- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /x/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement / / Confidential, For use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/x/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
REXALL SUNDOWN, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
REXALL SUNDOWN, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
[LOGO] REXALL(Registered) SUNDOWN
REXALL SUNDOWN, INC.
6111 BROKEN SOUND PARKWAY, NW
BOCA RATON, FLORIDA 33487
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 23, 2000
To the Shareholders
of Rexall Sundown, Inc.:
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Shareholders (the
"Annual Meeting") of Rexall Sundown, Inc., a Florida corporation (the
"Company"), will be held at 10:00 a.m., local time, on Wednesday, February 23,
2000 at the Boca Raton Marriott, 5150 Town Center Circle, Boca Raton, Florida
33486, for the following purposes:
(1) To elect seven (7) members to the Company's Board of Directors to
hold office until the Company's 2001 Annual Meeting of
Shareholders or until their successors are duly elected and
qualified;
(2) To consider and vote upon a proposal to amend the Company's
Amended and Restated 1993 Stock Incentive Plan;
(3) To consider and vote upon a proposal to ratify the appointment of
PricewaterhouseCoopers LLP as independent certified public
accountants of the Company for the fiscal year ending August 31,
2000; and
(4) To transact such other business as may properly come before the
Annual Meeting and any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on December 28, 1999
as the record date for determining those shareholders entitled to notice of, and
to vote at, the Annual Meeting and any adjournments or postponements thereof. A
list of such shareholders will be available for examination at the principal
executive offices of the Company located at 6111 Broken Sound Parkway, NW, Boca
Raton, Florida 33487, for a period commencing ten days prior to the Annual
Meeting.
Whether or not you expect to be present at the Annual Meeting, please sign,
date and return the enclosed proxy card in the enclosed, pre-addressed envelope
as promptly as possible. No postage is required if mailed in the United States.
By Order of the Board of Directors
/s/ RICHARD WERBER
Secretary
Boca Raton, Florida
January 14, 2000
THIS IS AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO ATTEND THE
MEETING IN PERSON. ALL SHAREHOLDERS ARE RESPECTFULLY URGED TO EXECUTE AND RETURN
THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. SHAREHOLDERS WHO EXECUTE A
PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING, REVOKE THEIR PROXY AND VOTE
THEIR SHARES IN PERSON.
<PAGE>
2000 ANNUAL MEETING OF SHAREHOLDERS
OF
REXALL SUNDOWN, INC.
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Rexall Sundown, Inc., a Florida corporation (the
"Company"), of proxies from the holders of the Company's common stock, par value
$.01 per share (the "Common Stock"), for use at the 2000 Annual Meeting of
Shareholders of the Company to be held on Wednesday, February 23, 2000 or at any
adjournments or postponements thereof (the "Annual Meeting"), pursuant to the
foregoing Notice of Annual Meeting of Shareholders.
The approximate date that this Proxy Statement and the enclosed form of
proxy are first being sent to shareholders is January 20, 2000. Shareholders
should review the information provided herein in conjunction with the Company's
1999 Annual Report which accompanies this Proxy Statement. The Company's
principal executive offices are located at 6111 Broken Sound Parkway, NW, Boca
Raton, Florida 33487, and its telephone number is (561) 241-9400.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should any shareholder giving their proxy so desire. Shareholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Company's
Secretary at the Company's headquarters a written revocation or duly executed
proxy bearing a later date. However, no such revocation will be effective until
written notice of the revocation is received by the Company at or prior to the
Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Shareholders and the enclosed proxy is to be borne
by the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone. The Company's employees will
receive no compensation for soliciting proxies other than their regular
salaries. The Company may request banks, brokers and other custodians, nominees
and fiduciaries to forward copies of the proxy material to their principals and
to request authority for the execution of proxies. The Company may reimburse
such persons for their expenses in so doing.
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's shareholders will consider and vote
upon the following matters:
(1) The election of seven (7) members to the Company's Board of Directors
to serve until the Company's 2001 Annual Meeting of Shareholders or
until their successors are duly elected and qualified;
(2) A proposal to amend the Company's Amended and Restated 1993 Stock
Incentive Plan;
(3) A proposal to ratify the appointment of PricewaterhouseCoopers LLP as
independent certified public accountants of the Company for the fiscal
year ending August 31, 2000; and
(4) The transaction of such other business as may properly come before the
Annual Meeting and any adjournments or postponements thereof.
Unless contrary instructions are indicated on the enclosed proxy, all
shares of Common Stock represented by valid proxies received pursuant to this
solicitation (and which have not been revoked in accordance with the procedures
set forth above) will be voted (a) for the election of the seven (7) nominees
for Director named below; (b) for the proposal to amend the Company's Amended
and Restated 1993 Stock Incentive Plan; and (c) for the proposal to ratify the
appointment of PricewaterhouseCoopers LLP as independent certified public
accountants. If a shareholder specifies a different choice by means of the
enclosed proxy, such shareholder's shares of Common Stock will be voted in
accordance with the specifications so made.
<PAGE>
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on December 28, 1999
as the record date (the "Record Date") for determining shareholders of the
Company entitled to notice of and to vote at the Annual Meeting. As of the
Record Date, there were 64,435,123 shares of Common Stock outstanding, each of
which is entitled to one vote on each matter submitted to shareholders at the
Annual Meeting. Shareholders do not have the right to cumulate their votes.
The attendance, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum. Directors will be elected by a plurality of
the votes cast by the shares of Common Stock represented in person or by proxy
at the Annual Meeting. The proposal to amend the Company's Amended and Restated
1993 Stock Incentive Plan, the proposal to ratify the appointment of
PricewaterhouseCoopers LLP as independent certified public accountants, and any
other matter that may be submitted to a vote of the shareholders, will be
approved if a majority of votes cast by the shares of Common Stock represented
in person or by proxy at the Annual Meeting vote in favor of the matter, unless
such other matter is one for which a greater vote is required by law or by the
Company's Articles of Incorporation or Bylaws. If less than a majority of
outstanding shares entitled to vote are represented at the Annual Meeting, a
majority of the shares of Common Stock so represented may adjourn the Annual
Meeting to another date, time or place, and notice need not be given of the new
date, time or place if the new date, time or place is announced at the meeting
before an adjournment is taken.
Prior to the Annual Meeting, the Company will select one or more inspectors
of election for the Annual Meeting. Such inspector(s) shall determine the number
of shares of Common Stock represented at the Annual Meeting, the existence of a
quorum and the validity and effect of proxies, and shall receive, count and
tabulate ballots and votes and determine the results thereof. Abstentions will
be considered as shares present and entitled to vote at the Annual Meeting and
will be counted as votes cast at the Annual Meeting, but will not be counted as
votes cast for or against any given matter.
A broker or nominee holding shares of Common Stock registered in its name,
or in the name of its nominee, which are beneficially owned by another person
and for which it has not received instructions as to voting from the beneficial
owner, may have discretion to vote the beneficial owner's shares with respect to
the election of Directors and other matters addressed at the Annual Meeting. Any
such shares which are not represented at the Annual Meeting either in person or
by proxy will not be considered as shares present at the Annual Meeting, and
will not be considered to have cast votes on any matters addressed at the Annual
Meeting.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information as of the Record Date
concerning the beneficial ownership of the Common Stock by: (i) each person
known by the Company to be the beneficial owner of more than 5% of the Common
Stock, (ii) each director of the Company, (iii) each of the executive officers
named in the Summary Compensation Table, and (iv) all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
COMMON STOCK COMMON STOCK
NAME BENEFICIALLY OWNED OUTSTANDING
- ------------------------------------------------------------------------- ------------------ -------------
<S> <C> <C>
Carl DeSantis(1)......................................................... 21,740,514(2)(3) 33.6%
Damon DeSantis(1)........................................................ 6,759,222(3)(4) 10.4
Christian Nast........................................................... 406,229(3) *
Nickolas Palin........................................................... 381,334(3) *
Geary Cotton............................................................. 708,010(3)(5) 1.1
Dean DeSantis(1)......................................................... 4,602,042(3)(6) 7.1
Stanley Leedy............................................................ 86,000(3)(7) *
Melvin Stith............................................................. 26,667(3) *
CDD Partners, Ltd.(1).................................................... 17,958,613 27.5
Sylvia DeSantis.......................................................... 13,495,792(8) 21.0
All directors and executive officers as a group (10 persons)............. 35,372,737(9) 52.3
</TABLE>
- ------------------
* Less than 1%.
(1) In June 1993, each of Carl DeSantis, Damon DeSantis and Dean DeSantis
contributed all shares of Common Stock then owned by them to CDD Partners,
Ltd. ("CDD"), a Texas limited partnership of which Carl DeSantis, Damon
DeSantis and Dean DeSantis are limited partners, and to CDD Management, Inc.
("CDDM"), a Texas corporation and the general partner of CDD. Each of Carl
DeSantis, Damon DeSantis and Dean DeSantis has shared beneficial ownership
and voting power with respect to all such shares held by CDD. CDD's address
is 12770 Coit Road, #850, Dallas, Texas 75251.
(2) Includes 13,495,792 shares owned by Sylvia DeSantis as to which Carl
DeSantis has sole voting power. Also includes 7,538,889 shares held by CDD,
which represent Carl DeSantis' percentage interest in CDD. Does not include
10,114,424 shares beneficially owned by Dean DeSantis and Damon DeSantis
indirectly through CDD.
(3) For each person, includes shares beneficially owned pursuant to currently
exercisable stock options or options which will become exercisable within
60 days: Carl DeSantis--540,833 shares; Damon DeSantis--519,000 shares; Dean
DeSantis--435,000 shares; Christian Nast--376,000 shares; Nickolas
Palin--381,334 shares; Geary Cotton--549,167 shares; Stanley Leedy--85,000
shares; and Melvin Stith--26,667 shares. See "Executive Compensation."
(4) Includes 6,029,712 shares held by CDD which represent Damon DeSantis'
percentage interest in CDD. Does not include 11,623,601 shares beneficially
owned by Damon DeSantis that are held by CDD, which represent the percentage
interest of Carl DeSantis and Dean DeSantis in CDD, and 28,100 shares owned
by the wife of Damon DeSantis. Mr. DeSantis disclaims beneficial ownership
of his wife's shares.
(5) Does not include 11,194 shares owned by the wife of Geary Cotton, as to
which shares Mr. Cotton disclaims beneficial ownership.
(6) Includes 4,084,712 shares held by CDD which represent Dean DeSantis'
percentage interest in CDD. Does not include 13,568,601 shares beneficially
owned by Dean DeSantis that are held by CDD which represent the percentage
interest of Carl DeSantis and Damon DeSantis in CDD, and 19,066 shares
beneficially owned by the wife of Dean DeSantis. Mr. DeSantis disclaims
beneficial ownership of his wife's shares.
(Footnotes continued on next page)
3
<PAGE>
(Footnotes continued from previous page)
(7) Does not include 8,900 shares owned by the wife of Stanley Leedy, as to
which shares Mr. Leedy disclaims beneficial ownership.
(8) Ms. DeSantis' address is 6111 Broken Sound Parkway, NW, Boca Raton, Florida
33487. All of such shares are subject to an irrevocable proxy granted to
Carl DeSantis, and 13,158,042 of such shares are further subject to a stock
purchase agreement with an irrevocable life insurance trust for the benefit
of her children. Such stock purchase agreement provides for significant
restrictions on sales or transfers of such shares during her life, and
requires the sale of such shares to such trust upon her death.
(9) Includes 3,434,818 shares beneficially owned by directors and executive
officers as a group pursuant to currently exercisable stock options or
options which will become exercisable within 60 days. See "Executive
Compensation."
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers, and persons who own
more than 10% of the Company's outstanding Common Stock, to file with the
Securities and Exchange Commission (the "SEC") initial reports of ownership and
reports of changes in ownership of Common Stock. Such persons are required by
SEC regulation to furnish the Company with copies of all such reports they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended August 31, 1999, all Section
16(a) filing requirements applicable to its directors, executive officers, and
greater than 10% beneficial owners have been complied with.
ELECTION OF DIRECTORS
The Company's Bylaws provide that the number of directors shall be fixed
from time to time by resolution of the Board of Directors. The Board of
Directors has fixed at seven the number of Directors that will constitute the
Board for the ensuing year. Each director elected at the Annual Meeting will
serve for a term expiring at the Company's 2001 Annual Meeting of Shareholders
or until his successor has been duly elected and qualified.
Each of the current members of the Board of Directors, consisting of Carl
DeSantis, Christian Nast, Damon DeSantis, Nickolas Palin, Dean DeSantis, Stanley
Leedy and Melvin Stith, has been nominated by the Company to be re-elected as a
director at the Annual Meeting. The Board of Directors has no reason to believe
that any nominee will refuse or be unable to accept election; however, if one or
more nominees are unable to accept election or if any other unforeseen
contingencies should arise, each proxy that does not direct otherwise will be
voted for the remaining nominees, if any, and for such other persons as may be
designated by the Board of Directors.
The following sets forth certain information concerning each director and
nominee for election to the Board of Directors of the Company.
CARL DESANTIS, age 60, founded the Company in 1976 and has been the
Chairman of the Board of the Company since its inception. He served as Chief
Executive Officer of the Company from its inception to February 1997 and
President of the Company from 1976 to April 1995. Mr. DeSantis has had over 18
years of experience with retail drug store companies, including Super-X Drug
Stores and Walgreen Drug Stores. He is the father of Damon DeSantis, the
President, Chief Executive Officer and a Director of the Company, and Dean
DeSantis, a Director of the Company.
CHRISTIAN NAST, age 68, has been Vice Chairman of the Company since
February 1999 and a Director of the Company since October 1993. Mr. Nast served
as Chief Executive Officer of the Company from February 1997 to February 1999,
President of the Company from April 1995 to February 1998 and Chief Operating
Officer of the Company from April 1995 to February 1997. From December 1989 to
April 1995, Mr. Nast was employed by Colgate Palmolive Company as its Executive
Vice President--North America. Mr. Nast has over 40 years of
4
<PAGE>
experience in the consumer products industry with companies such as
Bristol-Myers Squibb Company, Chesebrough-Ponds, Inc. and the Procter & Gamble
Company. Mr. Nast is also a Director of Q.E.P. Co., Inc.
DAMON DESANTIS, age 35, has been Chief Executive Officer of the Company
since February 1999, President of the Company and Chief Executive Officer of
Rexall Showcase, the Company's network marketing subsidiary, since February 1998
and a Director of the Company since July 1988. He served as President of Rexall
Showcase from January 1993 to February 1998 and as Executive Vice President of
the Company from July 1988 to February 1998. He was a Vice President of the
Company from when he joined the Company in September 1983 until July 1988. He is
the son of Carl DeSantis, the Chairman of the Board of the Company, and the
brother of Dean DeSantis, a Director of the Company.
NICKOLAS PALIN, age 52, has been Senior Executive Vice President of the
Company since July 1998 and a Director of the Company since December 1995.
Mr. Palin served as President of the Company's Sundown Vitamins division from
September 1997 to January 1999, Senior Vice President-Sales and Marketing of the
Company from August 1989 to September 1997 and joined the Company in 1984.
DEAN DESANTIS, age 37, has been a Director of the Company since March 1990.
He served as Chief Operating Officer of the Company from February 1997 to March
1998, Senior Vice President-Operations of the Company from June 1989 to March
1998 and joined the Company in 1985. He is the son of Carl DeSantis, the
Chairman of the Board of the Company and the brother of Damon DeSantis, the
President, Chief Executive Officer and a Director of the Company.
STANLEY LEEDY, age 65, has been a Director of the Company since March 1993.
Since January 1985, Mr. Leedy has been the President and Chief Executive Officer
of Van San Corporation, a consulting firm for the pharmaceutical and vitamin
industry. Mr. Leedy has over 30 years experience in the pharmaceutical and
vitamin industry and has previously served as President and Chief Executive
Officer of the Rexall Drug & Chemical Company, a division of Dart Industries,
Inc.
MELVIN STITH, age 52, has been a Director of the Company since April 1997.
Since July 1991, Mr. Stith has been Dean of the Florida State University College
of Business. From December 1989 to July 1991, Mr. Stith was Chairman of the
Marketing Department of the Florida State University College of Business where
he was also a Professor. Mr. Stith is also a Director of Correctional Services
Corp., Keebler Foods Company, Palmetto Hospital Trust, Inc., Synovous Financial
Corp. and Tallahassee State Bank.
Except as described below, there are no arrangements or understandings with
respect to the selection of officers or directors.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the Company's fiscal year ended August 31, 1999, the Company's Board
of Directors held six meetings and took certain actions by unanimous written
consent. During the 1999 fiscal year, no Director attended fewer than 75 percent
of the aggregate of (i) the number of meetings of the Board of Directors held
during the period he served on the Board, and (ii) the number of meetings of
committees of the Board of Directors held during the period he served on such
committees.
The committees of the Board of Directors are the Audit Committee and the
Compensation/Stock Option Committee. The Board does not have a nominating or
similar committee.
The members of the Audit Committee are Messrs. Leedy, Stith and Dean
DeSantis. Mr. Leedy serves as Chairman of the Committee. During the 1999 fiscal
year, the Audit Committee held three meetings. The Audit Committee is
responsible for (i) recommending the firm to be appointed as independent
certified public accountants to audit the Company's financial statements;
(ii) discussing the scope and results of the audit with the independent
certified public accountants; (iii) reviewing with management and the
independent certified public accountants the Company's interim and year-end
results; (iv) considering the adequacy of the internal accounting controls and
audit procedures of the Company; and (v) reviewing the non-audit services to be
performed by the independent certified public accountants.
The members of the Compensation/Stock Option Committee are Messrs. Leedy
and Stith and Mr. Leedy serves as Chairman of the Committee. During the 1999
fiscal year, the Compensation/Stock Option Committee
5
<PAGE>
held two meetings and took certain actions by unanimous written consent. The
Compensation/Stock Option Committee is responsible for setting compensation of
the executive officers of the Company and for the grant of stock options to
purchase Common Stock.
DIRECTOR COMPENSATION
Each non-employee Director of the Company receives a retainer fee of
$30,000 per year for Board and Committee membership. The Company reimburses all
directors for expenses incurred in connection with their activities as
directors.
1993 Non-Employee Director Stock Option Plan. Under the Amended and
Restated 1993 Non-Employee Director Stock Option Plan (the "1993 Director
Plan"), each director who is not an employee of the Company or its subsidiaries
("Non-Employee Directors") is entitled to a one-time grant of options upon
initial election to the Board of Directors with respect to 15,000 shares of
Common Stock, which vest 33 1/3% per year commencing one year from the date of
grant (except for those stock options granted prior to February 1997 which shall
continue to vest 20% per year commencing one year from the date of grant) and
have a term of 10 years (except for those granted prior to February 1996 which
have a term of six years). The maximum number of shares of Common Stock
available for issuance under the 1993 Director Plan is 120,000 shares. The 1993
Director Plan will expire on, and no options may be granted thereunder after
March 14, 2003, subject to the right of the Board of Directors to earlier
terminate the 1993 Director Plan. Upon a "change of control" (defined in the
same manner as in the employment agreements discussed under "Executive
Compensation--Employment Agreements"), all options outstanding under the 1993
Director Plan will become immediately exercisable in full.
1994 Non-Employee Director Stock Option Plan. Under the Amended and
Restated 1994 Non-Employee Director Stock Option Plan (the "1994 Director
Plan"), each then Non-Employee Director was granted stock options to purchase
15,000 shares of Common Stock on July 7, 1994. The 1994 Director Plan also
provides for the grant of an annual option to purchase 15,000 shares of Common
Stock at the first Annual Meeting of Shareholders at which the Non-Employee
Director is re-elected, 20,000 shares at the second Annual Meeting of
Shareholders at which the Non-Employee Director is re-elected, 25,000 shares at
the third Annual Meeting of Shareholders at which the Non-Employee Director is
re-elected, and 30,000 shares at every subsequent Annual Meeting of Shareholders
at which the Non-Employee Director is re-elected, which options vest 33 1/3% per
year commencing one year from the date of grant (except for those stock options
granted prior to February 1997, which shall continue to vest 20% per year
commencing one year from the date of grant) and have a term of 10 years (except
for those granted prior to February 1996, which have a term of five years). The
maximum number of shares of Common Stock available for issuance under the 1994
Director Plan is 600,000 shares. The 1994 Director Plan will expire on, and no
options may be granted thereunder after July 6, 2003, subject to the right of
the Board of Directors to earlier terminate the 1994 Director Plan. Upon a
"change of control" (defined in the same manner as in the employment agreements
discussed under "Executive Compensation--Employment Agreements"), all options
outstanding under the 1994 Director Plan will become immediately exercisable in
full.
6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation of the Company's Chief
Executive Officer and the other four most highly paid executive officers who
were serving as executive officers at the end of fiscal 1999 (collectively, the
"Named Executive Officers"), for the fiscal years ended August 31, 1999, 1998
and 1997.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION(1)
---------------------------- ------------------
FISCAL OTHER ANNUAL NUMBER OF
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(2) OPTIONS GRANTED(3)
- ------------------------------------------------ ------ -------- -------- --------------- ------------------
<S> <C> <C> <C> <C> <C>
Carl DeSantis(4) ............................... 1999 $502,586 $ -- $17,025 197,500
Chairman of the Board 1998 491,761 237,500 10,892 300,000
1997 452,362 217,880 16,712 120,000
Damon DeSantis(4) .............................. 1999 $396,769 $ -- $13,775 227,000
President and Chief 1998 331,717 109,575 7,715 270,000
Executive Officer 1997 197,885 47,297 9,182 80,000
Nickolas Palin(4) .............................. 1999 $377,899 $165,931 $ 6,337 335,000
Senior Executive Vice 1998 360,135 168,750 4,076 280,000
President 1997 285,578 102,266 4,589 80,000
Christian Nast(4) .............................. 1999 $349,615 $ -- $13,012 174,000
Vice Chairman 1998 416,278 280,000 11,500 300,000
1997 335,779 157,508 11,298 120,000
Geary Cotton(4) ................................ 1999 $323,925 $ -- $17,223 177,500
Vice President, Chief Financial 1998 314,117 100,000 12,126 260,000
Officer and Treasurer 1997 197,885 63,504 15,468 80,000
</TABLE>
- ------------------
(1) The columns for "Restricted Stock Awards," "LTIP Payouts" and "All Other
Compensation" have been omitted because there is no compensation required to
be reported in such columns.
(2) Represents that portion of the Company's automobile expense allowance
attributable to non-business utilization of such officer's automobile, the
Company's contributions to its 401(k) Plan for the benefit of such officer
and executive long-term disability expenses.
(3) See "Individual Option Grants in Last Fiscal Year-End Table" and "Aggregated
Option Exercises in Last Fiscal Year and Fiscal Year Option Value Table" for
additional information with respect to these options.
(4) See "--Employment Agreements" for information regarding current and future
compensation arrangements.
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements on April 1, 1995 with each
of Carl DeSantis, Damon DeSantis, Nickolas Palin, and Geary Cotton pursuant to
which they currently receive base annual salaries of $375,000, $425,000,
$385,900 and $330,800, respectively. Each of such employment agreements is for a
rolling term of three years except for Mr. Palin's employment agreement which is
for a rolling term of four years. The Company entered into an employment
agreement with Christian Nast for a three-year term commencing September 1,
1998, pursuant to which he currently receives a base annual salary of $100,000.
Each of such employment agreements provides for annual increases of base salary
of the greater of 5% or the percentage increase in the consumer price index
published by the United States Department of Labor. In addition, each of Damon
DeSantis, Nickolas Palin and Geary Cotton is entitled to receive incentive
bonuses upon the attainment by the Company of certain net sales and net income
targets. Such bonuses may not exceed 75% of base salary for Damon DeSantis and
62 1/2% of base salary for each of Nickolas Palin and Geary Cotton.
The employment agreements each provide that, if the employee terminates his
employment without good reason or is terminated for cause, such employee is
subject to a non-competition provision for a period of
7
<PAGE>
18 months except for Mr. Palin's employment agreement which makes him subject to
a non-competition provision for a period of three years. In the event of a
change of control of the Company, the employee is entitled to terminate his
employment and receive a lump sum distribution of compensation in an amount
equal to three times such employee's then current effective yearly compensation,
including, but not limited to, salary and bonuses. If the employee elects to so
terminate, the non-competitive provisions contained in the employment agreement
will terminate. Similar provisions apply in the event an employee is terminated
without cause upon a change of control of the Company. Payments under the
agreements by the Company after a change of control are, however, limited to the
amount which would be deductible by the Company under the Internal Revenue Code
of 1986, as amended (the "Code"). A "change of control" is deemed to occur upon
(i) the acquisition of 30% or more of the Company's voting power by anyone other
than a current director, executive officer of the Company or an affiliate
thereof, or (ii) the Incumbent Directors, as defined therein, becoming less than
a majority of the Board of Directors of the Company or its successor. A change
of control, as to any employee, may not result from a voluntary action of such
employee.
INDIVIDUAL OPTION GRANTS IN LAST FISCAL YEAR TABLE
The following table sets forth certain information concerning grants of
options to purchase Common Stock made during the 1999 fiscal year to the Named
Executive Officers. All stock options were granted pursuant to the Company's
Amended and Restated 1993 Stock Incentive Plan.
<TABLE>
<CAPTION>
INDIVIDUAL OPTION GRANTS IN LAST FISCAL YEAR
- ----------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED ANNUAL
OPTIONS RATES OF STOCK PRICE
GRANTED TO APPRECIATION FOR OPTION
NUMBER OF EMPLOYEES IN EXERCISE TERM(3)
OPTIONS FISCAL YEAR PRICE PER EXPIRATION -----------------------
NAME GRANTED(1) 1999 SHARE(2) DATE 5% 10%
- ---------------------------------------- ---------- ------------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Carl DeSantis........................... 147,500(4) 3.1% $11.375 12/06/08 $1,055,167 $2,674,001
50,000(5) 1.0% 11.560 06/14/09 363,501 921,183
Damon DeSantis.......................... 127,000(4) 2.6% 11.375 12/06/08 908,517 2,302,360
100,000(5) 2.1% 11.560 06/14/09 727,002 1,842,366
Nickolas Palin.......................... 185,000(4) 3.9% 11.375 12/06/08 1,323,430 3,353,832
50,000(6) 1.0% 14.190 02/28/09 446,201 1,130,760
100,000(5) 2.1% 11.560 06/14/09 727,002 1,842,366
Christian Nast.......................... 124,000(4) 2.6% 11.375 12/06/08 887,056 2,247,974
50,000(5) 1.0% 11.560 06/14/09 363,501 921,183
Geary Cotton............................ 92,500(4) 1.9% 11.375 12/06/08 661,715 1,676,916
85,000(5) 1.8% 11.560 06/14/09 617,952 1,566,011
</TABLE>
- ------------------
(1) Such options become exercisable with respect to 33 1/3% of the covered
shares one year from the date of grant, 66 2/3% of the covered shares two
years from the date of grant, and the remainder become exercisable three
years from the date of grant, except for the 50,000 options granted to
Nickolas Palin on March 1, 1999, which were exercisable immediately.
(2) The exercise price is the fair market value on the date of grant, determined
by calculating the average of the high and low prices of the Common Stock on
the date of such grant.
(3) The stock price appreciation is computed based on the exercise price per
share. The dollar amounts set forth under these columns are the result of
calculations at the 5% and 10% rates established by the SEC and are not
intended to forecast future appreciation in the price of the Common Stock.
(4) Such options were granted on December 7, 1998.
(5) Such options were granted on June 15, 1999.
(6) Such options were granted on March 1, 1999.
8
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE
TABLE
The following table sets forth certain information concerning the exercise
in fiscal 1999 of options to purchase Common Stock by the Named Executive
Officers and the unexercised options to purchase Common Stock held by such
individuals at August 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
VALUE REALIZED OPTIONS IN-THE-MONEY OPTIONS
SHARES (MARKET PRICE AT AT FISCAL YEAR END AT FISCAL YEAR-END(1)
ACQUIRED ON EXERCISE LESS --------------------------- ---------------------------
NAME EXERCISE EXERCISE PRICE) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ------------ ---------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Carl DeSantis............... 165,000 $ 1,692,958 360,000 437,500 $ 1,388,135 $ 237,938
Damon DeSantis.............. 90,000 897,486 368,333 433,667 1,910,433 253,542
Nickolas Palin.............. 40,000 566,828 169,002 537,332 114,412 587,195
Christian Nast.............. -- -- 161,000 456,000 155,116 471,732
Geary Cotton................ 15,000 150,308 446,000 386,500 2,686,014 283,123
</TABLE>
- ------------------
(1) Based on a fiscal year-end value of $12.50 per share. Value is calculated by
multiplying (a) the difference between $12.50 and the in-the-money option
exercise price by (b) the number of shares of Common Stock underlying the
in-the-money option.
LONG-TERM INCENTIVE AND PENSION PLANS
The Company does not have any long-term incentive or pension plans.
REPORT ON EXECUTIVE COMPENSATION
As in prior years, the Company's executive compensation for fiscal 1999
consisted of three primary components: base salary, bonus and grants of stock
options under the Company's Amended and Restated 1993 Stock Incentive Plan. Each
officer's base salary and bonus is set forth in such officer's employment
agreement.
The salary and bonus components of the Company's executive compensation are
designed to facilitate fulfillment of the following compensation objectives:
(i) attracting and retaining competent management; (ii) rewarding management for
short and long-term accomplishments; (iii) aligning the interests of management
with those of the Company's shareholders; and (iv) relating management
compensation to the achievement of Company goals and the Company's performance.
In April 1995, the Company's Board of Directors approved three-year
employment agreements with each of the Company's executive officers. In
addition, in September 1998, the Company entered into a three-year employment
agreement with the Company's Vice Chairman, Christian Nast, which was a renewal
of his prior employment agreement that expired on August 31, 1998. As of March
1997, the employment agreements of certain executive officers of the Company
were amended to provide for a rolling three-year term and in September 1998, the
employment agreement of Nickolas Palin, the Company's Senior Executive Vice
President, was amended to provide for a rolling four-year term. Under such
employment agreements, the current base salaries of Carl DeSantis, Christian
Nast, Damon DeSantis, Nickolas Palin and Geary Cotton are $375,000, $100,000,
$425,000, $385,900 and $330,800, respectively. See "--Employment Agreements."
The Board's determination of fiscal 1999 salaries for the Company's executive
officers set forth in their employment agreements was made after reviewing and
considering a number of factors, including each officer's level of job
responsibility, each officer's level of performance (with respect to specific
areas of responsibility and on an overall basis), achievement of the Company's
goals, the Company's performance during the 1999 fiscal year, compensation
levels at competitive companies and the Company's historical compensation
levels. The Company's compensation program for its executive officers is
intended to link compensation in substantial part to corporate performance. A
significant portion of executive officer compensation in the form of bonuses is
tied directly to the attainment of net sales and net income targets as well as
the fulfillment of individual objectives. Each officer's employment agreement
also provides for an annual increase in base salary of the greater of 5% or the
percentage increase in the Consumer Price Index published by the United States
Department of Labor. Decisions about granting stock options to executive
officers were made as described below. The Company also makes contributions
under the Company's 401(k) Plan of up to $2,000 per employee, based on a 50%
matching
9
<PAGE>
contribution. In recognition of the increased duties of Damon DeSantis as the
Company's President and Chief Executive Oficer, his bonus percentage potential
was increased. Similarly, as a result of the reduced duties and
responsiblilities of Carl DeSantis, the Company's Chairman of the Board, and
Christian Nast, the Company's Vice Chairman, their respective salaries were
reduced and their eligiblity to receive a bonus was eliminated.
In determining the fiscal 1999 salary and bonus for Damon DeSantis, the
Chief Executive Officer of the Company, the principal factors considered by the
Board included (i) an analysis of the compensation of chief executive officers
of public companies within the vitamin and nutritional supplement industry and
public companies similar in size to the Company and (ii) the Company's 1999
fiscal year earnings and other performance measures. Approximately forty-three
percent of Mr. DeSantis' compensation is tied directly to the attainment of net
sales and net income targets which were not met in fiscal 1999 and, therefore,
no bonus was earned.
The grants of stock options to executive officers in fiscal 1999 were
determined by the Committee based upon recommendations by the Company's Chief
Executive Officer, Damon DeSantis, and his assessment of each officer's
contributions to the Company's success, position with the Company, potential to
contribute to the Company's future performance and the overall level of
responsibility and job performance of each officer.
Section 162(m) of the Code, enacted in 1993, generally disallows a tax
deduction to public companies for compensation over $1,000,000 paid to the Chief
Executive Officer and the four other most highly compensated executive officers
of the Company. Qualifying performance-based compensation is not subject to the
deduction limit if certain requirements are met. The Company's Amended and
Restated 1993 Stock Incentive Plan has been structured such that awards
thereunder may constitute qualifying performance-based compensation under
Section 162(m). However, the Committee recognizes that unanticipated future
events, such as a change of control of the Company or a change in executive
personnel, could result in a disallowance of compensation deductions under
Section 162(m). Moreover, the Committee may from time to time award compensation
that is non-deductible under Section 162(m) when in the exercise of the
Committee's business judgment such award would be in the best interest of the
Company.
COMPENSATION/STOCK OPTION
COMMITTEE
Stanley Leedy, Chairman
Melvin Stith
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None.
10
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the
Common Stock with the cumulative total return on the Nasdaq Stock Market-U.S.
Index ("Nasdaq Stock Market-U.S.") and the Natural Business Composite
Index(Trademark) ("Natural Business Composite") from June 18, 1993 (the date the
Common Stock was first offered to the public) through August 31, 1999 (assuming
the investment of $100 in the Common Stock, the Nasdaq Stock Market-U.S. and the
Natural Business Composite and reinvestment of dividends). The Natural Business
Composite is prepared by Banc of America Securities LLC. The Company did not pay
any dividends during this period.
COMPARISON OF CUMULATIVE TOTAL
RETURN AMONG REXALL SUNDOWN, INC., THE
NASDAQ STOCK MARKET--U.S. INDEX, AND THE
NATURAL BUSINESS COMPOSITE INDEX
[LINE CHART]
<TABLE>
<CAPTION>
6/18/93 8/31/96 8/31/97 8/31/98 8/31/99
<S> <C> <C> <C> <C> <C>
Rexall Sundown, Inc. $ 100 $639.20 $641.50 $673.85 $461.54
Nasdaq Stock Market-U.S. $ 100 $165.53 $230.18 $217.41 $397.24
Natural Business Composite $ 100 $122.28 $148.03 $158.77 $140.51
</TABLE>
The comparisons in this table are required by the SEC and are not intended
to forecast or be indicative of possible future performance of the Common Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
11
<PAGE>
PROPOSAL TO AMEND THE COMPANY'S
AMENDED AND RESTATED
1993 STOCK INCENTIVE PLAN
The Company currently maintains its Amended and Restated 1993 Stock
Incentive Plan (the "Plan"), which was approved by the Company's Board of
Directors and shareholders on March 15, 1993 and was amended on February 6, 1997
and February 4, 1998. The Board of Directors and the Company's
Compensation/Stock Option Committee (the "Committee") believe that in order to
continue the effectiveness of the Plan in achieving its objectives, it would be
desirable to have 21,000,000 shares of Common Stock available for issuance
thereunder. Therefore, subject to shareholder approval, on September 24, 1999,
the Committee and the Board of Directors each approved an amendment to the Plan
to increase the number of shares of Common Stock which may be issued under the
Plan by 6,000,000 to a total of 21,000,000. The Company believes that the
additional shares of Common Stock will continue in the years ahead to permit the
Company to compete with other organizations offering similar plans in obtaining
and retaining the services of competent management. Since the Plan's inception
through December 31, 1999, the Company has granted 17,593,276 options to its
employees, 2,593,276 of which were granted subject to the approval of the
proposed amendment to the Plan by the Company's shareholders. The majority of
such option grants subject to approval of such amendment were part of the
Company's annual option grants to approximately 1,240 employees on December 7,
1999. If the proposed amendment to the Plan is not approved by the shareholders,
the Plan will remain in full force and effect and such 2,593,276 options will be
null and void.
The purpose of the Plan is to provide a means for the Company to attract
and retain highly qualified executives and employees and to have such employees
exert their best efforts on behalf of the Company and its subsidiaries through
the grant of incentive stock options ("Incentive Stock Options") and
non-statutory options ("Non-Statutory Options") (collectively, "Options") and
the grant of restricted stock awards ("Restricted Stock Awards") to purchase the
Company's Common Stock (the "Shares"). Stock Appreciation Rights ("SARs") and
Reload Options may also be issued under the Plan to eligible employees.
The following table summarizes the benefits, subject to shareholder
approval, under the Plan attributable to previously granted options as of
December 31, 1999.
NEW PLAN BENEFITS
AMENDED AND RESTATED 1993 STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE(1) NUMBER OF OPTIONS(2)
- ---------------------------------------------------------------------------- --------------- --------------------
<S> <C> <C>
Carl DeSantis
Chairman of the Board..................................................... $ 106,250 100,000
Christian Nast
Vice Chairman............................................................. 79,688 75,000
Damon DeSantis
President and Chief Executive Officer..................................... 106,250 100,000
Nickolas Palin
Senior Executive Vice President........................................... 79,688 75,000
Geary Cotton
Vice President, Chief Financial Officer
and Treasurer............................................................. 79,688 75,000
All Executive Officers as
a Group (7 persons)....................................................... 610,938 575,000
Non-Executive Officer Employee Group (1,230 persons)........................ 2,018,276 2,142,292
</TABLE>
- ------------------
(1) The dollar value is calculated as the amount by which the average of the
high and low bid price of a share of Common Stock as reported by the Nasdaq
National Market System on January 7, 2000, exceeds the exercise price of the
indicated options.
(2) Includes only outstanding options. The receipt of additional options is
dependent on grants by the Committee.
12
<PAGE>
The following is a summary of the other terms of the Plan. A copy of the
Plan, with the proposed amendments, is attached to this Proxy Statement as
Exhibit A and is incorporated herein by reference.
The Plan will remain in effect until March 14, 2003, unless terminated by
the Company's Board of Directors. The maximum number of Shares issuable under
the Plan will be 21,000,000 if the amendment proposed herein is approved and 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. All Options under the Plan must be granted prior to March 14,
2003, and all Options that have been granted must be exercised prior to their
expiration date. No Option will be exercisable 10 years after the date the
Option is granted.
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 employee 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 Plan will continue to be administered by the Committee consisting of
two or more of the Company's Directors, two of whom must be Non-Employee
Directors as defined in Exchange Act Rule 16b-3(b)(3)(i). The Committee will
select the employees of the Company and its subsidiaries to receive (i)
Incentive Stock Options; (ii) Non-Statutory Options; (iii) Reload Options; (iv)
Restrictive Stock Awards; (v) SARs; or (vi) a combination of the foregoing, and
the terms and conditions under which they will be granted. Such terms and
conditions may include, without limitation (a) when awards or Options shall be
granted; (b) the exercise price for the Options; (c) whether Options contain
SARs; (d) the time when the Option can be exercised and the duration of the
exercise period; and (e) the time when Restricted Stock Awards will vest and
when the restrictions will lapse. The members of the Committee are Stanley Leedy
and Melvin Stith.
The plan provides that the Committee may, in its discretion, base the
granting, exercisability or vesting of awards under the Plan upon the attainment
of performance criteria specified by the Committee so as to result in the awards
constituting performance-based compensation under Section 162(m) of the Code.
Such awards (the "Performance-Based Awards"), or the exercisability or vesting
thereof, shall be based upon one or more of the following business criteria,
which may be determined by reference to the performance of the employee to whom
the award is to be granted, or the performance of the Company or a subsidiary,
division or other operating unit of the Company (or comparative performance
relative to other companies): revenues; market share; costs; economic value
added; increase in price per share; total shareholder return; net income;
pre-tax earnings; earnings before interest expense, taxes and depreciation and
amortization; operating margins; earnings per share; return on equity, capital
or investment; operating earnings; working capital or inventory; the ratio of
debt to shareholders' equity; or the attainment of quantitative targets related
to the Company's business. The maximum number of shares of stock of the Company
with respect to which Options (including Reload Options and Options issued in
tandem with SARs), SARs issued independently of Options and Restricted Stock
Awards may be granted as to any employee during any calendar year shall not
exceed 500,000 shares, subject to adjustments as provided in the Plan.
Options and Restricted Stock Awards may only be granted to persons who are
employees of the Company or a subsidiary of the Company. Employees include all
employees of the Corporation including officers, directors, executives and
supervisory personnel. No member of the Committee is eligible to participate in
the Plan.
The purchase price for Shares purchased by exercise of an Option must be
paid in full at the time the Option is exercised. No shares of Common Stock will
be issued or transferred until full payment has been received. Payment may be in
cash or in shares of Common Stock. If payment is in shares of Common Stock, the
employee must have held such shares of Common Stock for a minimum of six months
preceding the exercise of the Option. The value of the shares delivered will be
the fair market value of the Common Stock on the date preceding the exercise
date of the Option.
13
<PAGE>
Any Options outstanding under the Plan that have not become exercisable,
will immediately become exercisable to their fullest extent (but in the case of
officers and directors, not before six months after the applicable grant date)
upon a "change of control" (defined in the same manner as the employment
agreements discussed under "Executive Compensation--Employment Agreements.")
Reload Options. The Committee may grant to an employee additional Options
once an Option has been exercised. Reload Options may only be granted with
respect to the same number of Shares issued upon exercise of the Option. The
exercise price for the Reload Option will be the fair market value of the Shares
on the date of the grant of the Reload Option. Reload Options may not be
exercised after the date Options with respect to which Reload Options were
granted, expire or terminate. No Reload Options have been granted under the
Plan.
Non-Statutory Options. The Committee in its discretion may also grant
Non-Statutory Options to selected key employees of the Company or its
subsidiaries. Prior to the grant of such Options, the Committee will determine
the number of Shares and the terms and conditions upon which such Options shall
be granted and exercised.
Stock Appreciation Rights. The Committee may, in its discretion, provide
the employee with the right to cancel all or any portion of an Option and
require the Company to pay to the employee an amount in cash equal to the sum of
the fair market value of the Shares subject to the Option at the time of
cancellation less the applicable purchase price for such Shares as set forth in
the Option agreement. Such right of cancellation will not be available unless
the cash amount owed to the employee at the time of cancellation is greater than
zero. The Company will withhold any federal, state and local taxes required by
law to be withheld if any cash payment made pursuant to cancellation of an
Option results in compensation to the employee. Any amounts payable by the
Company pursuant to a right of cancellation may in the Committee's discretion be
paid in cash, Shares or a combination thereof. The right of cancellation is only
exercisable by the employee during his lifetime, however, the right of
cancellation may be transferred by will or the laws of descent and distribution
but only to the extent the Option itself is transferable. No Stock Appreciation
Rights have been granted under the Plan.
Restricted Stock Awards. The Committee also has the discretion to grant
Restricted Stock Awards under the Plan. The Committee will determine
(i) whether and when Restricted Stock Awards shall be made; (ii) the number of
Shares covered by the Restricted Stock Award (provided that the aggregate fair
market value of Shares awarded to an employee in any one year may not exceed 20%
of the employee's then current base annual salary); (iii) the restrictions
applicable to the Shares awarded; and (iv) the form of instrument evidencing the
Restricted Stock Award. Restricted Stock Awards may be made to the same person
on more than one occasion, but no Restricted Stock Award will entitle a person
to future awards. The aggregate market value of Shares granted as a Restricted
Stock Award during any fiscal year will be limited to 10% of the aggregate
current base yearly compensation of all of the Company's salaried employees. All
certificates evidencing Shares delivered pursuant to Restricted Stock Awards
will bear an appropriate legend referring to the terms, conditions and
restrictions on the Shares granted. All Shares issued pursuant to Restricted
Stock Awards will, together with stock powers, be held by the Company until all
restrictions with respect to the particular Shares have lapsed, at which point
the Company shall deliver the certificates for such Shares to the employee. In
the event of a Change of Control, all restrictions on the Shares awarded shall
immediately lapse. No Restricted Stock Awards have been granted under the Plan.
The Board has power and authority to terminate, amend or modify the Plan.
The Board may not, however, amend, modify or terminate the Plan without the
approval of a majority of the Company's shareholders, if (a) such approval is
required by (i) the Code, (ii) the insider trading rules of Section 16 of the
Securities and Exchange Act of 1934 or (iii) any national securities exchange or
system on which the Shares are listed or reported or any regulatory body having
jurisdiction with respect thereto; or (b) if the amendment or modification (i)
increases the maximum number of Shares which may be issued under the Plan or
available for issuance as Incentive Stock Options under Section 422 of the Code
(except pursuant to certain changes in the Company's capitalization), (ii)
reduces the exercise price of Incentive Stock Options to less than the fair
market value of the Company's Common Stock at the time the Option is granted, or
(iii) changes the class of individuals eligible to receive Options; provided,
however, the Board may amend the Plan to make any changes necessary to qualify
options as Incentive Stock Options under the Code. Additionally, no termination,
modification or amendment of
14
<PAGE>
the Plan may adversely affect the rights of an individual to exercise an Option,
Restricted Stock Award or any SARs issued under the Plan, without the employee's
consent.
Tax Treatment Under the Plan. Under the Code, an employee incurs no tax
liability on the grant of Incentive Stock Options or Non-Statutory Options. In
the case of an Incentive Stock Option, the employee does not have any tax
consequences upon exercise of the Option. The employee is, however, required to
account for the spread at the time of exercise between the fair market value of
the stock and the option price as an item of tax preference for purposes of the
alternative minimum tax. Upon sale of the stock acquired by exercise of the
Incentive Stock Option, the employee must recognize the difference between the
amount paid for the stock and the option price as income. Upon exercise of a
Non-Statutory Stock Option, the employee must recognize the spread between the
option price and the fair market value of the stock received upon exercise as
income.
The issuance of a Restricted Stock Award to an employee will not produce
any tax consequences for the employee. When the stock is no longer subject to a
substantial risk of forfeiture or becomes transferable, the value of the stock
at that time, to the extent it exceeds any amount paid by the employee, is
income to the employee. The employee may elect to subject the spread between the
price paid for the restricted stock and the fair market value of the stock to
immediate taxation by electing to do so within 30 days of receiving the
restricted stock.
The grant of a Stock Appreciation Right is an unfunded and unsecured
promise of the employer to pay an unknown amount of money in the future and does
not have taxable consequences to the employee upon grant. Upon exercise of the
Stock Appreciation Right, the employee is required to recognize the amount of
income (or the value of stock received).
Deductions for federal income tax purposes will be allowed to the Company
at different times depending on the type of option or award granted. No
deduction will be allowed to the Company for federal income tax purposes at the
time of the grant or exercise of an Incentive Stock Option under the Plan. No
deduction will be allowed to the Company upon grant of a Non-Statutory Option.
However, upon exercise of a Non-Statutory Option, the Company will be entitled
to a compensation deduction equal to the amount the employee must recognize as
income. The timing and amount of the Company's compensation deduction for Stock
Appreciation Awards and Restricted Stock Options will correspond to the time and
amount that the employee recognizes income for regular federal income tax
purposes. The Company will deduct from any payment otherwise due, applicable
federal, state or local taxes of any kind required by law to be withheld with
respect to the issuance of Shares under the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL TO AMEND THE
COMPANY'S AMENDED AND RESTATED 1993 STOCK INCENTIVE PLAN
RATIFICATION OF SELECTION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors of the Company has recommended the firm of
PricewaterhouseCoopers LLP as the independent certified public accountants of
the Company for the current fiscal year. Although the appointment of
PricewaterhouseCoopers LLP as the independent certified public accountants of
the Company does not require ratification by the Company's shareholders, the
Board of Directors considers it appropriate to obtain such ratification.
Accordingly, the vote of the Company's shareholders on this matter is advisory
in nature and has no effect upon the Board of Directors' appointment of a firm
of independent certified public accountants, and the Board of Directors may
change the Company's auditor at any time without the approval or consent of the
shareholders. The Board proposes and unanimously recommends that the
shareholders ratify the selection of PricewaterhouseCoopers LLP by adopting the
following resolution:
RESOLVED, that the appointment by the Board of Directors of the
Company of PricewaterhouseCoopers LLP as the independent certified
public accountants of the Company for the current fiscal year be,
and such appointment hereby is, ratified, confirmed and approved.
If the shareholders do not ratify the selection of
PricewaterhouseCoopers LLP by the affirmative vote of the holders of a majority
of votes cast by the shares of Common Stock represented in person or by proxy at
the
15
<PAGE>
Annual Meeting, the selection of another independent certified public accountant
will be considered by the Board of Directors.
Representatives of PricewaterhouseCoopers LLP are expected to be present at
the Annual Meeting and will be afforded the opportunity to make a statement if
they so desire and to respond to appropriate questions.
OTHER BUSINESS
The Board of Directors knows of no other business to be brought before the
Annual Meeting. If, however, any other business should properly come before the
Annual Meeting, the persons named in the accompanying proxy will vote proxies as
in their discretion they may deem appropriate, unless they are directed by a
proxy to do otherwise.
INFORMATION CONCERNING SHAREHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the 1934 Act, a shareholder intending to
present a proposal to be included in the Company's Proxy Statement for the
Company's 2001 Annual Meeting of Shareholders must deliver a proposal in writing
to the Company's principal executive offices no later than September 17, 2000.
Pursuant to Rule 14a-4 under the 1934 Act, the Company intends to retain
discretionary authority to vote proxies with respect to shareholder proposals
for which the proponent does not seek inclusion of the proposed matter in the
Company's proxy statement for the Company's 2001 Annual Meeting of Shareholders
except in circumstances where (i) the Company receives notice of the matter no
later than December 1, 2000 and (ii) the proponent complies with the other
requirements set forth in Rule 14a-4.
By Order of the Board of Directors
RICHARD WERBER
Secretary
Boca Raton, Florida
January 14, 2000
16
<PAGE>
EXHIBIT A
REXALL SUNDOWN, INC.
AMENDED AND RESTATED
1993 STOCK INCENTIVE PLAN
1. PURPOSE. The purpose of the Rexall Sundown, Inc. Amended and Restated
1993 Stock Incentive Plan (the "Plan") is to provide a means whereby Rexall
Sundown, Inc. (the "Corporation") may, through the grant of incentive stock
options ("Incentive Stock Options") and non-statutory stock options
("Non-Statutory Options") (Non-Statutory Options and Incentive Stock Options
shall hereinafter collectively be referred to as, "Options") to purchase common
stock of the Corporation, stock appreciation rights ("SARs") and restricted
stock awards ("Restricted Stock Awards") to key employees of the Corporation and
of any subsidiary of the Corporation, attract and retain persons of ability as
key employees and entice said employees to exert their best efforts on behalf of
the Corporation and its subsidiaries.
2. ADMINISTRATION.
2.1 The Committee. The Plan shall be administered by a committee (the
"Committee") which shall be appointed by the Board of Directors (the "Board")
consisting of two or more Directors each of whom is a Non-Employee Director as
that term is defined in Rule 16b-3(b)(3) of the General Rules and Regulations
under the Securities and Exchange Act of 1934 (the "Exchange Act").
2.2 Authority of the Committee. The Committee shall select the key
employees of the Corporation and its subsidiaries to whom Options, SARs and
Restricted Stock Awards may from time to time be granted, shall determine the
number of shares to be covered by each of the Options, SARs and Restricted Stock
Awards so granted and shall determine the terms and conditions (not inconsistent
with this Plan) of any Options, SARs and Restricted Stock Awards granted
hereunder. Such terms and conditions shall include, but not be limited to, the
determination of:
a. the key employees of the Corporation and its subsidiaries from
among the class of key employees eligible to receive awards or options
under the Plan, to whom awards or options should be granted;
b. the time or times at which awards or options shall be granted;
c. the option price of the shares subject to each option;
d. whether the option shall contain stock appreciation rights;
e. the time or times when each option shall become exercisable
and the duration of the exercise periods; and
f. the time or times when each Restricted Stock Award shall vest
and/or restrictions with respect to the same shall lapse.
The Committee is authorized to interpret the Plan and to prescribe, amend
and rescind rules and regulations relating to it. The Committee may, in its sole
discretion, grant awards and/or options to any employee of the Corporation.
No member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan, Options, SARs or any
Restricted Stock Awards granted in connection with it.
3. ELIGIBILITY FOR INCENTIVE STOCK OPTIONS.
3.1 General Rule. Incentive Stock Options to purchase stock in the
Corporation may be granted only to persons who are key employees of the
Corporation or of a subsidiary corporation of the Corporation (the term
"Subsidiary" shall, for the purposes of this Plan, be defined in the same manner
as the term "Subsidiary Corporation" is defined in Section 425(f) of the
Internal Revenue Code). The term "key employees" shall include officers,
directors, executives and supervisory personnel, as well as other employees of
the Corporation or a Subsidiary who, in the judgment of the Committee, are
considered especially important to the future of the Corporation and may include
all employees of the Company. No member of the Committee, however, shall be
eligible to participate in the Plan.
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3.2 10-Percent Shareholder Rule.
3.2.1 In General. Incentive Stock Options may not be granted to
any individual employed by the Corporation if such individual, at the time
the Option is granted, owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Corporation or of any
Subsidiary.
3.2.2. Exception. Section 3.2.1 shall not apply if at the time
the Incentive Stock Option is granted the Option price is at least 110% of
the fair market value of the stock subject to the Option and such Option by
its terms is not exercisable after the expiration of five years from the
date such Option is granted.
4. TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS. Options granted
pursuant to this Plan shall be evidenced by agreements which shall, inter alia,
contain the following terms and conditions:
4.1 Price. The Option price shall not be less than the fair market
value of the stock at the time such Option is granted, as determined by the
Committee.
4.1.1. Fair Market Value. Any reasonable valuation method may be
used for the purpose of ensuring that the Option price at the time the
Incentive Stock Option is granted is not less than 100% of the fair market
value of the stock. For purposes of this Plan the fair market value shall
be determined without regard to any restriction other than a restriction
which, by its terms, will never lapse.
4.1.2. Payment with Stock. The Option price shall be paid in
full at the time of the exercise. No shares shall be issued or transferred
until full payment has been received therefor. Payment may be in cash or,
unless otherwise provided by the Committee at any time, by delivery of
shares of Common Stock of the Corporation owned by the employee in partial
or full payment; provided, however, as a condition to paying any part of
the exercise price of the stock, the stock tendered to the Corporation must
have been held by the employee for a minimum of six (6) months preceding
the tender. If payment is made by the delivery of stock, the value of the
stock delivered shall be the fair market value of the stock on the day
preceding the date of exercise of the Option.
4.2 Exercise. The terms and conditions relating to the exercise of
the Incentive Stock Option and the manner of exercise shall be established by
the Committee; provided, however, that:
4.2.1 Except as provided in Section 4.2.2 and 4.2.5 below, no
employee shall have a right to exercise an Incentive Stock Option after the
termination of his employment unless the Committee, in its discretion,
authorizes the employee to exercise such Incentive Stock Option at any time
prior to the earlier of (i) the expiration of the term of such Incentive
Stock Option or (ii) three months following the termination of the
employment. The Incentive Stock Option must be exercised only by such
employee during his lifetime.
4.2.2 If an employee becomes disabled (within the meaning of
Section 22(e)(3) of the Internal Revenue Code) while he is employed by the
Corporation or a Subsidiary, all Incentive Stock Options shall not be
exercisable more than one year after the date of such disability nor after
the period of time provided in Section 4.2.4, whichever is earlier. Upon
the death of the employee, Options may no longer be exercised except as
otherwise provided herein.
4.2.3. All Incentive Stock Options granted hereunder must be
granted within ten (10) years after the earlier of the date this Plan is
adopted or the date this Plan is approved by the shareholders of the
Corporation, and must be exercised prior to their respective expiration
dates.
4.2.4. No Incentive Stock Option shall be exercisable after the
expiration of ten (10) years from the date such Option is granted.
4.2.5. In the event that the employee dies at any time during his
employment or within (3) months after retirement (which shall be age 65 for
normal retirement), Incentive Stock Options granted to him under this Plan
and not theretofore exercised by him or expired shall be exercisable by the
estate of the employee or by any person who acquired such Incentive Stock
Option by bequest or inheritance from the employee to the extent that the
employee was entitled to exercise the Option, provided, however, that the
Option must be
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exercised, if at all, within six months after the death of the employee and
within the ten (10) year period provided in Section 4.2.4.
4.2.6. Incentive Stock Options are those options qualifying
pursuant to the provisions of Section 422 of the Internal Revenue Code of
1986, as amended from time to time.
4.2.7. Notwithstanding any other provision of this Plan or any
conditions imposed by the Committee upon the right of any employee to
exercise any Options granted under this Plan, all outstanding Options shall
become immediately exercisable (but in the case of officers and directors
of the Corporation, not before six months after the applicable grant date)
to their full extent upon a Change of Control (as described in
Section 4.2.8) of the Corporation (if not approved by the Board within ten
(10) days of such Change in Control).
4.2.8. For purposes of this Plan, a "Change in Control" of the
Corporation shall mean:
a. If any person (including a "Group" which is defined as any
combination of persons knowingly participating in a joint activity or
interdependent consciously parallel action toward a common goal, whether
or not pursuant to an express contract; provided, however, that the
actions taken by a director of the Corporation acting as such shall not
alone constitute membership in a group), without the approval of a
majority of the Incumbent Directors ("Incumbent Director" shall mean any
director of the Corporation serving at April 1, 1993 or one elected
thereafter if nominated or approved by at least two-thirds of the then
Incumbent Directors), becoming the Beneficial Owner ("Beneficial Owner"
shall have the meaning provided in Section 607.0901(i)(e) of the Florida
Statutes) of, or acquiring the power to direct the exercise of voting
power with respect to, directly or indirectly, securities which
represent thirty percent (30%) or more of the combined voting power of
the Corporation's outstanding securities thereafter, whether or not some
portion of such securities was owned by such person (or by any member of
such Group) prior thereto or provided, however, that this provision
shall not apply to acquisitions by a director, executive officer or
their affiliates if such person had such status on April 1, 1993; or
b. the Incumbent Directors cease at any time to constitute a
majority of the Board of Directors, whether of (A) the Corporation or
(B) after any cash tender offer or exchange offer, merger, consolidation
or other business combination, recapitalization of the Corporation,
sale, liquidation or dissolution (or adoption of a plan for liquidation
or dissolution), or any combination of any or all of the forgoing
transactions, including but not limited to a series of such
transactions, any successor to the Corporation.
Notwithstanding the foregoing, a Change in Control shall not be deemed to have
occurred with respect to any person if the action of such person was voluntary
and would have been sufficient, without the actions of others, to constitute a
Change of Control.
5. TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS.
5.1 Restricted Stock Awards. Restricted Stock Awards are awards of
shares of Common Stock, par value $.01 of the Corporation, which shares shall be
subject to the terms, conditions and restrictions described in this Plan and in
the instruments evidencing the grant of the Restricted Stock Awards.
5.2 Maximum Number of Shares That May Be Awarded. Any of the shares
of Common Stock available under this Plan pursuant to Section 12 may be granted
as Restricted Stock Awards. If, on or before March 14, 2003, any shares of
Common Stock shall be returned to the Corporation pursuant to the termination
provisions described in Section 5.7 hereof or in the instruments evidencing the
grant of the Restricted Stock Awards, such shares may again be awarded under the
Plan (unless the Plan shall have been theretofore terminated).
5.3 Limitations on Grant of Restricted Stock Awards. The aggregate
market value of shares granted (determined as of the dates of the respective
grants) as Restricted Stock Awards during any fiscal year of the Corporation
will be limited to 10% of the aggregate current basic yearly compensation of all
salaried employees (determined as of the dates of the respective grants).
5.4. Rights with Respect to Shares. An employee to whom a Restricted
Stock Award has been made shall have, after delivery to him or her of, or after
notification that there is being held in custody for him or her, a
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certificate or certificates for the number of shares of Common Stock awarded,
absolute ownership of such shares including the right to vote the same and to
receive dividends thereon, subject however, to the terms, conditions and
restrictions described in this Plan and in the instrument evidencing the grant
of the Restricted Stock Award to such employee.
5.5 Key Employees. Restricted Stock Awards may be made only to
persons who are determined by the Committee to be key employees of the
Corporation or of a Subsidiary on the date the Restricted Stock Award is made.
Any employee may elect irrevocably not to be eligible, either for a period of
time or during the entire term of this Plan, for grant of Restricted Stock
Awards under this Plan by delivering to the Committee or the Board a written
notice to such effect. Upon receipt of such notice by the Committee or the
Board, such employee shall thereupon be ineligible to receive Restricted Stock
Awards under this Plan for such period of time or for the entire term of this
Plan, as the case may be.
5.6 Grant of Restricted Stock Awards. Subject to the terms,
conditions and restrictions of this Plan, the Committee shall, in its sole
discretion, select from among the key employees of the Corporation and its
Subsidiaries those employees to whom Restricted Stock Awards are to be granted.
The Committee shall also have exclusive power in respect of Restricted Stock
Awards including, but not limited to, the power (i) to determine whether
Restricted Stock Awards are to be made, (ii) to determine the number of shares
of Common Stock covered by each Restricted Stock Award, provided that the
aggregate fair market value of such shares awarded in any one year (determined
as of the dates of the respective grants) shall not exceed 20% of the employee's
current basic yearly compensation (determined as of the dates of the respective
grants), (iii) to determine the time or times when Restricted Stock Awards will
be made, (iv) to determine, in accordance with the Plan, the restrictions
applicable to shares of Common Stock awarded pursuant to Restricted Stock
Awards, and (v) to prescribe the form of the instruments evidencing the grant of
the Restricted Stock Awards under the Plan. Restricted Stock Awards may be made
to the same person on more than one occasion; provided, however, that the
Committee's designation of an employee in any year shall not require the
Committee to designate such person to receive a Restricted Stock Award in any
other year, or if so designated, to receive the same amount of award as in any
other year, or as may be received by any other employee in any year.
5.7 Restrictions. Shares of Common Stock awarded to an employee
pursuant to a Restricted Stock Award:
(i) shall not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of, and
(ii) shall, if delivered to or to the order of the employee, be
returned to the Corporation forthwith, and all rights of the employee to
such shares shall immediately terminate without any payment of
consideration by the Corporation, if the employee's continuous employment
with the Corporation or any of its Subsidiaries shall terminate for any
reason, except as provided in Section 5.9; provided, however, that the
Committee shall have the right to waive such forfeiture, in whole or in
part, and in connection with such waiver to impose any terms or
restrictions on the continued ownership of such shares by the employee
under the Plan. If the employee's interests in the shares of Common Stock
awarded pursuant to a Restricted Stock Award shall be terminated pursuant
to this clause (ii), he or she shall forthwith deliver to the Secretary or
any Assistant Secretary of the Corporation the certificates for shares of
Common Stock so terminated, accompanied by such instrument of transfer as
may be required by the Secretary or any Assistant Secretary of the
Corporation.
5.8 Lapse of Restrictions. Subject to Section 5.9, the restrictions
set forth in Section 5.7 shall lapse at such times as are determined by the
Committee. Notwithstanding the provisions of this Section 5.8, all restrictions
shall lapse immediately upon a Change in Control of the Corporation as set forth
in Section 4.2.8.
5.9 Termination of Employment by Reason of Death or Disability;
Attainment of Age 65. Any provision of Section 5.7 to the contrary
notwithstanding, if an employee who has been in the continuous employment of the
Corporation or of any Subsidiary since the date on which a Restricted Stock
Award was granted to him or her shall, while in such employment, die, terminate
employment by reason of disability, or attain age 65 and any of such events
shall occur more than one year after the date on which a Restricted Stock Award
is granted to him or her, then the restrictions set forth in Section 5.7 shall
lapse, as to all shares of Common Stock awarded to such employee pursuant to
such Restricted Stock Award, on the date of such event.
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As used in this Section 5.9, the term "disability" shall mean a condition within
the meaning of Section 22(e)(3) of the Internal Revenue Code.
5.10 Restrictive Legends; Certificates May Be Held in
Custody. Certificates evidencing shares of Common Stock delivered pursuant to
Restricted Stock Awards shall bear an appropriate legend referring to the terms,
conditions and restrictions described in the Plan and in the instruments
evidencing the grant of the Restricted Stock Award. Any attempt to dispose of
any such shares of Common Stock in contravention of the terms, conditions and
restrictions described in the Plan or in the instruments evidencing the grant of
the Restricted Stock Awards shall be ineffective. The shares acquired, together
with stock powers (if required by the Corporation) or other instruments of
transfer appropriately endorsed in blank by the employee, shall be held by the
Corporation, for the use and benefit and subject to the rights of such employees
as owner thereof. After the lapse of all restrictions with respect to particular
shares, the Corporation shall deliver the certificates for such shares held by
the Corporation to the employee concerned.
6. NON-STATUTORY OPTIONS. The Committee may, in its discretion, grant
Non-Statutory Options to key employees of the Corporation or of a Subsidiary.
Prior to the grant of such Options the Committee shall determine the number of
shares and the terms and conditions of any Non-Statutory Options granted under
this Plan.
7. STOCK APPRECIATION RIGHTS.
7.1 Each option agreement may provide that the employee may, from time
to time, elect to cancel all or any portion of the Option then subject to
exercise, in which case, the Corporation's obligation in respect of such Option
may be discharged by the payment to the employee of an amount of cash equal to
the excess, if any, of the fair market value at the time of cancellation of
shares subject to the Option so canceled over the aggregate purchase price for
such shares as set forth in the option agreement. In the event of cancellation,
the number of shares as to which such Option was canceled shall not become
available for use under this Plan. Any right to elect cancellation shall be
transferable only by will or by the laws of descent and distribution. During the
lifetime of the employee, such right shall be exercisable only by him.
7.2 The provisions of this Section 7 shall not be available unless the
cash amount calculated hereunder is a positive number.
7.3 To the extent that the election provided in this Section 7 results
in compensation income to the employee; the Corporation shall withhold from the
amount due the employee an appropriate amount for Federal, state and local
taxes, if any, as then required by law.
7.4 The following additional rules are applicable:
7.4.1. The election herein shall expire no later than the
expiration of the Option to which the election relates;
7.4.2. The right under this Section 7 is transferable only to the
extent the Option to which the election relates is transferable and on the
same terms and conditions; and
7.4.3 The rights under this Section 7 may be exercisable only
when the underlying Option is eligible to be exercised.
7.5 The Committee may, in its discretion, award SARs independent of
the grant of any Option. Upon exercise, the employee shall receive the excess of
the market value of the Corporation's stock at the date of exercise over the
price of the stock determined at the time of the grant of the SAR.
7.6 Amounts payable pursuant to this Section 7 may, in the Committee's
discretion, be paid in cash, shares of the Corporation, or a combination
thereof.
8. PAYMENT OF OPTION PRICE. The employee or his successor in interest
shall pay the Option price by cash or check, except as may be permitted by
Section 4.1.2.
9. WITHHOLDING.
9.1 Tax Withholding. The Corporation shall deduct or withhold an
amount, otherwise payable, sufficient to satisfy Federal, state, and local taxes
required by law to be withheld with respect to any grant, exercise, or payment
made under or as a result of this Plan. The employee has no discretion as to
whether such amount will or will not be withheld by the Corporation.
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9.2 Share Withholding. With respect to tax withholding required upon
the exercise of Options, the Corporation shall withhold such number of shares,
otherwise issuable, having a fair market value on the date the tax is to be
determined equal to an amount sufficient to satisfy Federal, state and local
taxes. The employee has no discretion as to whether such shares will or will not
be withheld by the Corporation.
10. RELOAD OPTIONS. The Committee may provide for the grant, to any
employee of additional Options upon the exercise of Options ("Reload Options"),
including the exercise of Reload Options, through the delivery of common stock
of the Corporation provided, however, the (i) Reload Options may be granted only
with respect to the same number of common shares as were surrendered to exercise
the Options, (ii) the exercise price of the Reload Options will be the fair
market value on the date of grant of the Reload Options, (iii) with respect to
employees who are subject to the reporting requirements of Section 16(a) of the
Exchange Act, the Reload Options may not be exercised after the date the Options
with respect to which such Reload Options were granted expire or terminate and
(iv) the provisions contained in this sentence may not be amended more than once
every six (6) months, other than to comport with changes in the Internal Revenue
Code, the Employee Retirement Income Security Act of 1974, as amended, or the
rules thereunder.
11. $100,000 ANNUAL LIMIT. The aggregate fair market value (determined as
of the times Options are granted) of the stock with respect to which Incentive
Stock Options are exercisable for the first time by such individual during any
calendar year (under all such plans of the individual's employer corporation and
its parent and subsidiary corporations) shall not exceed $100,000.
12. SHARES AVAILABLE. The maximum number of shares which may be issued
under this Plan shall be 21,000,000 shares of Common Stock of the Corporation.
13. NON-TRANSFERABILITY OF OPTIONS. Options shall be transferable only by
will, the laws of descent and distribution and qualified domestic relations
order. The Options shall not be assigned, transferred, pledged, alienated or
hypothecated in any manner during the employee's lifetime except as permitted in
this Plan. Any attempted assignment, transfer, pledge, alienation or
hypothecation of the Option or rights thereunder, otherwise than as permitted
herein, shall terminate the Option.
14. EFFECTIVE DATE. The Plan became effective as of March 15, 1993 and the
amendment to Section 12 hereof shall become effective as of September 24, 1999,
subject to approval by the holders of the majority of the Common Stock present
and represented at a special or annual meeting of the shareholders held on or
before September 23, 2000. If the amendment to Section 12 hereof is not so
approved, such amendment shall not become effective.
15. TERM OF PLAN. Options must be granted within a period of 10 years from
the date the Plan is adopted (March 14, 2003).
16. ADJUSTMENTS. In the event that, and as often as, a stock dividend or
liquidating dividend shall be declared upon the outstanding shares of Common
Stock or the Common Stock shall be changed into or exchanged for a different
number or kind of shares of stock or other securities of the Corporation or
another corporation whether through reorganization, recapitalization, stock
split-up, combination of shares, merger, consolidation, or other change in
structure of the Corporation, through acquisition or otherwise, then the
aggregate number and kind of shares of stock covered by each outstanding Option,
the price per share thereof in each such Option, the maximum number of shares of
Common Stock that may be sold under the Plan and the options to be automatically
granted thereafter shall be proportionately adjusted in such manner as shall be
determined by the Committee.
In the event that a Special Dividend, hereinafter defined, shall be paid on
the Shares of Common Stock, outstanding options shall be amended to reduce the
price thereof by the fair value of the amount of the Special Dividend but such
reduction shall not result in such price being less than the par value of the
Common Stock provided, however, that if the total amount of the Special Dividend
is not reflected in such price adjustment, then the unapplied balance of the
Special Dividend shall be paid in cash to the holders of outstanding Options to
which this proviso applies at the time such Special Dividend is paid on the
outstanding Shares of Common Stock. "Special Dividend" shall mean a dividend in
cash and/or property the fair value of which shall be two or more times the
amount of regular cash dividends paid on the Common Stock during the twelve
month period preceding the declaration date of the Special Dividend; provided,
however, that if the Corporation has not previously paid a dividend on its
Common Stock, the first such dividend shall not be deemed a Special Dividend. In
the event there
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shall be any other change in the number or kind of the outstanding shares of
Common Stock, or of any stock or other securities into which the Common Stock
shall have been changed or for which it shall have been exchanged, then if the
Committee shall, in its sole discretion, determine that such change equitably
requires an adjustment in any Option theretofore granted or which may be granted
under the Plan, such adjustments shall be made in accordance with such
determination. Fractional shares resulting from any adjustment in Options
pursuant to this Section may be settled in cash or otherwise as the Committee
shall determine.
Notice of any adjustment shall be given by the Corporation to each holder
of an Option which shall have been so adjusted and such adjustment (whether or
not such notice is given) shall be effective and binding for all purposes of the
Plan.
17. PERFORMANCE BASED AWARDS
17.1 Performance Criteria. The Committee may, in its discretion, base
the granting, exercisability or vesting of awards under this Plan upon the
attainment of performance criteria specified by the Committee and intended to
result in the awards constituting performance-based compensation under
Section 162(m) ("Section 162(m)") of the Internal Revenue Code. Such awards
("Performance-Based Awards"), or the exercisability or vesting thereof, shall be
based upon one or more of the following business criteria which may be
determined by reference to the performance of the key employee to whom the award
is to be granted or the performance of the Corporation or a subsidiary, division
or other operation unit of the Corporation (or based on comparative performance
relative to other companies): revenues; market shares; cost; economic value
added; increase in price per share; total shareholder return; net income;
pre-tax earnings; earnings before interest expense, taxes, depreciation, and
amortization; operating margins; earning per share; growth in earnings per
share; return on equity, capital, or investment; operating earnings; working
capital or inventory; ratio of debt to shareholder's equity; the attainment of
strategic and operational initiatives; or any individual performance objective
measured in term of attainment of quantitative targets related to the
Corporation's business.
17.2 Establishment of Criteria. With respect to Performance-Based
Awards, (i) the Committee shall establish in writing the objective performance
goals applicable to a given period of service no later than 90 days after the
commencement of such period of service (but in no event after 25% of such period
of service had elapsed), and (ii) no awards shall be granted, or become
exerciseable or vested, as the case may be, to any key employee for a given
period of service until the Committee certifies in writing that the objective
performance goals (and any other material terms) applicable to such period have
been satisfied. Notwithstanding anything else contained in this Plan to the
contrary, if any award is intended, at the time of grant, to be
performance-based compensation under Section 162(m), the Committee shall not be
entitled to exercise any discretion otherwise authorized under this Plan with
respect to such award if the exercise of such discretion would cause such award
to fail to qualify as performance-based compensation under Section 162(m).
17.3 Maximum Awards. In no event shall the maximum aggregate number
of Options (including Reload Options and Options issued in tandem with SARs),
SARs issued independently of Options and Restricted Stock Awards granted to any
key employee under this Plan in any calendar year exceed 500,000 shares, subject
to adjustment as provided in Section 16 of this Plan.
18. AMENDMENT OR TERMINATION OF PLAN.
18.1. Amendment, Modification and Termination. The Board may at any
time and from time to time, terminate, amend, or modify this Plan. However, no
such amendment, modification or termination of this Plan may be made without the
approval of shareholders of the Corporation, if such approval is required by the
Internal Revenue Code, by the insider trading rules of Section 16 of the
Exchange Act, by any national securities exchange or system on which the shares
of the Corporation's Common Stock are then listed or reported, or by a
regulatory body having jurisdiction with respect hereto.
18.2 Awards Previously Granted. No termination, amendment, or
modification of this Plan shall in any material manner adversely affect any
Option, SAR or Restricted Stock Award previously granted under this Plan,
without the written consent of the employee holding such Option, SAR or
Restricted Stock Award.
19. SECURITIES ACT REQUIREMENTS. No Option granted pursuant to the Plan
shall be exercisable in whole or in part, and the Corporation shall not be
obligated to sell any Shares subject to any such Option, if such exercise and
sale would, in the opinion of counsel for the Corporation, violate the
Securities Act of 1933, as amended (or other Federal or state statutes having
similar requirements). Each Option shall be subject to the
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further requirement that, if at any time the Committee shall determine in its
discretion that the listing or qualification of the Shares subject to such
option under any securities exchange requirements or system on which the
Corporation's Common Stock is then listed or reported or under any applicable
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting of
such Option or the issue of Shares thereunder, such Option may not be exercised
in whole or in part unless such listing, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Committee.
20. REQUIREMENTS OF LAW. If any law, regulation of the Securities and
Exchange Commission, or any regulation of any other commission or agency having
jurisdiction shall require the Company or the exercising Optionee to take any
action with respect to the shares of stock acquired by the exercise of an
Option, then the date upon which the Company shall deliver or cause to be
delivered the certificate or certificates for the shares of stock shall be
postponed until full compliance shall have been made with all such requirements.
21. LIQUIDATION OF THE CORPORATION. In the event of the complete
liquidation or dissolution of the Corporation, other than as an incident to a
merger, reorganization, or other adjustment referred to in Section 16 above, any
Options granted pursuant to this Plan and remaining unexercised and any non
vested Restricted Stock Awards shall be deemed canceled, without regard to or
limitation by any other provisions of this Plan.
22. MISCELLANEOUS. The granting of an Option or Restricted Stock Award
shall not constitute or be evidence of any agreement or understanding, expressed
or implied, on the part of the Corporation to employ the holder thereof for any
period. No holder of an Option or Restricted Stock Award shall be entitled to
any rights of a shareholder of the Corporation with respect to any of the shares
of stock subject thereto until such shares of stock have been paid for in full
and/or otherwise issued to such person. Each Option shall be evidenced by an
agreement or certificate in such form and substance which is not inconsistent
with this Plan and as shall be determined by the Board or the Committee. No
employee shall have the right to be selected to receive an Option under this
Plan, or, having been so selected, to be selected to receive a future Option.
All obligations of the Corporation under this Plan shall be binding on any
successor to the Corporation, whether the existence of such successor is the
result of a direct or indirect purchase, merger, consolidation, or otherwise, of
all or substantially all of the business and/or assets of the Corporation.
23. GOVERNING LAW. This Plan shall be governed by the laws of the State of
Florida and, with respect to Incentive Stock Options, shall be construed in a
manner to qualify as an Incentive Stock Option Plan pursuant to the requirements
of Section 422 of the Internal Revenue Code. In the event this Plan does not
meet such requirements, any provision herein which conflicts with such
requirements shall be omitted, and any required provisions which were omitted
shall be included, as necessary, so as to qualify this Plan as an Incentive
Stock Option Plan.
A-8
<PAGE>
Appendix I - Proxy Card
REXALL SUNDOWN, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 23, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Carl DeSantis and Christian Nast, as
Proxies, each with the power to appoint his substitute, and hereby authorized
them to represent and to vote as designated on the reverse side of this card,
all the shares of Common Stock of Rexall Sundown, Inc. held of record by the
undersigned on December 28, 1999, at the Annual Meeting of Shareholders to be
held on February 23, 2000, or any adjournment or postponement thereof.
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF ALL DIRECTORS, FOR PROPOSAL 2 AND FOR
PROPOSAL 3 AS OTHERWISE DETERMINED BY THE PROXYHOLDERS IN THEIR DISCRETION.
(continued, and to be signed, on other side)
A [ ] Please mark your votes as in this example
<TABLE>
<CAPTION>
FOR all
nominees WITHHOLD
listed at right AUTHORITY
(except as marked to the to vote for all nominees
contrary in the list at right) listed at right
<S> <C> <C>
1. Election of Nominees: Carl DeSantis
Directors [ ] [ ] Christian Nast
Damon DeSantis
Nickolas Palin
Dean DeSantis
Stanley Leedy
Melvin Stith
FOR AGAINST ABSTAIN
2. Proposal To Amend The Company's [ ] [ ] [ ]
Amended And Restated 1993 Stock
Incentive Plan
3. Ratification of Selection of [ ] [ ] [ ]
Pricewaterhousecoopers LLP.
4. In their discretion, the Proxies are authorized
to vote upon such other business as may properly
come before the meeting.
</TABLE>
Please mark, sign, date and return the proxy card promptly using the enclosed
envelope.
SIGNATURE DATED , 2000
------------------ --------------------------- --------
SIGNATURE, IF HELD JOINTLY
Note: Please sign exactly as your name appears hereon. When shares are held
by joint tenants, both should sign. When signing as attorney,
administrator, executor, trustee or guardian, please give full title as
such. If a corporation, please sign full corporate name by President or
other authorized officer. If a partnership, please sign in partnership
name by authorized person.
