission Month
only had the opportunity to qualify for Options based on five Active Legs and
above and not for Options based on four Active Legs. Distributors who had four
Active Legs or less for the June 1996 Commission Month had the opportunity to
qualify for Options based on four Active Legs or more. All qualification levels
were based upon a Distributor's effective position with the Rexall Showcase
Compensation Plan.
7. GRANT AND VESTING OF OPTIONS FOR THE QUALIFICATION PERIOD OF JULY 1,
1996 TO JUNE 30, 1997.
7.1. FOUR ACTIVE LEGS. A Distributor whose Qualification Level is
four Active Legs will receive an Option to purchase 1,000 Shares on July 1, 1997
if:
(a) Such Distributor has a minimum of four Active Director
Legs for all 12 months of the Qualification Period,
(b) Such Distributor has at least 2,000 G.P. for all 12 months of
the Qualification Period, and
(c) Such Distributor's Organizational Points for 9 of the 12
months of the Qualification Period are at least 3,000 in each
of 2 Legs and at least 2,000 in one other Leg.
or, as of March 1, 1997:
(A) Such Distributor has a minimum of four Active Director Legs
for all 12 months of the Qualification Period,
(B) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period, and
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(C) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 50,000 with
10,000 in one Leg and at least 5,000 in each of two other Legs
and the two non-qualifying months, if any, cannot be
consecutive.
Such Option will become exercisable with respect to 20% of the Shares
subject to such Option on the initial grant date and 20% on the first,
second, third and fourth anniversary of the initial grant date if:
(i) Such Distributor has a minimum of four Active Director Legs
for all 12 months of the applicable 1996 Qualification Period,
(ii) Such Distributor has at least 2,000 G.P. for 9 of the 12
months of the Qualification Period, and
(iii) Such Distributor's Organizational Points in 6 of the 12 months
of the Qualification Period are as described in Section 7.1(c)
above.
or
(1) Such Distributor's active Director legs, G.P. and
Organizational Points are as described in (A) - (C) above for
the Four Active Leg level.
7.2. FIVE ACTIVE LEGS. A Distributor will receive an Option to
purchase 1,500 Shares if either of the following requirements are met:
(a) Such Distributor has a minimum of five active Director
Legs for all 12 months of the Qualification Period;
(b) Such Distributor has at least 2,000 G.P. for all 12 months of
the Qualification Period; and
(c) Such Distributor's Organizational Points for 9 of the 12
months of the Qualification Period are at least 5,000 in each
of 2 Legs and at least 2,000 in each of 2 other Legs.
or, as of March 1, 1997:
(A) Such Distributor has a minimum of five active Director legs
for all 12 months of the Qualification Period;
(B) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period; and
(C) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 75,000 with
10,000 in each of 2 legs and at least 5,000 in each of 2
other legs and the two non-qualifying months, if any, cannot
be consecutive.
Such Option will become exercisable with respect to 20% of the Shares
subject to such Option on the initial grant date and 20% on the first,
second, third and fourth anniversary date of the initial grant date if
either of the following requirements are met:
(i) Such Distributor has a minimum of five active Director
Legs for all 12 months of the Qualification Period;
(ii) Such Distributor has at least 2,000 G.P. for 9 of the 12
months of the Qualification Period; and
(iii) Such Distributor's Organizational Points in 6 of the 12 months
of the Qualification Period are at least 5,000 in each of 2
Legs and at least 2,000 in each of 2 other Legs.
or
(1) Such Distributor's active Director legs, G.P. and
Organizational Points are as described in (A) - (C) above for
the Five Active Leg level.
7.3 SIX ACTIVE LEGS. A Distributor will receive an Option to
purchase 2,500 Shares if either of the following requirements are met:
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(a) Such Distributor has a minimum of six active Director
Legs for all 12 months of the Qualification Period;
(b) Such Distributor has at least 2,000 G.P. for all 12 months of
the Qualification Period; and
(c) Such Distributor's Organizational Points for 9 of the 12
months of the Qualification Period are at least 7,500 in each
of 2 Legs and at least 5,000 in each of 2 other Legs.
or, as of March 1, 1997:
(A) Such Distributor has a minimum of six active Director legs for
all 12 months of the Qualification Period;
(B) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period; and
(C) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 150,000 with
25,000 in each of 3 legs, 10,000 in 1 leg and at least 5,000
in each of 2 other legs and the two non-qualifying months, if
any, cannot be consecutive.
Such Option will become exercisable with respect to 20% of the Shares
subject to such Option on the initial grant date and 20% on the first,
second, third and fourth anniversary date of the initial grant date if
either of the following requirements are met:
(i) Such Distributor has a minimum of six active Director
Legs for all 12 months of the Qualification Period;
(ii) Such Distributor has at least 2,000 G.P. for 9 of the 12
months of the Qualification Period; and
(iii) Such Distributor's Organizational Points in 6 of the 12 months
of the Qualification Period are at least 7,500 in each of 2
Legs and at least 5,000 in each of 2 other Legs.
or
(1) Such Distributor's active Director legs, G.P. and
Organizational Points are as described in (A) - (C) above for
the Six Active Leg level.
7.4. TEN ACTIVE LEGS. A Distributor will receive an Option to
purchase 5,000 Shares if either of the following requirements are met:
(a) Such Distributor has a minimum of ten active Director
Legs for all 12 months of the Qualification Period;
(b) Such Distributor has at least 2,000 G.P. for all 12 months of
the Qualification Period; and
(c) Such Distributor's Organizational Points for 9 of the 12
months of the Qualification Period are at least 10,000 in each
of 2 Legs and at least 5,000 in each of 5 other Legs.
or, as of March 1, 1997:
(A) Such Distributor has a minimum of six active Director legs for
all 12 months of the Qualification Period;
(B) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period; and
(C) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 150,000 with
25,000 in each of 3 legs, 10,000 in 1 leg and at least 5,000
in each of 2 other legs and the two non-qualifying months, if
any, cannot be consecutive.
Such Option will become exercisable with respect to 20% of the Shares
subject to such Option on the initial grant date and 20% on the first,
second, third and fourth anniversary date of the initial grant date if
either of the following requirements are met:
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(i) Such Distributor has a minimum of ten active Director
Legs for all 12 months of the Qualification Period;
(ii) Such Distributor has at least 2,000 G.P. for 9 of the 12
months of the Qualification Period; and
(iii) Such Distributor's Organizational Points in 6 of the 12 months
of the Qualification Period are at least 10,000 in each of 2
Legs and at least 5,000 in each of 5 other Legs.
or
(1) Such Distributor's active Director legs, G.P. and
Organizational Points are as described in (A) - (C) above for
the Six Active Leg level.
7.5. ADDITIONAL OPTIONS FOR PRESIDENTS CLUB MEMBERS. A Distributor
who is a member of the Presidents Club during either of the Bonus Pool periods
during the Qualification Period (July 1996 to December 1996 or January 1997 to
June 1997) will receive an Option to purchase 2,500 additional Shares if either
of the following requirements are met:
(a) Such Distributor has a minimum of six active Director
Legs for all 12 months of the Qualification Period;
(b) Such Distributor has at least 2,000 G.P. for all 12 months of
the Qualification Period; and
(c) Such Distributor's Organizational Points for 9 of the 12
months of the Qualification Period are at least 50,000 in 1
Leg, at least 30,000 in each of 2 other Legs and at least
5,000 in each of 3 additional Legs;
or, as of March 1, 1997:
(A) Such Distributor has a minimum of six active Director legs for
all 12 months of the Qualification Period;
(B) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period; and
(C) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 150,000 with
25,000 in each of 3 legs, 10,000 in 1 leg and at least 5,000
in each of 2 other legs and the two non-qualifying months, if
any, cannot be consecutive; provided, however, a Distributor
may only receive additional Options as a member of the
Presidents Club or the Chairman's Club, but not as a member of
both Clubs.
Such Option will become exercisable with respect to 20% of the Shares
subject to such Option on the initial grant date and 20% on the first,
second, third and fourth anniversary date of the initial grant date if
either of the following requirements are met:
(i) Such Distributor has a minimum of six active Director
Legs for all 12 months of the Qualification Period;
(ii) Such Distributor has at least 2,000 G.P. for 9 of the 12
months of the Qualification Period; and
(iii) Such Distributor's Organizational Points in 6 of the 12 months
of the Qualification Period are at least 50,000 in 1 Leg, at
least 30,000 in each of 2 other Legs and at least 5,000 in
each of 3 additional Legs.
or
(1) Such Distributor's active Director legs, G.P. and
Organizational Points are as described in (A) - (C) above for
the Six Active Leg level.
7.6. ADDITIONAL OPTIONS FOR CHAIRMAN'S CLUB MEMBERS. A Distributor
who is a member of the Chairman's Club during either of the Bonus Pool periods
during the Qualification Period (July 1996 to December
29
<PAGE>
1996 or January 1997 to June 1997) will receive an Option to purchase 5,000
additional Shares if the following three requirements are met:
(a) Such Distributor has a minimum of ten active Director
Legs for all 12 months of the Qualification Period;
(b) Such Distributor has at least 2,000 G.P. for all 12 months of
the Qualification Period; and
(c) Such Distributor's Organizational Points for 9 of the 12
months of the Qualification Period are at least 100,000 in 1
Leg, at least 50,000 in each of 2 other Legs and at least
5,000 in each of 5 additional Legs.
or, as of March 1, 1997:
(A) Such Distributor has a minimum of six active Director legs for
all 12 months of the Qualification Period;
(B) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period; and
(C) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 150,000 with
25,000 in each of 3 legs, 10,000 in 1 leg and at least 5,000
in each of 2 other legs and the two non-qualifying months, if
any, cannot be consecutive.
Such Option will become exercisable with respect to 20% of the Shares
subject to such Option on the initial grant date and 20% on the first,
second, third and fourth anniversary date of the initial grant date if
the following three requirements are met:
(i) Such Distributor has a minimum of six active Director
legs for all 12 months of the Qualification Period;
(ii) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period; and
(iii) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 150,000 with
25,000 in each of 3 legs, 10,000 in 1 leg and at least 5,000
in each of 2 other legs and the two non-qualifying months, if
any, cannot be consecutive.
7.7. ADDITIONAL OPTIONS FOR AMBASSADORS CLUB MEMBERS. A Distributor
who is a member of the Ambassadors Club during either of the Bonus Pool periods
during the Qualification Period (July 1996 to December 1996 or January 1997 to
June 1997) will receive an Option to purchase 5,000 additional Shares if the
following three requirements are met:
(a) Such Distributor has a minimum of ten active Director
Legs for all 12 months of the Qualification Period;
(b) Such Distributor has at least 2,000 G.P. for all 12 months of
the Qualification Period; and
(c) Such Distributor's Organizational Points for 9 of the 12
months of the Qualification Period are at least 100,000 in
each of 4 Legs, at least 50,000 in one other Leg and at least
5,000 in each of 5 more Legs.
or, as of March 1, 1997:
(A) Such Distributor has a minimum of six active Director legs for
all 12 months of the Qualification Period;
(B) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period; and
(C) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 150,000 with
25,000 in each of 3 legs, 10,000 in 1 leg and at least 5,000
in each of 2 other legs and the two non-qualifying months, if
any, cannot be consecutive.
30
<PAGE>
Such Option will become exercisable with respect to 20% of the Shares
subject to such Option on the initial grant date and 20% on the first,
second, third and fourth anniversary date of the initial grant date if
the following three requirements are met:
(i) Such Distributor has a minimum of six active Director
legs for all 12 months of the Qualification Period;
(ii) Such Distributor has at least 1,000 G.P. for all 12 months of
the Qualification Period; and
(iii) Such Distributor's Organizational Points for 10 of the 12
months of the Qualification Period are at least 150,000 with
25,000 in each of 3 legs, 10,000 in 1 leg and at least 5,000
in each of 2 other legs and the two non-qualifying months, if
any, cannot be consecutive.
31
<PAGE>
<TABLE>
<CAPTION>
==================================================================== ====================================================
<S> <C>
No dealer, salesperson or any other person has been
authorized to give any information or to make any
representation other than those contained in this 1,000,000 SHARES
Prospectus in connection with the offering made hereby,
and, if given or made, such information or representations
must not be relied upon as having been authorized by the REXALL SUNDOWN, INC.
Company.This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any securities other
than the registered securities to which it relates,or an offer REXALL SHOWCASE
to sell or solicitation of an offer to buy such securities in INTERNATIONAL
any jurisdiction where, or to any person to whom, it is DISTRIBUTOR STOCK
unlawful to make such an offer or solicitation. Neither the OPTION PLAN
delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that
there has been no change in the affairs of the Company
since the date hereof or that the information contained COMMON STOCK
herein is correct as of any time subsequent to the date of
this Prospectus.
------------------------------
TABLE OF CONTENTS
PAGE
----
________________________
AVAILABLE INFORMATION.............................2
INCORPORATION OF CERTAIN PROSPECTUS
DOCUMENTS BY REFERENCE.....................2 ________________________
THE COMPANY.......................................3
RISK FACTORS......................................3
DESCRIPTION OF THE REXALL SUNDOWN,
INC. REXALL SHOWCASE
INTERNATIONAL DISTRIBUTOR STOCK
OPTION PLAN.......................................9
USE OF PROCEEDS...................................18 October 22, 1998
INDEMNIFICATION OF DIRECTORS AND
OFFICERS..........................................18
LEGAL MATTERS.....................................18
EXPERTS...........................................18
======================================================================== ====================================================
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Post-Effective
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boca Raton, State of
Florida, on this 24th day of September, 1998.
REXALL SUNDOWN, INC.
By:/S/DAMON DESANTIS
-------------------------------------
Damon DeSantis, President and Director
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURE TITLE DATE
- --------- ----- ----
/S/CARL DESANTIS Chairman of the Board September 24, 1998
- ---------------------------------------
Carl DeSantis
/S/CHRISTIAN NAST Director and Chief Executive Officer September 24, 1998
- ---------------------------------------
Christian Nast
/S/DAMON DESANTIS Director and President September 24, 1998
- ---------------------------------------
Damon DeSantis
/S/GEARY COTTON Vice President - Finance, Chief September 24, 1998
- --------------------------------------- Financial Officer, Treasurer and
Geary Cotton Chief Accounting Officer
/S/NICKOLAS PALIN Director and Senior Executive Vice September 24, 1998
- --------------------------------------- President
Nickolas Palin
/S/DEAN DESANTIS Director September 24, 1998
- ---------------------------------------
Dean DeSantis
/S/STANLEY LEEDY Director September 24, 1998
- ---------------------------------------
Stanley Leedy
/S/MELVIN STITH Director September 24, 1998
- ---------------------------------------
Melvin Stith
</TABLE>
<PAGE>
EXHIBIT INDEX
NUMBER DESCRIPTION
- ------ -----------
4.1 Rexall Sundown, Inc. Rexall Showcase International Distributor
Stock Option Plan (1)
4.2 Form of Stock Option Agreement (2)
5.1 Opinion of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel,
P.A. (2)
23.1 Consent of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel,
P.A. (contained in Exhibit 5.1 hereto) (2)
23.2 Consent of PricewaterhouseCoopers LLP(1)
- ----------------------------------------
(1) Filed herewith.
(2) Previously filed.
<PAGE>
EXHIBIT 23.2
------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Rexall Sundown, Inc. on Post-Effective Amendment No. 1 to Form S-3 (Registration
Statement No. 33-66282) of our report dated October 10, 1997, on our audits of
the consolidated financial statements and financial statement schedule of Rexall
Sundown, Inc. as of August 31, 1997 and 1996 and for the three years in the
period ended August 31, 1997, appearing in the Form 10-K of Rexall Sundown, Inc.
filed with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Fort Lauderdale, Florida
October 22, 1998
