<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE TO
(RULE 14D-100)
TENDER OFFER STATEMENT
UNDER SECTION 14(D)(1) OR 13(E)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
REXALL SUNDOWN, INC.
(NAME OF SUBJECT COMPANY)
NUTRICIA INVESTMENT CORP.
NUTRICIA FLORIDA, L.P.
NUTRICIA FLORIDA, INC.
NUTRICIA INTERNATIONAL B.V.
KONINKLIJKE NUMICO N.V.
(ROYAL NUMICO)
(NAMES OF FILING PERSONS)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
761648104
(CUSIP NUMBER OF CLASS OF SECURITIES)
JULITTE VAN DER VEN
NUTRICIA INVESTMENT CORP.
C/O GUY SNYDER, ESQ.
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 NORTH LASALLE STREET
CHICAGO, ILLINOIS 60601
TELEPHONE: (312) 609-7500
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
Copies To:
GUY E. SNYDER, ESQ.
STEVEN J. GRAY, ESQ.
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 NORTH LASALLE STREET
CHICAGO, ILLINOIS 60601
(312) 609-7500
--------------------------
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE**
$1,675,331,438 $335,067
</TABLE>
* For purposes of calculating the filing fee only. This calculation assumes the
purchase of (i) 64,063,856 issued and outstanding Shares (as defined herein) as
of April 28, 2000, according to Rexall Sundown, Inc. (the "Company"), at $24.00
per Share plus (ii) 11,879,215 options to acquire Shares with an exercise price
of less than $24.00, according to the Company, at $11.60 per Share (which
represents the difference between the Offer price of $24.00 and the aggregated
weighted average exercise price of $12.40 per Share for all outstanding
options).
** 1/50 of one percent of Transaction Valuation.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
<TABLE>
<S> <C> <C> <C>
Amount Previously Paid: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
</TABLE>
/ / Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
/X/ third-party tender offer subject to Rule 14d-1.
/ / issuer tender offer subject to Rule 13e-4.
/ / going-private transaction subject to Rule 13e-3.
/ / amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: / /
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<PAGE>
This Tender Offer Statement on Schedule TO ("Schedule TO") relates to the
offer by Nutricia Investment Corp. (the "Purchaser"), a Florida corporation, and
an indirect wholly owned subsidiary of Koninklijke Numico N.V. ("Numico"), a
company incorporated under the laws of the Netherlands, to purchase all of the
issued and outstanding shares of common stock, par value $0.01 per share, (the
"Shares") of Rexall Sundown, Inc. (the "Company"), at a price of $24.00 per
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated May 5, 2000
(the "Offer to Purchase"), a copy of which is annexed hereto as Exhibit (a)(1),
and in the related Letter of Transmittal (the "Letter of Transmittal"), a copy
of which is annexed hereto as Exhibit (a)(2) (which, together with the Offer to
Purchase, as each may be amended or supplemented from time to time, collectively
constitute the "Offer").
The information in the Offer to Purchase, including all schedules and
annexes thereto, is hereby expressly incorporated herein by reference in
response to all the items of this Schedule TO, except as otherwise set forth
below.
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ITEM 10. FINANCIAL STATEMENTS
Not applicable.
ITEM 11. ADDITIONAL INFORMATION.
(b) The information set forth in the Letter of Transmittal,
attached hereto as Exhibit (a)(2), is incorporated herein
by reference.
ITEM 12. MATERIAL TO BE FILED AS EXHIBITS
(a)(1) Offer to Purchase, dated May 5, 2000.
(a)(2) Letter of Transmittal with respect to the Shares.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Form of letter, dated May 5, 2000, to brokers, dealers,
commercial banks, trust companies and other nominees.
(a)(5) Form of letter, dated May 5, 2000, to clients to be used by
brokers, dealers, commercial banks, trust companies and
other nominees.
(a)(6) Press release, dated May 1, 2000. This press release was
filed under cover of Schedule TO with the Securities and
Exchange Commission on May 1, 2000, and is incorporated
herein by reference.
(a)(7) Form of newspaper advertisement, dated May 5, 2000.
(a)(8) IRS Guidelines for Certification of Taxpayer Indentification
Number on Substitute Form W-9.
(a)(9) Press release, dated May 5, 2000.
(b) None.
(d)(1) Agreement and Plan of Merger, dated as of April 30, 2000, by
and among the Company, Numico and the Purchaser.
(d)(2) Shareholder Agreement, dated as of April 30, 2000, by and
among the Purchaser, Numico and certain shareholders of the
Company.
(d)(3) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Damon DeSantis.
(d)(4) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Geary Cotton.
(d)(5) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Richard Goudis.
</TABLE>
2
<PAGE>
<TABLE>
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(d)(6) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Gerald Holly.
(d)(7) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Richard Werber.
(d)(8) Consulting Agreement, dated as of April 30, 2000, among
Numico, the Company and Carl DeSantis.
(d)(9) Consulting Agreement, dated as of April 30, 2000, among
Numico, the Company and Nickolas Palin.
(d)(10) Consulting Agreement, dated as of April 30, 2000, among
Numico, the Company and Christian Nast.
(d)(11) Benefits Letter, dated April 30, 2000, by and between Numico
and the Company.
(d)(12) Confidentiality Agreement, dated March 22, 2000, by and
between Numico and the Company.
(g) None.
(h) None.
</TABLE>
3
<PAGE>
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: May 5, 2000
<TABLE>
<S> <C> <C>
KONINKLIJKE NUMICO N.V.
By: /s/ JOHANNES C.T. VAN DER WIELEN
---------------------------------------
Name: Johannes C.T. van der Wielen
Title: President and Chief Executive
Officer
NUTRICIA INVESTMENT CORP.
By: /s/ JULITTE VAN DER VEN
---------------------------------------
Name: Julitte van der Ven
Title: President
NUTRICIA FLORIDA, L.P.
By: Nutricia Florida, Inc., its general
partner
By: /s/ JULITTE VAN DER VEN
---------------------------------------
Name: Julitte van der Ven
Title: President
NUTRICIA FLORIDA, INC.
By: /s/ JULITTE VAN DER VEN
---------------------------------------
Name: Julitte van der Ven
Title: President
NUTRICIA INTERNATIONAL B.V.
By: /s/ JOHANNES C.T. VAN DER WIELEN
---------------------------------------
Name: Johannes C.T. van der Wielen
Title: President and Chief Executive
Officer
</TABLE>
4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------------------- -----------
<S> <C>
(a)(1) Offer to Purchase, dated May 5, 2000.
(a)(2) Letter of Transmittal with respect to the Shares.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Form of letter, dated May 5, 2000, to brokers, dealers,
commercial banks, trust companies and other nominees.
(a)(5) Form of letter, dated May 5, 2000, to clients to be used by
brokers, dealers, commercial banks, trust companies and
other nominees.
(a)(6) Press release, dated May 1, 2000. This press release was
filed under cover of Schedule TO with the Securities and
Exchange Commission on May 1, 2000, and is incorporated
herein by reference.
(a)(7) Form of newspaper advertisement, dated May 5, 2000.
(a)(8) IRS Guidelines for Certification of Taxpayer Indentification
Number on Substitute Form W-9.
(a)(9) Press release, dated May 5, 2000.
(b) None.
(d)(1) Agreement and Plan of Merger, dated as of April 30, 2000, by
and among the Company, Numico and the Purchaser.
(d)(2) Shareholder Agreement, dated as of April 30, 2000, by and
among the Purchaser, Numico and certain shareholders of the
Company.
(d)(3) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Damon DeSantis.
(d)(4) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Geary Cotton.
(d)(5) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Richard Goudis.
(d)(6) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Gerald Holly.
(d)(7) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Richard Werber.
(d)(8) Consulting Agreement, dated as of April 30, 2000, among
Numico, the Company and Carl DeSantis.
(d)(9) Consulting Agreement, dated as of April 30, 2000, among
Numico, the Company and Nickolas Palin.
(d)(10) Consulting Agreement, dated as of April 30, 2000, among
Numico, the Company and Christian Nast.
(d)(11) Benefits Letter, dated April 30, 2000, by and between Numico
and the Company.
(d)(12) Confidentiality Agreement, dated March 22, 2000, by and
between Numico and the Company.
(g) None.
(h) None.
</TABLE>
5
<PAGE>
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Rexall Sundown, Inc.
at
$24.00 Net Per Share
by
Nutricia Investment Corp.
an indirect wholly owned subsidiary of
Koninklijke Numico N.V.
(Royal Numico)
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THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JUNE 2, 2000, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS OF REXALL SUNDOWN, INC. (THE "COMPANY") HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER (EACH AS
DEFINED HEREIN), DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN
THE BEST INTERESTS OF, THE SHAREHOLDERS OF THE COMPANY AND RECOMMENDS THAT
SHAREHOLDERS TENDER THEIR SHARES (AS DEFINED HEREIN) PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE (THE "SHARES"), OF THE COMPANY
EQUIVALENT TO A MAJORITY OF THE TOTAL ISSUED AND OUTSTANDING SHARES ON A FULLY
DILUTED BASIS AS OF THE DATE SUCH SHARES ARE PURCHASED PURSUANT TO THE OFFER
(THE "MINIMUM CONDITION") AND (II) THE EXPIRATION OR TERMINATION OF ANY
APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT
OF 1976, AS AMENDED (THE "HSR ACT"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER
CONDITIONS DESCRIBED IN SECTION 12 OF THIS OFFER TO PURCHASE.
THE OFFER IS NOT CONDITIONED ON THE PURCHASER (AS DEFINED HEREIN) OBTAINING
FINANCING.
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
Shares should: (1) complete and sign the Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of Transmittal,
including any required signature guarantees, and (A) mail or deliver the Letter
of Transmittal (or such facsimile) with such shareholder's certificate(s) for
the tendered Shares and any other required documents to the Depositary (as
defined herein), or (B) follow the procedure for book-entry transfer of Shares
set forth in Section 3 of this Offer to Purchase or (2) request such
shareholder's broker, dealer, commercial bank, trust company or other nominee to
effect the transaction for such shareholder. Shareholders having Shares
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if they desire to tender Shares so registered.
A shareholder who desires to tender Shares and whose certificates for such
Shares are not immediately available, or who cannot comply with the procedure
for book-entry transfer on a timely basis, may tender such Shares by following
the procedures for guaranteed delivery set forth in Section 3 of this Offer to
Purchase.
Questions and requests for assistance may be directed to Innisfree M&A
Incorporated, which is acting as the Information Agent, or Salomon Smith
Barney Inc., which is acting as the Dealer Manager, at their respective
addresses and telephone numbers set forth on the back cover of this Offer to
Purchase. Requests for additional copies of this Offer to Purchase, the Letter
of Transmittal and the Notice of Guaranteed Delivery may be directed to the
Information Agent or to brokers, dealers, commercial banks or trust companies.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE FAIRNESS OR MERITS OF THIS TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF
THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY
IS UNLAWFUL.
------------------------
THE DEALER MANAGER FOR THE OFFER IS:
Salomon Smith Barney
May 5, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
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SUMMARY TERM SHEET..................................................... ii
INTRODUCTION........................................................... vi
THE TENDER OFFER....................................................... 1
1. Terms of the Offer.......................................... 1
2. Acceptance for Payment and Payment for Shares............... 3
3. Procedure for Tendering Shares.............................. 4
4. Rights of Withdrawal........................................ 7
5. Certain U.S. Federal Income Tax Consequences................ 8
6. Price Range of the Shares; Dividends........................ 9
7. Effect of the Offer on the Market for the Shares; Stock
Quotation; Exchange Act Registration; Margin Regulations... 10
8. Certain Information Concerning the Company.................. 11
9. Certain Information Concerning the Purchaser and Numico..... 14
10. Background of the Offer; Contacts with the Company.......... 16
11. Purpose of the Offer; Plans for the Company; the Merger
Agreement;
Other Agreements........................................... 18
12. Certain Conditions to the Offer............................. 35
13. Source and Amount of Funds.................................. 37
14. Dividends and Distributions................................. 38
15. Certain Legal Matters....................................... 38
16. Fees and Expenses........................................... 40
17. Legal Proceedings........................................... 41
18. Miscellaneous............................................... 41
SCHEDULE A--Directors and Executive Officers of Numico, the Purchaser,
Nutricia LP, Nutricia, Inc. and Nutricia International................. A-1
</TABLE>
i
<PAGE>
SUMMARY TERM SHEET
Nutricia Investment Corp. is offering to purchase all of the outstanding
shares of common stock of Rexall Sundown, Inc. for $24.00 net per share in cash,
without any interest. The following are some of the questions you, as a
shareholder of Rexall Sundown, may have and answers to those questions.
We urge you to read carefully the remainder of this Offer to Purchase and
the Letter of Transmittal because the information in this summary term sheet is
not complete. Additional important information is contained in the remainder of
this Offer to Purchase and the Letter of Transmittal.
WHO IS OFFERING TO BUY MY SECURITIES?
Our name is Nutricia Investment Corp. We are a Florida corporation formed
for the purpose of making this offer. We are an indirect wholly owned subsidiary
of Koninklijke Numico N.V., a company incorporated under the laws of the
Netherlands. See the "Introduction" to this Offer to Purchase.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are seeking to purchase all of the outstanding shares of common stock of
Rexall Sundown. See the "Introduction" to this Offer to Purchase.
HOW MUCH ARE YOU OFFERING TO PAY, WHAT IS THE FORM OF PAYMENT AND WILL I
HAVE TO PAY ANY FEES OR COMMISSIONS?
We are offering to pay $24.00 per share, net to you, in cash, without any
interest. If you are the record owner of your shares and you tender your shares
to us in the offer, you will not have to pay brokerage fees or similar expenses.
If you own your shares through a broker or other nominee, and your broker
tenders your shares on your behalf, your broker or nominee may charge you a fee
for doing so. You should consult your broker or nominee to determine whether any
charges will apply. See the "Introduction" to this Offer to Purchase.
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
We will be provided with approximately $1.8 billion, by Numico and/or its
affiliates, which will be used to purchase all shares validly tendered and not
withdrawn in the offer and to provide funding for the merger of Nutricia
Investment Corp. with and into Rexall Sundown. This merger is expected to follow
the successful completion of the offer in accordance with the terms and
conditions of the merger agreement among us, Numico and Rexall Sundown. The
offer is not conditioned upon any financing arrangements. Numico and/or its
affiliates currently intend to provide the necessary funds through a combination
of loans and/or capital contributions. Numico and/or its affiliates intend to
obtain such funds through a loan facility that will be established. See
Section 13--"Source and Amount of Funds" in this Offer to Purchase.
IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
We do not think our financial condition is relevant to your decision whether
to tender shares and accept the offer because:
--only cash consideration is being offered,
--the offer is not subject to any financing condition, and
--the offer is being made for all the outstanding shares of Rexall Sundown.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have until 12:00 midnight, New York City time, on Friday, June 2,
2000, to decide whether to tender your shares in the offer, unless the offer is
extended pursuant to the terms of the
ii
<PAGE>
merger agreement. Further, if you cannot deliver everything that is required in
order to make a valid tender by that time, you may be able to use a guaranteed
delivery procedure, which is described later in this Offer to Purchase. See
Section 1--"Terms of the Offer" and Section 3--"Procedure for Tendering Shares"
in this Offer to Purchase.
CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
Yes. We have agreed with Rexall Sundown that we may extend the offer if
(i) at the time the offer is scheduled to expire, including at the end of an
earlier extension, any of the offer conditions is not satisfied or waived by us,
if we are required to extend the offer under the terms of the merger agreement
or (ii) subject to waiver by us of certain of the offer conditions, less than
80% of the shares have been tendered. We have also agreed with Rexall Sundown
that we will extend the offer (i) under certain circumstances contemplated by
the merger agreement or (ii) if we are required to do so by the rules of the
Securities and Exchange Commission.
We may also elect to provide a "subsequent offering period" for the offer. A
subsequent offering period, if one is included, will be an additional period of
time beginning after we have purchased shares tendered during the offer, during
which shareholders may tender, but not withdraw, their shares and receive the
offer consideration. We do not currently intend to include a subsequent offering
period, although we reserve the right to do so. See Section 1--"Terms of the
Offer" in this Offer to Purchase.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will inform Wilmington Trust Company, which is
the depositary for the offer, of that fact. We also will make a public
announcement of the extension, not later than 9:00 a.m., New York City time, on
the next business day after the day on which the offer was scheduled to expire.
See Section 1--"Terms of the Offer" in this Offer to Purchase.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
We are not obligated to purchase any shares which are validly tendered
unless the number of shares validly tendered and not properly withdrawn before
the expiration of the offer represents at least a majority of the outstanding
shares of Rexall Sundown on a fully diluted basis. We may, however, decide to
purchase all shares tendered, even though such number may be less than a
majority of the outstanding shares on a fully diluted basis, with the prior
written consent of Rexall Sundown.
The offer also is subject to a number of other conditions which we can waive
without consent of Rexall Sundown. See the "Introduction" and
Section 12--"Certain Conditions to the Offer" in this Offer to Purchase.
HOW DO I TENDER MY SHARES?
To tender shares, you must deliver the certificates representing your
shares, together with a completed Letter of Transmittal, to Wilmington Trust
Company, the depositary for the offer, not later than the time the tender offer
expires. If your shares are held in "street name," the shares can be tendered by
your nominee through The Depository Trust Company. If you cannot get any
document or instrument that is required to be delivered to the depositary by the
expiration of the tender offer, you may get a little extra time to do so by
having a broker, a bank or other fiduciary which is a member of the Securities
Transfer Agents Medallion Program or other eligible institution guarantee that
the missing item will be received by the depositary within three Nasdaq National
Market trading days. For the tender to be valid, however, the depositary must
receive the missing items within that three trading day period. See
Section 3--"Procedure for Tendering Shares" in this Offer to Purchase.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
You can withdraw shares at any time until the offer has expired and, if we
have not agreed by July 3, 2000 (or a later date as may apply, if this offer is
extended) to accept your shares for payment,
iii
<PAGE>
you can withdraw them at any time after such time until we accept shares for
payment. This right to withdraw will not apply to any subsequent offering
period. See Section 1--"Terms of the Offer" and Section 4--"Rights of
Withdrawal" in this Offer to Purchase.
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
To withdraw shares, you must deliver a written notice of withdrawal, or a
copy of one, with the required information to Wilmington Trust Company, the
depositary for the offer, while you still have the right to withdraw the shares.
See Section 4--"Rights of Withdrawal" in this Offer to Purchase.
WHAT DOES THE REXALL SUNDOWN BOARD OF DIRECTORS THINK OF THE OFFER?
We are making the offer pursuant to a merger agreement among us, Numico and
Rexall Sundown. The board of directors of Rexall Sundown unanimously approved
the merger agreement, our tender offer and the proposed merger of us with and
into Rexall Sundown. Following the proposed merger, Rexall Sundown will be the
surviving corporation and an indirect wholly owned subsidiary of Numico. The
board of directors of Rexall Sundown has determined that the terms of the offer
and the merger are fair to, and in the best interests of, the shareholders of
Rexall Sundown and recommends that you tender your shares in the offer. See the
"Introduction" to this Offer to Purchase.
HAVE ANY SHAREHOLDERS AGREED TO TENDER THEIR SHARES?
Yes. Shareholders who own shares representing approximately 50.3% of the
outstanding common stock of Rexall Sundown (which is subject to increase upon
the exercise of any outstanding options) have agreed to tender their shares in
the offer. See Section 11--"Purpose of the Offer; Plans for the Company; the
Merger Agreement; Other Agreements--SHAREHOLDER AGREEMENT," in this Offer to
Purchase.
IF A MAJORITY OF THE SHARES ARE TENDERED AND ACCEPTED FOR PAYMENT, WILL
REXALL SUNDOWN CONTINUE AS A PUBLIC COMPANY?
No. Following the purchase of shares in the offer, we expect to consummate
the merger, and, following the merger, Rexall Sundown will no longer be publicly
owned. Even if the merger does not take place, if we purchase all of the
tendered shares, there may be so few remaining shareholders and publicly held
shares that (a) Rexall Sundown shares will no longer meet the published
guidelines of the Nasdaq National Market for continued listing and may be
delisted from the Nasdaq National Market, (b) there may not be a public trading
market for Rexall Sundown shares and (c) Rexall Sundown may cease being required
to comply with the SEC rules relating to publicly held companies. See
Section 7--"Effect of the Offer on the Market for the Shares; Stock Quotation;
Exchange Act Registration; Margin Regulations" in this Offer to Purchase.
WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL OF REXALL SUNDOWN
SHARES ARE NOT TENDERED IN THE OFFER?
Yes. If we accept for payment and pay for at least a majority of the
outstanding shares of Rexall Sundown, Nutricia Investment Corp. will be merged
with and into Rexall Sundown. If that merger takes place, Numico will own
indirectly all of the shares of Rexall Sundown and all remaining shareholders of
Rexall Sundown (other than Numico or its subsidiaries, including Nutricia
Investment Corp.) will receive $24.00 per share in cash. See the "Introduction"
to this Offer to Purchase.
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If the merger described above takes place, shareholders not tendering in the
offer will receive the same amount of cash per share that they would have
received had they tendered their shares in the offer. Therefore, if the merger
takes place, the only difference to you between tendering your shares
iv
<PAGE>
and not tendering your shares is that you will be paid earlier if you tender
your shares. However, if the merger does not take place, the number of Rexall
Sundown shareholders and shares of Rexall Sundown which are still in the hands
of the public may be so small that there no longer will be an active public
trading market (or, possibly, there may not be any public trading market) for
the shares. Also, as described above, Rexall Sundown may cease making filings
with the SEC or otherwise being required to comply with the SEC rules relating
to publicly held companies. See the "Introduction" and Section 7--"Effect of the
Offer on the Market for the Shares; Stock Quotation; Exchange Act Registration;
Margin Regulations" of this Offer to Purchase.
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On April 28, 2000, the last trading day before we announced the tender offer
and the possible subsequent merger, the closing price of Rexall Sundown shares
reported on the Nasdaq National Market was $19.25 per share. Between
December 31, 1999 and April 28, 2000, the closing price of Rexall Sundown shares
ranged between $9.9375 and $19.25 per share. We advise you to obtain a recent
quotation for shares of Rexall Sundown in deciding whether to tender your
shares. See Section 6--"Price Range of the Shares; Dividends" in this Offer to
Purchase.
WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You can call Innisfree M&A Incorporated at (888) 750-5834 (toll free) or
(212) 750-5833 (call collect) or Salomon Smith Barney Inc. at (877) 755-4456
(toll free). Innisfree M&A Incorporated is acting as the information agent and
Salomon Smith Barney Inc. is acting as the dealer manager for our tender offer.
See the back cover of this Offer to Purchase.
v
<PAGE>
To the Holders of Shares of
REXALL SUNDOWN, INC.:
INTRODUCTION
Nutricia Investment Corp., a Florida corporation (the "Purchaser") and an
indirect wholly owned subsidiary of Koninklijke Numico N.V., a company organized
under the laws of the Netherlands ("Numico"), hereby offers to purchase all
outstanding shares of common stock, par value $0.01 per share (the "Shares"), of
Rexall Sundown, Inc., a Florida corporation (the "Company"), at $24.00 per
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in this Offer to Purchase (as amended or
supplemented from time to time, the "Offer to Purchase") and in the related
Letter of Transmittal (the "Letter of Transmittal," which, together with the
Offer to Purchase, as each may be amended or supplemented from time to time,
collectively constitute the "Offer").
Tendering shareholders who have Shares registered in their name and who
tender directly to the Depositary will not be charged brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, transfer
taxes on the purchase of Shares by the Purchaser pursuant to the Offer.
Shareholders who hold their Shares through their broker, dealer, commercial bank
or trust company should consult with such institution as to whether there are
any fees applicable to a tender of Shares. The Purchaser will pay all charges
and expenses of Wilmington Trust Company, as the depositary (the "Depositary"),
Salomon Smith Barney Inc., as the dealer manager (the "Dealer Manager"), and
Innisfree M&A Incorporated, as the information agent (the "Information Agent"),
incurred in connection with the Offer. See Section 16.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER (THE
"MERGER AGREEMENT") DATED AS OF APRIL 30, 2000, BY AND AMONG THE COMPANY, NUMICO
AND THE PURCHASER. PURSUANT TO THE MERGER AGREEMENT, AFTER COMPLETION OF THE
OFFER AND SUBJECT TO THE SATISFACTION OR WAIVER OF ALL CONDITIONS TO THE MERGER,
THE PURCHASER WILL BE MERGED WITH AND INTO THE COMPANY (THE "MERGER"). THE BOARD
OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, THE OFFER AND THE MERGER, DETERMINED THAT THE OFFER AND THE MERGER
ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF THE COMPANY AND
RECOMMENDS THAT SHAREHOLDERS TENDER THEIR SHARES PURSUANT TO THE OFFER.
For a discussion of the Board's recommendation, see "Item 4. The
Solicitation or Recommendation" set forth in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which is being mailed to shareholders with this Offer to Purchase.
Morgan Stanley & Co. Incorporated ("Morgan Stanley") has delivered to the
Board its written opinion that, as of April 28, 2000, and based upon and subject
to the matters set forth therein, the consideration to be received by the
holders of Shares pursuant to the Merger Agreement is fair from a financial
point of view to such holders. A copy of the opinion of Morgan Stanley is
contained in the Schedule 14D-9. Shareholders are urged to and should read the
opinion carefully and in its entirety.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES EQUIVALENT TO A MAJORITY OF THE TOTAL ISSUED AND OUTSTANDING SHARES ON A
FULLY DILUTED BASIS AS OF THE DATE SUCH SHARES ARE PURCHASED PURSUANT TO THE
OFFER (THE "MINIMUM CONDITION") AND (II) THE EXPIRATION OR TERMINATION OF ANY
APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT RODINO ANTITRUST IMPROVEMENTS ACT
OF 1976, AS AMENDED (THE "HSR ACT"). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER
CONDITIONS DESCRIBED IN SECTION 12.
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The purpose of the Offer is to acquire for cash as many outstanding Shares
as possible as a first step in acquiring all of the equity interests in the
Company.
Pursuant to the Merger Agreement, each issued and outstanding Share (other
than Shares owned by the Company, Numico or the Purchaser or Shares that are
held by shareholders exercising dissenters' rights under Florida law
("Dissenting Shareholders")) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and represent the
right to receive an amount in cash, without interest, equal to the price paid
for each Share pursuant to the Offer (the "Merger Consideration"). The Merger
Agreement is more fully described in Section 11.
The consummation of the Merger is subject to the satisfaction or waiver of a
number of conditions, including the approval of the Merger by the requisite vote
of the shareholders of the Company. Under Florida law, the shareholder vote
necessary to approve the Merger will be the affirmative vote of at least a
majority of the outstanding Shares, including Shares held by the Purchaser and
its affiliates. Accordingly, if the Purchaser acquires a majority of the
outstanding Shares, the Purchaser will have the voting power required to approve
the Merger without the affirmative vote of any other shareholders of the
Company. In the event the Purchaser obtains 80% or more of the outstanding
Shares pursuant to the Offer or otherwise, the Purchaser will effect the Merger
pursuant to the short-form merger provisions of the Florida Business Corporation
Act ("FBCA"), without the approval of any other shareholder of the Company.
Certain shareholders of the Company owning in the aggregate 32,239,270
Shares, or approximately 50.3% of the Shares issued and outstanding on April 28,
2000, have entered into a Shareholder Agreement dated April 30, 2000, with
Numico and the Purchaser (the "Shareholder Agreement") whereby such shareholders
have agreed to tender all of their Shares pursuant to the Offer. This agreement
is more fully described in Section 11.
Consummation of the Offer is conditioned upon the expiration or termination
of any applicable waiting period under the HSR Act. See Section 15.
Based on the representations and warranties of the Company contained in the
Merger Agreement, as of the close of business on April 28, 2000: (i) 64,063,856
Shares were issued and outstanding and (ii) 13,245,023 Shares were reserved for
issuance upon exercise of outstanding stock options, warrants or other rights to
acquire Shares. Based on the foregoing, the Minimum Condition will be satisfied
if 38,654,440 Shares are validly tendered and not withdrawn prior to the
Expiration Date (as defined herein). The number of Shares required to be validly
tendered and not withdrawn in order to satisfy the Minimum Condition will
increase to the extent additional Shares are deemed to be outstanding on a fully
diluted basis under the Merger Agreement.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
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THE TENDER OFFER
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions set forth in the Offer
(including the terms and conditions set forth in Section 12 (the "Offer
Conditions"), and if the Offer is extended or amended, the terms and conditions
of such extension or amendment), the Purchaser will accept for payment, and pay
for, all Shares validly tendered on or prior to the Expiration Date and not
otherwise withdrawn as permitted by Section 4. The term "Expiration Date" shall
mean 12:00 Midnight, New York City time, on Friday, June 2, 2000, or any later
time and date at which the Offer, as so extended by the Purchaser, shall expire.
Under no circumstances will any interest be paid on the Offer price for tendered
Shares, regardless of any extension of the Offer or any delay in making such
payment.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition and the obtaining of any Required Regulatory Approvals (as
defined in the Merger Agreement), including the expiration or termination of any
waiting period under the HSR Act. The Offer is also conditioned upon the
satisfaction of each of the other conditions described in Section 12. If any of
these conditions is not satisfied prior to the Expiration Date (as extended by
the Purchaser pursuant to the Merger Agreement), the Purchaser may decline to
purchase any of the Shares tendered in the Offer and may terminate the Offer and
return all tendered Shares to tendering shareholders. The Purchaser reserves the
right (but shall not be obligated), subject to the provisions of the Merger
Agreement, to waive any or all of such conditions, except the Minimum Condition,
or, subject to the right of shareholders to withdraw Shares until the Expiration
Date, to retain the Shares which have been tendered during the period or periods
for which the Offer is extended.
Subject to the applicable rules and regulations of the Securities and
Exchange Commission (the "SEC") and the terms of the Merger Agreement (see
Section 11), the Purchaser expressly reserves the right, in its sole discretion,
at any time or from time to time, to extend the period of time during which the
Offer is open by giving oral or written notice of such extension to the
Depositary. Any such extension will be followed as promptly as possible by a
public announcement thereof. During any such extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer, subject to the
rights of a tendering shareholder to withdraw such shareholder's Shares. See
Section 4. Subject to the terms of the Merger Agreement and the applicable rules
and regulations of the SEC, the Purchaser also expressly reserves the right, in
its sole discretion, at any time or from time to time, (i) to delay acceptance
for payment of or (regardless of whether such Shares were already accepted for
payment) payment for, any tendered Shares, or to terminate or amend the Offer as
to any Shares not then paid for, upon the occurrence of any of the conditions
specified in Section 12 and (ii) to waive any condition and to set forth or
change any other term and condition of the Offer, by giving oral or written
notice of such delay, termination or amendment to the Depositary and by making a
public announcement thereof; provided that pursuant to the Merger Agreement, the
Purchaser will not, without the prior written consent of the Company (such
consent to be authorized by the Board), (i) waive the Minimum Condition,
(ii) decrease the amount or change the form of consideration payable in the
Offer, (iii) decrease the number of Shares sought in the Offer, (iv) impose
additional conditions to the Offer, (v) change any of the Offer Conditions or
amend any other term of the Offer if any such change or amendment would be
materially adverse to the holders of Shares (other than Numico or the Purchaser)
or (vi) except as provided below, extend the Offer if all the Offer Conditions
have been satisfied.
Notwithstanding the foregoing, pursuant to the Merger Agreement, the
Purchaser may, without the consent of the Company, (a) extend the Offer, if at
the scheduled Expiration Date, any of the Offer Conditions have not been
satisfied or waived, on one or more occasions for one or more additional
period(s) of up to ten business days at a time until such conditions are
satisfied or waived, (b) extend the Offer for such period as may be required by
any rule, regulation, interpretation of position of the SEC or the staff thereof
applicable to the Offer, (c) extend the Offer for one or more periods (each such
period to be for not more than five business days, and such extensions to be for
an aggregate period of not more than twenty business days beyond the latest
Expiration Date that would otherwise be permitted under clause (a) or (b) of
this sentence) if on the date of such extensions the Offer
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Conditions have been satisfied or waived but more than 80% of the outstanding
Shares have not been tendered, or (d) extend the Offer for any reason for one or
more periods, each such period to be for not more than ten business days, and
such extensions to be for an aggregate period of not more than twenty business
days beyond the latest Expiration Date that would otherwise be permitted under
clause (a) or (b) of this sentence. Pursuant to the Merger Agreement, if all of
the Offer Conditions are not satisfied on any Expiration Date of the Offer, the
Purchaser will, upon the Company's request, extend the Offer for periods of not
more than ten business days each; provided, that (i) the Company will only be
able to make two such requests, and (ii) the Purchaser will not be required to
extend the Offer beyond August 31, 2000 (the "Outside Date") (or October 30,
2000, if all Required Regulatory Approvals are not obtained by such date) or, if
earlier, the termination of the Merger Agreement in accordance with its terms.
Under the Merger Agreement and pursuant to Rule 14d-11 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Purchaser may,
subject to certain conditions, elect to provide a subsequent offering period of
three to twenty business days in length following the expiration of the Offer on
the Expiration Date (the "Subsequent Offering Period"). A Subsequent Offering
Period would be an additional period of time, following the expiration of the
Offer and the purchase of Shares in the Offer, during which shareholders may
tender Shares not tendered in the Offer. A Subsequent Offering Period, if one is
included, is not an extension of the Offer, which already will have been
completed.
Rule 14d-11 provides that the Purchaser may elect to provide a Subsequent
Offering Period so long as, among other things, (i) the Offer has remained open
for a minimum of twenty business days and has expired, (ii) the Offer is for all
outstanding Shares, (iii) the Purchaser accepts and promptly pays for all
securities tendered during the Offer prior to close of the Offer, (iv) the
Purchaser announces the results of the Offer, including the approximate number
and percentage of Shares deposited in the Offer, no later than 9:00 a.m. New
York City time on the next business day after the Expiration Date and
immediately begins the Subsequent Offering Period, (v) the Purchaser immediately
accepts and promptly pays for Shares as they are tendered during the Subsequent
Offering Period and (vi) the Purchaser offers the same form and amount of
consideration to the holders of Shares in both the Offer and the Subsequent
Offering Period. The Purchaser does not currently intend to include a Subsequent
Offering Period in the Offer, although it reserves the right to do so in its
sole discretion. Under the Exchange Act, no withdrawal rights apply to Shares
tendered during the Subsequent Offering Period and no withdrawal rights apply
during the Subsequent Offering Period with respect to Shares tendered in the
Offer and accepted for payment. If a Subsequent Offering Period is included, the
Purchaser will promptly purchase and pay for any Shares tendered at the same
price paid in the Offer.
If the Purchaser accepts any Shares for payment pursuant to the terms of the
Offer, it will accept for payment all Shares validly tendered and not withdrawn
prior to the Expiration Date, and, subject to the terms and conditions of the
Offer, including but not limited to the Offer Conditions, it will accept for
payment and promptly pay for all Shares so accepted for payment. The Purchaser
confirms that its reservation of the right to delay payment for Shares that it
has accepted for payment is limited by Rule 14e-1(c) under the Exchange Act,
which requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after the termination or withdrawal of a tender
offer.
Any extension, delay, termination or amendment of the Offer will be followed
as promptly as practicable by public announcement thereof, such announcement in
the case of an extension to be issued no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date.
Subject to applicable law (including Rules 14d-4(c), 14d-6(d) and 14e-1 under
the Exchange Act, which require that any material change in the information
published, sent or given to shareholders in connection with the Offer be
promptly disseminated to shareholders in a manner reasonably designed to inform
shareholders of such change) and without limiting the manner in
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which the Purchaser may choose to make any public announcement, the Purchaser
shall have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a press release or other announcement.
The Purchaser confirms that if it makes a material change in the terms of
the Offer or the information concerning the Offer, or if it waives a material
condition of the Offer, the Purchaser will extend the Offer to the extent
required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act.
If, prior to the Expiration Date, the Purchaser (with the previous approval
of the Company in writing) shall decrease the percentage of Shares being sought
or the consideration offered to holders of Shares, such decrease shall be
applicable to all holders whose Shares are accepted for payment pursuant to the
Offer and, if at the time notice of any increase or decrease is first published,
sent or given to holders of Shares, the Offer is scheduled to expire at any time
earlier than the tenth business day from and including the date that such notice
is first so published, sent or given, the Offer will be extended until the
expiration of such ten business day period. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday or federal holiday
and consists of the time period from 12:01 a.m. through 12:00 Midnight, New York
City time.
The Company provided the Purchaser with a list of the record holders of the
Shares and their addresses, as well as mailing labels for such record holders,
lists of non-objecting beneficial owners and security position listings for the
purpose of disseminating the Offer to holders of Shares. This Offer to Purchase,
the Letter of Transmittal and other relevant materials will be mailed to record
holders of Shares whose names appear on the Company's shareholder list and will
be furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the Company's
shareholder list or who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares by the Purchaser.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including the
Offer Conditions and, if the Offer is extended or amended, the terms and
conditions of any such extension or amendment), the Purchaser will accept for
payment, and will pay for, all Shares validly tendered and not withdrawn as
promptly as practicable after the Expiration Date, if the Offer Conditions have
been satisfied or waived.
In addition, subject to applicable rules of the SEC, the Purchaser expressly
reserves the right to delay acceptance for payment of or payment for Shares in
order to comply, in whole or in part, with any applicable law. See Section 12.
Notwithstanding the foregoing, the Purchaser reserves the right, in its sole
discretion, to extend the Offer notwithstanding the prior satisfaction of the
Offer Conditions if more than 80% of the outstanding Shares have not been
tendered in the Offer (in which case the Purchaser may extend the expiration
date on one or more occasions for up to twenty business days in the aggregate
beyond the time it would otherwise be required to accept validly tendered Shares
for payment). See Sections 1, 12 and 15.
Numico filed a Notification and Report Form under the HSR Act on May 2,
2000, and, accordingly, unless earlier terminated or extended by a request for
additional information, the waiting period under the HSR Act is scheduled to
expire at 11:59 p.m., New York City time, on May 17, 2000. See Section 15.
Payment for Shares tendered and accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of certificates for
such Shares (or a confirmation of a book-entry transfer of such Shares (a
"Book-Entry Confirmation") into the Depositary's account at The Depository
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Trust Company (the "Book-Entry Transfer Facility")), a properly completed and
duly executed Letter of Transmittal (or facsimile thereof) and any other
required documents.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment Shares validly tendered and not withdrawn as, if and when the Purchaser
gives oral or written notice to the Depositary of its acceptance for payment of
such Shares pursuant to the Offer. Payment for Shares accepted for payment
pursuant to the Offer will be made by deposit of the purchase price therefor
with the Depositary, which will act as agent for the tendering shareholders for
the purpose of receiving payments from the Purchaser and transmitting such
payments to the tendering shareholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON
THE PURCHASE PRICE FOR SHARES BE PAID, REGARDLESS OF ANY EXTENSION OF THE OFFER
OR ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, or if certificates are submitted for
more Shares than are tendered, certificates for such unpurchased Shares will be
returned, without expense to the tendering shareholder (or, in the case of
Shares tendered by book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility pursuant to the procedures set forth
in Section 3, such Shares will be credited to an account maintained with the
Book-Entry Transfer Facility), as soon as practicable following expiration or
termination of the Offer.
If, prior to the Expiration Date, the Purchaser increases the consideration
to be paid for Shares pursuant to the Offer, the Purchaser will pay such
increased consideration for all Shares purchased pursuant to the Offer, whether
or not such Shares were tendered prior to such increase in consideration.
The Purchaser reserves the right to transfer or assign, in whole or in part,
to one or more direct or indirect subsidiaries of Numico the right to purchase
all or any portion of the Shares tendered pursuant to the Offer, but any such
transfer or assignment will not relieve the Purchaser of its obligations under
the Offer and will in no way prejudice the rights of tendering shareholders to
receive payment for Shares validly tendered and accepted for payment pursuant to
the Offer.
3. PROCEDURE FOR TENDERING SHARES.
VALID TENDER. To tender Shares pursuant to the Offer, (a) a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions of the Letter of Transmittal, with any required
signature guarantees, certificates for Shares to be tendered and any other
documents required by the Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Date, (b) such Shares must be delivered
pursuant to the procedures for book-entry transfer described below (and a
Book-Entry Confirmation of such delivery, including an Agent's Message (as
defined below), must be received by the Depositary if the tendering shareholder
has not delivered a Letter of Transmittal) prior to the Expiration Date or
(c) the tendering shareholder must comply with the guaranteed delivery
procedures set forth below. The term "Agent's Message" means a message
transmitted by the Book-Entry Transfer Facility to, and received by, the
Depositary and forming a part of a Book-Entry Confirmation, which states that
the Book-Entry Transfer Facility has received an express acknowledgment from the
participant in the Book-Entry Transfer Facility tendering the Shares that are
subject to the Book-Entry Confirmation, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
BOOK-ENTRY DELIVERY. The Depositary will establish accounts with respect to
the Shares at the Book-Entry Transfer Facility for purposes of the Offer within
two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the Book-Entry Transfer Facility's systems
may make book-entry delivery of Shares by causing the Book-Entry Transfer
Facility to transfer
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such Shares into the Depositary's account at the Book-Entry Transfer Facility in
accordance with the Book-Entry Transfer Facility's procedures for such transfer.
However, although delivery of Shares may be effected through book-entry
transfer, either the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message in lieu of a Letter of Transmittal, and any other required
documents, must, in any case, be transmitted to, and received by, the Depositary
at one of its addresses set forth on the back cover of this Offer to Purchase
prior to the Expiration Date, or the tendering shareholder must comply with the
guaranteed delivery procedures described below. The confirmation of a book-entry
transfer of Shares into the Depositary's account at the Book-Entry Transfer
Facility as described above is referred to herein as a "Book-Entry
Confirmation." DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
SIGNATURE GUARANTEES. Except as otherwise provided below, all signatures on
a Letter of Transmittal must be guaranteed by a financial institution (including
most commercial banks, savings and loan associations and brokerage houses) that
is a participant in the Securities Transfer Agents Medallion Program, the New
York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (each, an "Eligible Institution"). No signature guarantee is
required on the Letter of Transmittal (a) if the Letter of Transmittal is signed
by the registered holder(s) (which term, for purposes of this Section 3,
includes any participant in any of the Book-Entry Transfer Facility's systems
whose name appears on a security position listing as the owner of the Shares) of
Shares tendered therewith and such registered holder has not completed either
the box entitled "Special Delivery Instructions" or the box entitled "Special
Payment Instructions" on the Letter of Transmittal or (b) if such Shares are
tendered for the account of an Eligible Institution. See Instructions 1 and 5 to
the Letter of Transmittal. If the certificates for Shares are registered in the
name of a person other than the signer of the Letter of Transmittal, or if
payment is to be made or certificates for Shares not tendered or not accepted
for payment are to be returned to a person other than the registered holder of
the certificates surrendered, the tendered certificates for such Shares must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered holders or owners appear on the
certificates, with the signatures on the certificates or stock powers guaranteed
in the manner described above. See Instructions 1 and 5 to the Letter of
Transmittal.
GUARANTEED DELIVERY. A shareholder desiring to tender Shares pursuant to
the Offer and whose certificates for Shares are not immediately available or who
cannot comply with the procedures for book-entry transfer on a timely basis or
who cannot deliver all required documents to the Depositary prior to the
Expiration Date, may tender such Shares by following all of the procedures set
forth below:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to all such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or a facsimile thereof), with any required signature guarantees (or,
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in the case of a book-entry transfer, an Agent's Message in lieu of a Letter
of Transmittal), and any other required documents are received by the
Depositary within three trading days after the date of execution of such
Notice of Guaranteed Delivery. A "trading day" is any day on which the
Nasdaq National Market operated by the National Association of Securities
Dealers, Inc. (the "NASD") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or overnight
courier to the Depositary or transmitted by telegram, telex or facsimile or mail
to the Depositary and must include a guarantee by an Eligible Institution in the
form set forth in such Notice of Guaranteed Delivery.
OTHER REQUIREMENTS. Notwithstanding any other provision hereof, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (a) certificates for (or a timely
Book-Entry Confirmation with respect to) such Shares, (b) a Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message in lieu of a Letter of Transmittal) and (c) any other documents
required by the Letter of Transmittal. Accordingly, tendering shareholders may
be paid at different times depending upon when certificates for Shares or
Book-Entry Confirmations with respect to such Shares are actually received by
the Depositary. UNDER NO CIRCUMSTANCES WILL ANY INTEREST BE PAID ON THE PURCHASE
PRICE OF THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN
MAKING SUCH PAYMENT.
TENDER CONSTITUTES AN AGREEMENT. The valid tender of Shares pursuant to one
of the procedures described above will constitute a binding agreement between
the tendering shareholder and the Purchaser upon the terms and subject to the
conditions of the Offer.
APPOINTMENT. By executing a Letter of Transmittal as set forth above
(including through delivery of an Agent's Message), the tendering shareholder
irrevocably appoints designees of the Purchaser as such shareholder's
attorneys-in-fact and proxies in the manner set forth in the Letter of
Transmittal, each with full power of substitution, to the full extent of such
shareholder's rights with respect to the Shares tendered by such shareholder and
accepted for payment by the Purchaser and with respect to any and all other
Shares or other securities or rights issued or issuable in respect of such
Shares on or after April 30, 2000. All such proxies will be considered coupled
with an interest in the tendered Shares. Such appointment will be effective
when, and only to the extent that, the Purchaser accepts for payment and pays
for the Shares tendered by such shareholder as provided herein. Upon such
appointment, all prior powers of attorney, proxies and consents given by such
shareholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given (and, if given, will be deemed not
effective). The designees of the Purchaser will thereby be empowered to exercise
all voting and other rights with respect to such Shares and other securities or
rights in respect of any annual, special or adjourned meeting of the Company's
shareholders, actions by written consent in lieu of any such meeting or
otherwise, as they in their sole discretion deem proper. The Purchaser reserves
the right to require that, in order for Shares to be deemed validly tendered,
immediately upon the Purchaser's acceptance for payment of and payment for such
Shares, the Purchaser must be able to exercise full voting and other rights with
respect to such Shares, including voting at any meeting of shareholders then
scheduled.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders determined by it not to be in proper form or the acceptance
for payment of or payment for which may, in the opinion of the Purchaser's
counsel, be unlawful. The Purchaser also reserves the absolute right to waive
any defect or irregularity in the tender of any Shares of any particular
shareholder whether or not similar defects or irregularities are waived in the
case of other
6
<PAGE>
shareholders. No tender of Shares will be deemed to have been validly made until
all defects or irregularities relating thereto have been cured or waived. None
of the Purchaser, Numico, the Depositary, the Information Agent, the Dealer
Manager or any other person will be under any duty to give notification of any
defects or irregularities in tenders or incur any liability for failure to give
any such notification. The Purchaser's interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding.
BACKUP WITHHOLDING. In order to avoid "backup withholding" of U.S. Federal
income tax on payments of cash pursuant to the Offer, a U.S. Holder (as defined
herein) surrendering Shares in the Offer must, unless an exemption applies,
provide the Depositary with such U.S. Holder's correct taxpayer identification
number ("TIN") on a Substitute Form W-9 and certify under penalties of perjury
that such TIN is correct and that such U.S. Holder is not subject to backup
withholding. If a U.S. Holder does not provide a correct TIN or fails to provide
the certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such U.S. Holder and payment of cash to such shareholder
pursuant to the Offer may be subject to backup withholding at a rate of 31%. All
U.S. Holders surrendering Shares pursuant to the Offer should complete and sign
the Substitute Form W-9 included as part of the Letter of Transmittal to provide
the information and certification necessary to avoid backup withholding (unless
an applicable exemption exists and is proved in a manner satisfactory to the
Purchaser and the Depositary). Certain shareholders (including, among others,
certain domestic corporations and certain foreign individuals and entities) are
not subject to backup withholding. Noncorporate foreign shareholders should
complete and sign a Form W-8, Certificate of Foreign Status, a copy of which may
be obtained from the Depositary, in order to avoid backup withholding. See
Section 5 of this Offer to Purchase and Instruction 9 to the Letter of
Transmittal.
4. RIGHTS OF WITHDRAWAL.
Tenders of Shares made pursuant to the Offer are irrevocable except that
Shares tendered pursuant to the Offer may be withdrawn pursuant to the
procedures set forth below at any time prior to the Expiration Date and, unless
theretofore accepted for payment and paid for by the Purchaser pursuant to the
Offer, may also be withdrawn at any time after July 3, 2000.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If certificates evidencing Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such certificates, the serial numbers shown on such certificates must
be submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution, the signature(s) on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares have been delivered pursuant to
the procedures for book-entry transfer as set forth in Section 3, any notice of
withdrawal must also specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and
otherwise comply with the Book-Entry Transfer Facility's procedures.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Numico, the Depositary, the Information Agent, the Dealer Manager or
any other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
Withdrawals of tenders of Shares may not be rescinded, and any Shares
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the Offer. However, withdrawn Shares may
7
<PAGE>
be retendered by again following one of the procedures described in Section 3 at
any time prior to the Expiration Date.
If the Purchaser extends the Offer, is delayed in its acceptance for payment
of Shares, or is unable to accept for payment Shares pursuant to the Offer, for
any reason, then, without prejudice to the Purchaser's rights under the Offer,
the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent that tendering
shareholders are entitled to withdrawal rights as set forth in this Section 4.
Any such delay will be an extension of the Offer to the extent required by
applicable rules and regulations.
In the event the Purchaser provides a Subsequent Offering Period following
the Offer, no withdrawal rights will apply to Shares tendered during such
Subsequent Offering Period or to Shares tendered in the Offer and accepted for
payment.
5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES.
The following is a general discussion of certain U.S. Federal income tax
consequences of the receipt of cash by a holder of Shares pursuant to the Offer
or the Merger. The discussion is based on the Internal Revenue Code of 1986, as
amended to the date hereof (the "Code"), Treasury Regulations, administrative
pronouncements and judicial decisions, in each case, as in effect on the date
hereof, all of which are subject to change (possibly with retroactive effect)
and possibly to differing interpretations. No ruling will be requested from the
Internal Revenue Service (the "IRS") regarding the tax consequences of the Offer
or the Merger and there can be no assurance that the IRS will agree with the
discussion set forth below. This discussion does not address state, local or
foreign tax laws and, except as specifically noted, applies only to a U.S.
Holder.
A "U.S. Holder" means a holder of Shares that is for U.S. Federal income tax
purposes (i) a citizen or resident of the United States, (ii) a corporation or
other entity taxable as a corporation created or organized in or under the laws
of the United States or any political subdivision thereof or therein, (iii) an
estate the income of which is subject to United States Federal income taxation
regardless of its source, or (iv) a trust if (x) a court within the United
States is able to exercise primary supervision over the administration of the
trust and (y) one or more United States persons have the authority to control
all substantial decisions of the trust. In the case of a partnership that holds
Shares, any partner described in any of (i) through (iv), above, generally is
also a U.S. Holder. A "Non-U.S. Holder" is a holder of Shares, generally
including any partner in a partnership that holds Shares, that is not a U.S.
Holder.
The transfer of Shares pursuant to the Offer or the Merger will be a taxable
transaction for U.S. Federal income tax purposes under the Code and may also be
a taxable transaction under applicable state, local or foreign income or other
tax laws. Generally, for U.S. Federal income tax purposes, a U.S. Holder will
recognize gain or loss equal to the difference between the amount of cash
received by the U.S. Holder pursuant to the Offer or the Merger and the
aggregate tax basis in the Shares transferred by such U.S. Holder pursuant to
the Offer (or canceled pursuant to the Merger). Gain or loss will be calculated
separately for each block of Shares tendered and purchased pursuant to the Offer
(or canceled pursuant to the Merger).
Gain (or loss) will be capital gain (or loss), assuming that such Shares are
held as a capital asset. Capital gains of individuals, estates and trusts
generally are subject to preferential U.S. Federal income tax rates if, at the
time the Company accepts the Shares for payment, the shareholder held the Shares
for more than one year. Capital gains of corporations generally are taxed at the
same Federal income tax rates applicable to corporate ordinary income. In
addition, under present law, the ability to use capital losses to offset
ordinary income is limited.
A U.S. Holder that tenders Shares pursuant to the Offer or surrenders Shares
pursuant to the Merger may be subject to 31% backup withholding unless the U.S.
Holder provides its TIN and
8
<PAGE>
certifies that such number is correct or properly certifies that it is awaiting
a TIN, or unless an exemption applies. A shareholder that does not furnish its
TIN may be subject to a penalty imposed by the IRS. See "--Backup Withholding"
under Section 3 herein.
If backup withholding applies to a holder of Shares, the Depositary is
required to withhold 31% from payments to such holder. Backup withholding is not
an additional tax. Rather, the amount of the backup withholding can be credited
against the U.S. Federal income tax liability of the person subject to the
backup withholding, provided that the required information is given to the IRS.
If backup withholding results in an overpayment of tax, a refund can be obtained
by the shareholder upon filing a U.S. Federal income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX
TREATMENT UNDER THE CODE, SUCH AS NON-U.S. HOLDERS, LIFE INSURANCE COMPANIES,
TAX-EXEMPT ORGANIZATIONS, FINANCIAL INSTITUTIONS, DEALERS IN SECURITIES OR
CURRENCIES, PERSONS WHO HOLD SHARES AS A POSITION IN A "STRADDLE" OR AS PART OF
A "HEDGING", "CONVERSION" OR "CONSTRUCTIVE SALE" TRANSACTION AND PERSONS THAT
HAVE A FUNCTIONAL CURRENCY OTHER THAN THE U.S. DOLLAR. THE DISCUSSION MAY NOT
APPLY TO A HOLDER OF SHARES IN LIGHT OF SUCH HOLDER'S INDIVIDUAL CIRCUMSTANCES
AND MAY NOT DISCUSS EVERY ASPECT OF U.S. FEDERAL TAX LAW THAT MAY BE RELEVANT TO
HOLDERS (INCLUDING, BUT NOT LIMITED TO, THE APPLICABILITY OF ANY ESTATE OR GIFT
TAX LAWS). SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE
THE PARTICULAR TAX CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF
ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE
MERGER.
6. PRICE RANGE OF THE SHARES; DIVIDENDS.
According to the Company's Annual Report on Form 10-K for the fiscal year
ended August 31, 1999, the Shares are listed for trading on the Nasdaq National
Market under the symbol "RXSD." The following table sets forth, for each of the
fiscal quarters of the Company indicated, the high and low closing price for the
Shares on the Nasdaq National Market based upon published financial sources.
<TABLE>
<CAPTION>
CLOSING PRICE
-------------------
FISCAL YEAR ENDED AUGUST 31, HIGH LOW
- ---------------------------- -------- --------
<S> <C> <C>
1998
First quarter.......................................... $23.75 $17.13
Second quarter......................................... 38.63 23.50
Third quarter.......................................... 38.69 30.03
Fourth quarter......................................... 38.38 18.25
1999
First quarter.......................................... 24.25 12.94
Second quarter......................................... 16.50 11.06
Third quarter.......................................... 22.69 14.00
Fourth quarter......................................... 16.69 11.63
2000
First quarter.......................................... 12.31 10.25
Second quarter......................................... 15.00 10.31
Third quarter (through April 28, 2000)................. 19.25 14.13
</TABLE>
On April 28, 2000, the last full trading day before the first public
announcement of the execution of the Merger Agreement, the closing price of the
Shares on the Nasdaq National Market was $19.25 per Share. On May 4, 2000, the
last full trading day before the commencement of the Offer, the closing price of
the Shares on the Nasdaq National Market was $23.50 per Share. SHAREHOLDERS ARE
URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
9
<PAGE>
The Purchaser has been advised by the Company that the Company has never
paid any cash dividends on the Shares. The Merger Agreement prohibits the
Company from declaring or paying any dividends until the effectiveness of the
Merger.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK QUOTATION; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS.
MARKET FOR THE SHARES. The purchase of Shares by the Purchaser pursuant to
the Offer will reduce the number of Shares that might otherwise trade publicly
and may reduce the number of holders of Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by the public.
STOCK QUOTATION. Depending upon the number of Shares purchased pursuant to
the Offer and the aggregate market value of any Shares not purchased pursuant to
the Offer, the Shares may no longer meet the requirements for continued
inclusion in the Nasdaq National Market, which among other things require that
an issuer have either (i) at least 750,000 publicly held shares, held by at
least 400 shareholders of round lots, with an aggregate market value of at least
$5,000,000, net tangible assets of at least $4,000,000, a minimum bid price of
at least $1 per Share, and at least two registered and active market makers
providing quotations for the shares or (ii) at least 1,100,000 publicly held
shares, held by at least 400 shareholders of round lots, with an aggregate
market value of at least $15,000,000, a minimum bid price of at least $5 per
share and either (x) a market capitalization of at least $50,000,000 or
(y) total assets and total revenue of at least $50,000,000 each for the most
recently completed fiscal year or two of the last three most recently completed
fiscal years and at least four registered and active market markers providing
quotations for the Shares. If neither of the foregoing standards are met, the
Shares would no longer be listed on the Nasdaq National Market. Shares held
directly or indirectly by directors, officers or beneficial owners of more than
10% of the Shares are not considered as being publicly held for this purpose.
According to information provided by the Company, as of May 2, 2000, there were
approximately 1,600 shareholders of record.
The Purchaser cannot predict whether the reduction in the number of Shares
that might otherwise trade publicly, if any, effected by the Offer would have an
adverse or beneficial effect on the market price for or marketability of the
Shares or whether it would cause future market prices to be greater or less than
the Offer price.
If the Shares were to cease to be quoted on the Nasdaq National Market, the
market for the Shares could be adversely affected. It is possible that the
Shares would be traded or quoted on other securities exchanges or in the
over-the-counter market and the price quotations would be reported by such
exchange or through Nasdaq or other sources. The extent of the public market for
the Shares and the availability of such quotations would, however, depend upon
the number of shareholders and/or the aggregate market value of the Shares
remaining at such time, the interest in maintaining a market in the Shares on
the part of securities firms, the possible termination of registration of the
Shares under the Exchange Act and other factors.
EXCHANGE ACT REGISTRATION. The Shares are currently registered under the
Exchange Act. Such registration may be terminated by the Company upon
application to the SEC if the outstanding Shares are not listed on a national
securities exchange and there are fewer than 300 holders of record of the
Shares. Termination of registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company to
its shareholders and to the SEC and would make certain provisions of the
Exchange Act no longer applicable to the Company, such as the short-swing profit
recovery provisions of Section 16(b), the requirement of furnishing a proxy
statement pursuant to Section 14(a) in connection with shareholders' meetings
and the related requirement of furnishing an annual report to shareholders.
Furthermore, the ability of "affiliates" of the Company and persons holding
"restricted securities" of the Company to dispose of such securities pursuant to
Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"),
may be impaired or
10
<PAGE>
eliminated. If registration of the Shares under the Exchange Act was terminated,
the Shares would no longer be eligible for Nasdaq National Market reporting or
for continued inclusion on the list of "margin securities" of the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"). The
Purchaser intends to seek to cause the Company to apply for termination of
registration of the Shares under the Exchange Act as soon as possible after the
completion of the Offer if the requirements for such termination are met.
MARGIN REGULATIONS. The Shares are currently "margin securities" under the
regulations of the Federal Reserve Board, which has the effect, among other
things, of allowing brokers to extend credit on the collateral of the Shares.
Depending upon factors similar to those described above regarding listing and
market quotations, it is possible that, following the Offer, the Shares would no
longer constitute "margin securities" for the purposes of the margin regulations
of the Federal Reserve Board and therefore could no longer be used as collateral
for loans made by brokers. In any event, the Shares will cease to be "margin
securities" if registration of the Shares under the Exchange Act is terminated.
INCREASED INTEREST IN NET BOOK VALUE AND NET EARNINGS OF THE COMPANY. If
the Offer is consummated, the direct and indirect interest of Numico in the
Company's net book value and net earnings will increase in proportion to the
number of Shares acquired in the Offer. Following consummation of the Merger,
Numico's direct and indirect interest in such items will increase to 100%, and
the Company will be a wholly owned indirect subsidiary of Numico. Accordingly,
Numico and its subsidiaries will be entitled to all benefits resulting from that
interest, including all income generated by the Company's operations, any future
increase in the Company's value and the right to elect all members of the Board.
Similarly, Numico will also bear the risk of losses generated by the Company's
operations and any decrease in the value of the Company after the Merger.
Furthermore, after the Merger, pre-Merger shareholders will not have the
opportunity to participate directly in the earnings and growth of the Company
and will not face the risk of losses generated by the Company's operations or
decline in the value of the Company.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company is a Florida corporation with its principal executive office at
6111 Broken Sound Parkway, NW, Boca Raton, Florida 33487 and its telephone
number is (561) 241-9400. The Company develops, manufactures, markets and sells
vitamins, nutritional supplements and consumer health products.
SELECTED CONSOLIDATED FINANCIAL INFORMATION. The selected consolidated
financial information of the Company set forth below has been derived from the
Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1999
and its Quarterly Report on Form 10-Q for the six months ended February 29,
2000. Certain amounts in the selected consolidated financial information
presented below for the fiscal years ended August 31, 1999 and 1998 have been
reclassified to conform to the current period's basis of presentation. More
comprehensive financial and other information is included in such reports
(including management's discussion and analysis of results of operations and
financial position) and in other reports and documents filed by the Company with
the SEC. The financial information set forth below should be read in conjunction
with such reports and documents filed with the SEC and all of the financial
statements and related notes contained therein. These reports and other
documents may be examined and copies thereof may be obtained from the SEC in the
manner set forth below under "--Available Information."
11
<PAGE>
REXALL SUNDOWN, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED FISCAL YEAR ENDED
--------------------------- -----------------------
FEBRUARY 29, FEBRUARY 28, AUGUST 31, AUGUST 31,
2000 1999 1999 1998
------------ ------------ ---------- ----------
<S> <C> <C> <C> <C>
OPERATING DATA:
Net sales........................................ $318,427 $261,054 $584,689 $522,293
Cost of sales.................................... 144,752 116,717 258,777 223,231
-------- -------- -------- --------
Gross profit................................... 173,675 144,337 325,912 299,062
Selling, general and administrative expenses..... 126,807 101,866 232,575 193,207
-------- -------- -------- --------
Operating income............................... 46,868 42,471 93,337 105,855
Other (expense) income, net...................... (539) 2,100 2,438 4,399
-------- -------- -------- --------
Income before income tax provision............... 46,329 44,571 95,775 110,254
Income tax provision............................. 17,667 16,605 35,713 40,078
-------- -------- -------- --------
Net income..................................... $ 28,662 $ 27,966 $ 60,062 $ 70,176
======== ======== ======== ========
Pro forma net income(1)........................ $ 28,662 $ 27,966 $ 60,062 $ 69,234
======== ======== ======== ========
Pro forma diluted net income per common
share(1)....................................... $ 0.44 $ 0.39 $ 0.88 $ 0.94
======== ======== ======== ========
Diluted weighted average shares outstanding...... 65,068 71,092 68,564 73,773
======== ======== ======== ========
BALANCE SHEET DATA:
Working capital.................................. $156,452 $141,795 $148,125 $220,643
Total assets..................................... 427,581 277,462 295,351 339,358
Long term debt................................... 90,842 -- -- --
Shareholders' equity............................. 252,359 220,183 230,968 290,061
</TABLE>
- ------------------------
(1) Pro forma net income reflects a pro forma tax provision for Richardson
Labs, Inc. for periods prior to the January 1998 acquisition as Richardson
was an S corporation and not subject to corporate income taxes.
Except as otherwise stated in this Offer to Purchase, including financial
information, the information concerning the Company contained herein has been
taken from or based upon publicly available documents on file with the SEC and
other publicly available information. Although the Purchaser, Numico, the
Information Agent and the Dealer Manager do not have any knowledge that any such
information is untrue, none of the Purchaser, Numico, the Information Agent and
the Dealer Manager takes any responsibility for the accuracy or completeness of
such information or for any failure by the Company to disclose events that may
have occurred and may affect the significance or accuracy of any such
information.
CERTAIN FINANCIAL PROJECTIONS. The Company does not, as a matter of course,
make public forecasts or projections as to its future financial performance.
However, in connection with the negotiations between Numico and the Company, the
Company made available to Numico and its representatives certain nonpublic
information (the "Projections") regarding the Company's projected operating
performance. The Projections indicated that for the fiscal year ending
August 31, 2000 and for the calendar years ending December 31, 2000, 2001 and
2002, the Company's net revenue, earnings before interest and income taxes
("EBIT"), earnings before interest, income taxes, depreciation and amortization
("EBITDA") and net earnings were projected to be:
12
<PAGE>
REXALL SUNDOWN, INC.
CERTAIN PROJECTIONS OF FUTURE OPERATING RESULTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
FISCAL YEAR ENDING --------------------------------
AUGUST 31, 2000 2000 2001 2002
------------------ -------- -------- ----------
<S> <C> <C> <C> <C>
Net revenue.................................. $747,500 $807,300 $940,200 $1,079,300
EBIT......................................... 129,396 148,376 183,179 210,859
EBITDA....................................... 150,103 171,930 210,025 240,772
Net earnings................................. 74,387 83,040 104,056 122,225
</TABLE>
The Projections reflect the Company's forecast of its consolidated net
revenue, EBIT, EBITDA and net earnings on a stand-alone basis and without
reflecting any potential synergies from the consummation of the Offer and the
Merger.
THE PROJECTIONS WERE PREPARED SOLELY FOR INTERNAL USE AND NOT WITH A VIEW TO
PUBLIC DISCLOSURE OR COMPLIANCE WITH THE PUBLISHED GUIDELINES OF THE SEC OR THE
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS AND
WERE NOT PREPARED WITH THE ASSISTANCE OF, OR REVIEWED BY, INDEPENDENT
ACCOUNTANTS. THE PROJECTIONS ARE INCLUDED IN THIS OFFER TO PURCHASE SOLELY
BECAUSE SUCH INFORMATION WAS FURNISHED TO NUMICO AND THE PURCHASER BY THE
COMPANY. THE PROJECTIONS WERE NOT PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES AND WERE NOT AUDITED OR REVIEWED BY ANY INDEPENDENT
ACCOUNTING FIRM, NOR DID ANY SUCH FIRM PERFORM ANY OTHER SERVICES WITH RESPECT
THERETO. THE PROJECTIONS ARE BASED ON A VARIETY OF ASSUMPTIONS RELATING TO THE
BUSINESSES OF THE COMPANY, INDUSTRY PERFORMANCE, GENERAL BUSINESS AND ECONOMIC
CONDITIONS AND OTHER MATTERS, WHICH ARE INHERENTLY SUBJECT TO SIGNIFICANT
UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL.
THESE ASSUMPTIONS INVOLVE JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS, FUTURE
ECONOMIC AND COMPETITIVE CONDITIONS, INFLATION RATES AND FUTURE BUSINESS
CONDITIONS. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE ASSUMPTIONS MADE IN
PREPARING THE PROJECTIONS WILL PROVE ACCURATE, AND ACTUAL RESULTS MAY BE
MATERIALLY GREATER OR LESS THAN THOSE CONTAINED IN THE PROJECTIONS. THE
INCLUSION OF THE PROJECTIONS HEREIN SHOULD NOT BE REGARDED AS AN INDICATION THAT
THE COMPANY, NUMICO, THE PURCHASER OR THEIR RESPECTIVE AFFILIATES OR
REPRESENTATIVES CONSIDERED OR CONSIDER THE PROJECTIONS TO BE A RELIABLE
PREDICTION OF FUTURE EVENTS, AND THE PROJECTIONS SHOULD NOT BE RELIED UPON AS
SUCH. NONE OF NUMICO, THE PURCHASER OR ANY OF THEIR RESPECTIVE AFFILIATES
ASSUMES ANY RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS, ACCURACY OR
COMPLETENESS OF THE PROJECTIONS. NONE OF NUMICO, THE PURCHASER OR THE COMPANY IS
UNDER ANY OBLIGATION TO OR HAS ANY INTENTION TO UPDATE THE PROJECTIONS AT ANY
FUTURE TIME.
13
<PAGE>
AVAILABLE INFORMATION. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports and other information relating to its business, financial condition
and other matters. Information as of particular dates concerning the Company's
directors and officers, their remuneration, stock options and other matters, the
principal holders of the Company's securities and any material interest of such
persons in transactions with the Company is required to be disclosed in proxy
statements distributed to the Company's shareholders and filed with the SEC.
Such reports, proxy statements and other information should be available for
inspection at the public reference facilities of the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549, at the regional offices of the SEC located at
Seven World Trade Center, 13th Floor, New York, NY 10048 and at Citicorp Center,
500 West Madison Street (Suite 1400), Chicago, IL 60661. Copies of such
information should be obtainable, by mail, upon payment of the SEC's customary
charges, by writing to the SEC's principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The SEC maintains a web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the SEC. Such reports, proxy and information
statements and other information may be found on the SEC's web site address,
http://www.sec.gov. Although neither Numico nor the Purchaser has any knowledge
that any such information is untrue, Numico and the Purchaser take no
responsibility for the accuracy or completeness of information contained in this
Offer to Purchase with respect to the Company or for any failure by the Company
to disclose events which may have occurred or may affect the significance or
accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND NUMICO.
The Purchaser is a Florida corporation and, to date, has engaged in no
activities other than those incident to its formation, its entering into the
Merger Agreement and the commencement of the Offer. The Purchaser is an indirect
wholly owned subsidiary of Numico. The principal executive office of the
Purchaser is located at 222 North LaSalle, Chicago, Illinois 60601, and its
telephone number is (312) 609-7500. All outstanding shares of common stock of
Purchaser are owned by Nutricia Florida, L.P., a Delaware limited partnership
("Nutricia LP").
Nutricia LP is a holding company established solely to hold the common stock
of the Purchaser and has not engaged in any activities other than those incident
to its formation and the formation of the Purchaser. Nutricia LP is an indirect
wholly owned subsidiary of Numico. The principal executive office of Nutricia LP
is located at 1209 Orange Street, Wilmington, Delaware 19801, and its telephone
number is 011-31-79-353-9000.
Nutricia Florida, Inc., a Delaware corporation ("Nutricia, Inc."), is the
general partner of Nutricia LP. Nutricia, Inc. is a company established solely
to serve as the sole general partner of Nutricia LP and has not engaged in any
activities other than those incident to its formation and the formation of
Nutricia LP. Nutricia, Inc. is an indirect wholly owned subsidiary of Numico.
The principal executive office of Nutricia, Inc. is located at 1209 Orange
Street, Wilmington, Delaware 19801, and its telephone number
is 011-31-79-353-9000. All of the outstanding shares of common stock of
Nutricia, Inc. are owned by Nutricia International B.V., a company organized
under the laws of the Netherlands ("Nutricia International").
Nutricia International is the parent of Nutricia, Inc. Nutricia
International is engaged in the business of providing financing to Numico
affiliates. The principal executive office of Nutricia International is located
at Rokkeveenseweg 49, 2712 PJ Zoetermeer, P.O. Box 1 2700 MA Zoetermeer, the
Netherlands, and its telephone number is 011-31-79-353-9000. Nutricia
International is a wholly owned subsidiary of Numico.
Numico is a company incorporated under the laws of the Netherlands. The
principal executive office of Numico is located at Rokkeveenseweg 49, 2712 PJ
Zoetermeer, P.O. Box 1, 2700 MA
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Zoetermeer, the Netherlands, and its telephone number is 011-31-79-353-9000.
Numico is a multinational company concentrating on the development, manufacture
and sales of specialized nutrition products based upon medical scientific
concepts with a high added value.
Numico is not subject to the informational reporting requirements of the
Exchange Act and, as such, is not required to file reports, proxy statements or
other information with the SEC. Numico does file certain limited information
with the SEC under Rule 12g3-2 of the Exchange Act.
Statements which Numico and the Purchaser may publish, including those in
this Offer to Purchase, that are not strictly historical are "forward-looking"
statements. Although Numico and Purchaser believe the expectations reflected in
such forward-looking statements are based on reasonable assumptions, they can
give no assurance that their expectations will be realized. Forward-looking
statements involve known and unknown risks which may cause the actual results
and corporate developments of Numico and the Purchaser to differ materially from
those expected. There are a number of factors that could cause actual results
and developments to differ materially from those expressed or implied by these
forward-looking statements. These factors include, but are not limited to,
levels of consumer and business spending in major economies, changes in consumer
tastes and preferences, the levels of marketing and promotional expenditures by
Numico and its competitors, raw materials and employee costs, changes in future
exchange and interest rates, changes in tax rates and future business
combinations, acquisitions or dispositions, and the rate of technical changes.
The name, citizenship, business, address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of Numico, the Purchaser, Nutricia LP, Nutricia, Inc. and
Nutricia International are set forth in Schedule A hereto.
During the last five years, none of Numico, the Purchaser, Nutricia LP,
Nutricia, Inc. or Nutricia International or, to the best of their respective
knowledge, any of the persons listed on Schedule A hereto has been convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors) or
was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which any such person was or is subject to
a judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such law.
Except as set forth in this Offer to Purchase, none of the Purchaser,
Numico, Nutricia LP, Nutricia, Inc. or Nutricia International or, to the best of
their respective knowledge, any of the persons listed on Schedule A hereto, or
any associate or majority-owned subsidiary of the foregoing, beneficially owns
or has a right to acquire, directly or indirectly, any equity security of the
Company, and none of the Purchaser, Numico, Nutricia LP, Nutricia, Inc. or
Nutricia International, or, to the best of their respective knowledge, any of
the persons referred to above, has effected any transaction in any equity
security of the Company during the past 60 days.
Except as set forth in this Offer to Purchase, none of the Purchaser,
Numico, Nutricia LP, Nutricia, Inc. or Nutricia International or, to the best of
their respective knowledge, any of the persons listed on Schedule A hereto, has
any other contract, arrangement, understanding or relationship with any other
person with respect to any securities of the Company, including, but not limited
to, any contract, arrangement, understanding or relationship concerning the
transfer or the voting of any securities of the Company, joint ventures, loan or
option arrangements, puts or calls, guarantees of loans, guarantees against
loss, or the giving or withholding of proxies.
Except as set forth in this Offer to Purchase, none of the Purchaser,
Numico, Nutricia LP, Nutricia, Inc. or Nutricia International or, to the best of
their respective knowledge, any of the persons listed on Schedule A hereto, has
had, since January 1, 1998, any business relationships or transactions with the
Company or any of its executive officers, directors or affiliates that would
require reporting under the rules of the SEC. Except as set forth in this Offer
to Purchase, since January 1, 1998, there
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have been no contracts, negotiations or transactions between the Purchaser,
Numico, Nutricia LP, Nutricia, Inc. or Nutricia International, any of their
respective subsidiaries or, to the best of their respective knowledge, any of
the persons listed on Schedule A, and the Company or its affiliates concerning a
merger, consolidation or acquisition, a tender offer or other acquisition of
securities, an election of directors or a sale or other transfer of a material
amount of assets.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
In December 1999, Numico's management completed an internal analysis for
implementing its growth strategy in the United States. Numico's management
concluded that the acquisition of the Company, if pursued, would represent an
attractive growth opportunity for Numico because of, among other things, the
Company's complementary products and distribution channels.
Numico determined to contact the Company's management on an unsolicited
basis through Mr. William E. Watts, a member of Numico's Executive Board and
President and Chief Executive Officer of General Nutrition Companies, Inc.
("GNC"), Numico's indirect wholly owned subsidiary in the United States, in
order to gauge whether the Company would be interested in acquisition
discussions or establishing another strategic relationship.
On December 13, 1999, Mr. Watts contacted Mr. Christian Nast, Vice Chairman
of the Board of Directors of the Company, to arrange a meeting. An initial
meeting was scheduled for mid-January 2000.
On January 13, 2000, Mr. Johannes C.T. van der Wielen, President and Chief
Executive Officer of Numico, and Mr. Watts met with Mr. Damon DeSantis,
President and Chief Executive Officer of the Company, and others. They discussed
in general the nutritional supplements market and the reasons Numico acquired
GNC in 1999.
Over February 14 and 15, 2000, members of Company management visited
Numico's headquarters in Zoetermeer, the Netherlands, and its research
facilities in Wageningen, the Netherlands. At that time, the parties determined
that there was a basis for further discussions.
From February 15 through March 15, 2000, management of Numico and the
Company communicated on numerous occasions to discuss pricing and other issues.
On March 15, 2000, Messrs. van der Wielen and Watts met with Mr. DeSantis and
Mr. Geary Cotton, the Company's Chief Financial Officer, in Boston,
Massachusetts, and the parties continued discussions regarding a proposed
acquisition of the Company by Numico.
As of March 22, 2000, a confidentiality agreement was signed providing for
the confidential exchange of information between the companies and immediately
thereafter Numico provided the Company with a request for documents and
information, among other things. The confidentiality agreement prohibited Numico
from acquiring the Company's securities or soliciting proxies for a period of
18 months.
Numico representatives traveled to Deerfield Beach, Florida, for a
presentation by the Company and its advisors on March 28, 2000. Representatives
from Salomon Smith Barney Inc. ("Salomon Smith Barney"), Numico's financial
advisor, and Vedder, Price, Kaufman & Kammholz, Numico's legal counsel in the
United States, also were present. Senior management members from the Company
attended. Morgan Stanley, the Company's financial advisor, Greenberg
Traurig, P.A., the Company's legal counsel and PricewaterhouseCoopers LLP, the
Company's independent certified public accountants, were also represented. At
the meeting, the Company's management made presentations to Numico regarding the
Company's business and operations. Beginning immediately thereafter, Numico, its
financial advisors and legal counsel conducted business, legal and financial due
diligence. Over the succeeding weeks, Numico's outside advisors continued their
review of the Company and its operations.
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On April 13, 2000, Mr. Harm Zandvoort, Human Resources Director for Numico,
met with Messrs. DeSantis, Cotton and Richard Werber, Vice President and General
Counsel to the Company, to discuss employee retention issues. Representatives
from Vedder, Price, Kaufman & Kammholz also were present.
On April 17, 2000, Numico's legal counsel distributed to the Company, the
Company's legal counsel and the Company's financial advisor a draft merger
agreement setting forth the proposed terms of the tender offer and second step
merger together with a draft shareholder agreement.
The April 17th draft agreements proposed an exclusive merger agreement, did
not permit the Company to participate in discussions or negotiations with or
furnish information to any person that made an acquisition proposal which was
superior to Numico's, and did not permit the Company to terminate the merger
agreement if the Company's Board desired to accept such superior proposal.
On April 18, 2000, management representatives from both companies and their
legal advisors met in New York, New York to negotiate potential transaction
terms. During such negotiations, the Company and its legal advisors strongly
objected to an exclusive merger agreement which did not permit the Company to
consider superior proposals or permit the Company to terminate the merger
agreement and accept a superior proposal.
On April 20, 2000, the Company and its financial and legal advisors provided
extensive comments on the draft agreements. In addition, counsel for the
DeSantis family, whose shares represent in excess of 98% of the record and
beneficial shares subject to the shareholder agreement, provided extensive
comments on the shareholder agreement.
On April 22, 2000, Numico's legal counsel distributed to the Company and the
Company's legal counsel and legal counsel for the DeSantis family revised drafts
of the merger and shareholder agreements. These drafts still provided for an
exclusive merger agreement, did not permit the Company to provide information in
connection with a superior proposal and did not permit the Company to terminate
the merger agreement and accept a superior proposal.
On April 24, 2000, Numico proposed that the Company agree to an exclusivity
agreement which required that the Company immediately cease all discussions and
negotiations with any party other than Numico and exclusively negotiate with
Numico for a 14-day period. Legal counsel for Numico provided a draft
exclusivity agreement to the Company and its legal advisors on April 24, 2000.
The Company rejected this exclusivity agreement and refused to consider such an
agreement.
On April 26, 2000, management representatives from both companies and their
legal advisors, together with the legal advisor for the DeSantis family, met in
Fort Lauderdale, Florida, for lengthy and wide-ranging negotiations regarding
the merger and shareholder agreements. During such negotiations, the Company and
its legal advisors again strongly objected to an exclusive merger agreement
which did not give the Company the ability to furnish information in connection
with a superior proposal or to terminate the merger agreement and accept a
superior proposal. After extensive discussions, Numico agreed that the merger
agreement would be revised to permit the Company, subject to certain conditions,
to participate in discussions or negotiations with or furnish information to any
person that made an acquisition proposal which was superior to Numico's and to
permit the Company, subject to certain conditions, to terminate the merger
agreement if the Company's Board desired to accept such superior proposal. The
original shareholder agreement as proposed by Numico was revised substantially
as a result of the parties' negotiations.
On April 27, 2000, management representatives from both companies and their
legal advisors, as well as the legal advisor for the DeSantis family, continued
negotiations.
On April 26 and 27, 2000, Messrs. DeSantis and Cotton met with Mr. van der
Wielen and other members of Numico management in the Netherlands. On April 28,
2000, the Company management,
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Numico management and Numico's financial advisors made presentations to the
Supervisory Board of Numico. After the presentations, the Supervisory Board
approved a cash tender offer for all of the outstanding shares of the Company at
$24.00 per Share and the subsequent merger of a subsidiary of Numico with and
into the Company, subject to definitive documentation.
According to the Company, on April 28, 2000, the Company's Board met and
unanimously approved the Merger Agreement, the Shareholder Agreement, the
Employment Agreements and the Consulting Agreements (each as defined herein).
On April 29 and 30, 2000, management representatives from both companies and
their legal advisors met in New York, New York, to finalize certain technical
aspects of the Merger Agreement and the Shareholder Agreement. The legal advisor
for the DeSantis family participated by telephone. Upon conclusion of these
meetings, the Merger Agreement, the Shareholder Agreement, the Employment
Agreements and the Consulting Agreements were executed by all the parties
thereto.
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; THE MERGER AGREEMENT; OTHER
AGREEMENTS.
PURPOSE.
The purpose of the Offer is to acquire for cash as many outstanding Shares
as possible as a first step in acquiring the entire equity interest in the
Company.
If the Purchaser acquires a majority of the total issued and outstanding
Shares pursuant to the Offer, it will have the votes necessary under the FBCA to
approve the Merger of the Purchaser with and into the Company. Therefore, based
on information provided by the Company, if at least approximately
38,654,440 Shares are acquired pursuant to the Offer or otherwise, the Purchaser
will be able to and intends to effect the Merger without the vote of any person
other than the Purchaser. In addition, under the FBCA, Numico may cause the
Purchaser to merge with and into the Company without a vote of the Company's
shareholders if the Purchaser owns at least 80% of the outstanding Shares. If
over 80% of the outstanding Shares are tendered in the Offer, Numico intends to
effect the merger of the Purchaser into the Company.
PLANS FOR THE COMPANY.
Numico intends to conduct a detailed review of the Company and its assets,
corporate structure, dividend policy, capitalization, operations, properties,
policies, management and personnel and to consider, subject to the terms of the
Merger Agreement, what, if any, changes would be desirable in light of the
circumstances then existing following the acquisition of Shares pursuant to the
Offer and reserves the right to take such actions or effect such changes as it
deems desirable.
Except as otherwise described in this Offer to Purchase, neither Purchaser
nor Numico have any current plans or proposals which relate to or would result
in: (i) an extraordinary corporate transaction, such as a merger, reorganization
or liquidation involving the Company or any of its subsidiaries; (ii) a
purchase, sale or transfer of a material amount of assets of the Company or any
of its subsidiaries; (iii) any change in the present board of directors or
management of the Company including, but not limited to, any plans or proposals
to change the number or the term of directors or to fill any existing vacancies
on the board of directors of the Company or to change any material term of the
employment contract of any executive officer; (iv) any material change in the
present dividend rate or policy, or indebtedness or capitalization of the
Company; (v) any other material change in the Company's corporate structure or
business; (vi) causing a class of securities of the Company to be delisted from
a national securities exchange or to cease to be authorized to be quoted on an
automated quotation system operated by a national securities association; or
(vii) a class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Exchange Act.
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THE MERGER AGREEMENT.
The following is a summary of material terms of the Merger Agreement. This
summary is not a complete description of the terms and conditions thereof and is
qualified in its entirety by reference to the full text thereof, which is
incorporated herein by reference and a copy of which has been filed with the SEC
as an exhibit to Schedule TO. The Merger Agreement may be examined, and copies
thereof may be obtained, as set forth in Section 8 above.
THE OFFER. The Merger Agreement provides for the commencement of the Offer
as described in Section 1 hereof.
THE MERGER. The Merger Agreement provides that the closing of the Merger
will take place no later than the third business day after satisfaction or
waiver of the conditions of the Merger, unless another time or date is agreed to
in writing by the parties. The Merger Agreement provides that, upon the closing
of the Merger, the Company and the Purchaser will file Articles of Merger with
the Department of State of the State of Florida. The Merger will become
effective at such time as the Articles of Merger is duly filed with the Florida
Department of State or at such later time as is specified in the Articles of
Merger (the time the Merger becomes effective being the "Effective Time"). The
Merger Agreement provides that, upon the terms and subject to the conditions set
forth in the Merger Agreement, and in accordance with the FBCA, at the Effective
Time, the Purchaser will be merged with and into the Company. Following the
Merger, the separate corporate existence of the Purchaser shall cease, the
Company will be the surviving corporation in the Merger (hereinafter sometimes
called the "Surviving Corporation") and, in accordance with the FBCA, continue
to be governed by the laws of the State of Florida.
Pursuant to the Merger Agreement, as of the Effective Time, by virtue of the
Merger and without any action on the part of Numico, the Purchaser, the Company
or the holder of any Shares or any shares of capital stock of the Purchaser:
(i) each Share issued and outstanding at the Effective Time (other than any
Shares owned by the Company, Numico or the Purchaser or Shares which are held by
Dissenting Shareholders) will be converted into the right to receive $24.00 in
cash, or such greater amount paid pursuant to the Offer, without interest (the
"Merger Consideration") and (ii) each share of capital stock of the Purchaser
issued and outstanding at the Effective Time will be converted into and become
one fully paid and nonassessable share of common stock, par value $0.01 per
share, of the Surviving Corporation.
The Merger Agreement provides that as soon as reasonably practicable after
the Effective Time, Numico will cause the Exchange Agent (as defined in the
Merger Agreement) to mail to each shareholder of record a Letter of Transmittal
and instructions for use in exchanging certificates evidencing Shares for the
Merger Consideration. The Exchange Agent will pay to the shareholder of record,
who surrendered Share certificates for cancellation along with the Letter of
Transmittal to the Exchange Agent, the Merger Consideration due, less any
withholding taxes, and will cancel the surrendered certificates. Any shareholder
who does not surrender their Share certificates to the Exchange Agent within six
months after the Effective Time shall thereafter look only to Numico for payment
of their claim for Merger Consideration. If any Share certificate has not been
surrendered prior to five years after the Effective Time (or immediately prior
to such earlier date on which Merger Consideration in respect of such Share
certificates would otherwise escheat to or become the property of any public
official), any such shares, cash, dividends or distributions in respect of such
Share certificates shall become the property of the Surviving Corporation, free
and clear of all claims or interest of any person previously entitled thereto.
Numico, the Purchaser, the Company and the Exchange Agent shall not be liable to
any person in respect of any Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
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COMPANY ACTIONS. The Company's Board of Directors unanimously (x) approved
the Merger Agreement, the Offer, the Merger, the Shareholder Agreement, and the
transactions contemplated thereby (y) determined that each of the Merger
Agreement, the Offer and the Merger are fair to, and in the best interests of,
the Company and the shareholders of the Company and (z) recommends that the
shareholders of the Company accept the Offer, tender their Shares and adopt the
Merger Agreement. Morgan Stanley, the Company's financial advisor, has rendered
to the Board its opinion that, as of April 28, 2000, the consideration to be
paid in the Offer and the Merger is fair to holders of the Shares from a
financial point of view.
Concurrently with the filing of this Offer to Purchase, the Company is
filing with the SEC and causing to be disseminated to shareholders of the
Company, a Schedule 14D-9 with respect to the Offer (together with any
amendments or supplements thereto, the "Schedule 14D-9") which includes the
recommendation described in the preceding paragraph. Subject to the provisions
of the Merger Agreement, the Board may amend, modify or withdraw its
recommendation, or make no recommendation, if the Board determines, following
consultation with the Company's outside legal counsel, that such action is
required to comply with applicable law.
SHAREHOLDER MEETING. Pursuant to the Merger Agreement, the Company shall,
at Numico's option and direction and as soon as practicable, either (i) duly
call, give notice of, convene and hold a meeting of its shareholders (the
"Company Shareholders Meeting") or (ii) submit the Merger to its shareholders
for approval through shareholder action by written consent in lieu of a meeting
for the purpose of obtaining the requisite number of votes to adopt the Merger
and the Merger Agreement. In addition, the Company shall, through the Board,
recommend to its shareholders that they vote in favor of the adoption of the
Merger and the Merger Agreement; provided, however, that the Board may amend,
modify or withdraw such recommendation if the Board determines, following
consultation with the Company's outside legal counsel, that such action is
required in order to comply with applicable law and so long as the Board submits
the Merger to the Company's shareholders for approval at a meeting or by written
consent with no recommendation in accordance with the FBCA. The Merger Agreement
provides that Numico and the Purchaser shall vote or cause to be voted all
Shares owned of record by Numico, the Purchaser or any of its other subsidiaries
in favor of the approval of the Merger and adoption of the Merger Agreement.
Notwithstanding the preceding paragraph or any other provision of the Merger
Agreement, the Merger Agreement provides that, in the event that Numico, the
Purchaser, or any other subsidiary of Numico shall beneficially own in the
aggregate at least 80% of the outstanding Shares, the Company shall not be
required to call the Company Shareholders Meeting or to file or mail a proxy
statement, and the parties to the Merger Agreement shall, subject to the
provisions of Section 12 herein, at the request of Numico, take all necessary
and appropriate action to cause the Merger to become effective as soon as
practicable after the acceptance for payment of and payment for Shares by the
Purchaser pursuant to the Offer without a meeting of shareholders of the
Company.
The Merger Agreement provides that, if required by applicable law, as soon
as practicable following Numico's request, the Company and Numico shall prepare
and file with the SEC the proxy statement relating to the Company Shareholders
Meeting (the "Proxy Statement"). Each of the Company and Numico shall use its
reasonable best efforts to cause the Proxy Statement to be mailed to the
Company's shareholders, as promptly as practicable and to solicit proxies in
favor of the adoption of the Merger Agreement and the approval of the Merger;
provided, however, in the event the Board withdraws its recommendation for the
adoption of the Merger Agreement and the approval of the Merger, the Company
shall solicit proxies regarding the Merger Agreement and the Merger in a neutral
fashion; provided that such obligation to solicit proxies in a neutral fashion
shall not prohibit the Board from communicating the basis for its determination
not to make a recommendation to the extent required under the FBCA.
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CONDUCT OF BUSINESS. In the Merger Agreement, the Company has covenanted
and agreed as to itself and its subsidiaries that, among other things and
subject to certain exceptions, during the period from the date of the Merger
Agreement to the Effective Time:
(a) the Company and its subsidiaries shall carry on their respective
businesses in the usual, regular and ordinary course in all respects,
consistent with past practice and shall use their respective reasonable best
efforts to preserve intact their present business organizations and preserve
their existing relationships with customers, suppliers, employees,
Governmental Entities (as defined in the Merger Agreement) and others having
business dealings with them, and shall not enter into any material joint
venture or other similar arrangement;
(b) the Company shall not, and shall not propose to, (i) declare or pay
any dividends on or make other distributions in respect of any of its
capital stock; (ii) split, subdivide, combine or reclassify any of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for, shares of its
capital stock; (iii) repurchase, redeem or otherwise acquire any shares of
its capital stock or any securities convertible into or exercisable for any
shares of its capital stock except as otherwise permitted with respect to
the payment of the option exercise price or tax withholding under certain
option agreements in effect on the date of the Merger Agreement under the
Company Equity Plans (as defined in the Merger Agreement); or (iv) effect
any reorganization or recapitalization;
(c) the Company shall not and shall cause its subsidiaries not to issue,
pledge, dispose of or encumber, deliver or sell, or authorize or propose the
issuance, disposition, encumbrance, pledge, delivery or sale of, any shares
of its capital stock of any class, any Company Voting Debt (as defined in
the Merger Agreement) or any securities convertible into or exercisable for,
or any rights, warrants or options to acquire, any such shares or Company
Voting Debt, or enter into any agreement with respect to any of the
foregoing, other than the issuance of Shares upon the exercise of stock
options or rights to purchase Shares outstanding on the date of the Merger
Agreement in accordance with the terms of the Company Equity Plans as in
effect on the date of the Merger Agreement;
(d) except to the extent required to comply with their respective
obligations under the Merger Agreement or required by law, the Company and
its subsidiaries will not amend or propose to amend their respective
Articles of Incorporation, Bylaws or other similar governing documents;
(e) the Company shall not (i) incur any indebtedness for borrowed money
or guarantee any such indebtedness or issue or sell any debt securities or
warrants or rights to acquire any debt securities of the Company or
guarantee any debt securities of other persons other than indebtedness
(including short term borrowings) of the Company or its subsidiaries to the
Company or its subsidiaries and other than in the ordinary course of
business which shall include, without limitation, borrowings in the ordinary
course under its existing credit agreements; (ii) make any loans, advances
or capital contributions to, or investments in, any other person, other than
by the Company or its subsidiaries to or in the Company or its subsidiaries;
or (iii) pay, discharge, modify or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than in the case of clauses (ii) and (iii), loans,
advances, capital contributions, investments, payments, discharges or
satisfactions incurred or committed to in the ordinary course of business
consistent with past practice;
(f) the Company shall not, and shall not permit its subsidiaries to
(i) increase the compensation payable or to become payable to any of its
executive officers or employees or (ii) take any action with respect to the
grant of any severance or termination pay, or stay, bonus or other incentive
arrangement (other than as required by applicable law or the terms of any
collective bargaining agreement or as required pursuant to benefit plans and
policies in effect on
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the date of the Merger Agreement), except any such increases or grants made
in the ordinary course of business consistent with past practice, pursuant
to agreements, plans or policies existing on the date of the Merger
Agreement or as otherwise provided under the Merger Agreement; provided,
however that in no event shall the Company grant, or permit to be granted,
any options or other awards or rights to purchase under any Company Equity
Plan or otherwise after the date of the Merger Agreement;
(g) the Company shall not, and shall not permit its subsidiaries to,
make any tax election or change any method of accounting for tax purposes,
except as required by applicable law or GAAP;
(h) except as contemplated by the Merger Agreement, the Company shall
not, and shall not permit its subsidiaries to, release or otherwise
terminate the employment of any management employee or hire any new
management employees, except in the ordinary course of business;
(i) the Company shall not, and shall not permit is subsidiaries to,
establish, adopt or enter into any new employee benefit plans or agreements
(including pension, profit sharing, bonus, incentive compensation, director
and officer compensation, severance, medical, disability, life or other
insurance plans, and employment agreements) or amend or modify any existing
Company Benefit Plans (as defined in the Merger Agreement), or extend
coverage of the Company Benefit Plans, except as required by applicable law,
or the terms of any collective bargaining agreement;
(j) subject to certain exceptions, simultaneous with the execution of
the Merger Agreement, the Company shall freeze all Company Equity Plans as
of the date of the Merger Agreement, such that, as a result thereof, no
officer, employee or any other person or entity shall be entitled to
purchase any additional Shares under any Company Equity Plan (other than
pursuant to currently outstanding stock options and stock purchase periods)
and no stock options or other awards shall be granted under any Company
Equity Plan after the date of the Merger Agreement;
(k) the Company shall not, and shall not permit its subsidiaries to,
take any action that could reasonably be expected to result in any of the
Offer Conditions not being satisfied; and
(l) the Company shall not, and shall not permit its subsidiaries to,
(i) transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of
or encumber any assets except in the ordinary course of business consistent
with past practice; (ii) authorize capital expenditures in any manner not
reflected in the capital budget of the Company as currently in effect or
make any acquisition of, or investment in, any business or stock of any
other person or entity other than a current subsidiary; (iii) settle or
compromise any material claims or litigation or, except in the ordinary
course of business consistent with past practice, modify, amend or terminate
any of the Company Material Contracts (as defined in the Merger Agreement)
or waive, release or assign any material rights or claims; (iv) permit any
material insurance policy naming it as a beneficiary or a loss payable payee
to be canceled or terminated without the prior written approval of Numico,
except in the ordinary course of business consistent with past practice; or
(v) terminate the employment of any employee who is covered by a change in
control, employment, termination or similar agreement, except for Cause (as
defined in such agreements) or permit circumstances to exist that would
allow such employee to terminate employment and be entitled to enhanced or
special severance or other payments thereunder.
Pursuant to the Merger Agreement and subject to certain terms therein, from
the date of the Merger Agreement until the earlier of the termination of the
Merger Agreement or the Effective Time, the Company has agreed to, upon
reasonable notice, afford Parent's officers, employees, counsel, accountants,
financial advisors and other representatives reasonable access to all of its and
its subsidiaries' properties, books, contracts, commitments and records and its
officers, management, employees and representatives and, during such period,
will promptly furnish all information concerning its business, properties and
personnel as may be reasonably requested.
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Under the Merger Agreement, before issuing any press release or otherwise
making any public statements with respect to the Merger and other transactions
contemplated by the Merger Agreement, Numico and the Company will use reasonable
best efforts to consult with each other.
DIRECTOR AND OFFICER LIABILITY. Under the Merger Agreement, subject to
certain terms therein, Numico shall (i) cause to be maintained for a period of
six years the provisions regarding indemnification of current or former officers
and directors of the Company contained in the Organizational Documents (as
defined in the Merger Agreement) of the Company and its subsidiaries in effect
following the Effective Time; provided that, in the event any claim or claims
are asserted or made within such six-year period, all rights to indemnification
in respect of any claim or claims shall continue until final disposition of any
and all such claims; and (ii) maintain, for a period of six years, the Company's
existing directors' and officers' liability insurance policy and fiduciary
liability insurance (provided that Numico or the Surviving Corporation may
substitute therefor policies of substantially similar coverage and amounts
containing terms which are no less advantageous); provided, however, that Numico
is not obligated to make annual premium payments for such insurance to the
extent such premiums exceed $450,000.
Notwithstanding anything to the contrary in the Merger Agreement, the Board
was permitted to amend the Company's Bylaws to include, among other things, that
(i) the Company shall indemnify each person who was or is a party, or is
threatened to be made a party, or was or is a witness, to a Proceeding (as
defined in the Bylaws), against all liability asserted against, or incurred by,
such person by reason of the fact that such person is or was a director or
officer of the Company (each an "Indemnified Person") and (ii) that reasonable
costs, charges and expenses (including attorney's fees) incurred by an
Indemnified Person in defending a Proceeding may and, in connection with a
transaction involving a Change in Control (as defined in the Bylaws) of the
Company or a potential Change in Control of the Company shall, be paid by the
Company in advance of the final disposition of the Proceeding, upon receipt of
an undertaking reasonably satisfactory to the Board by the Indemnified Person to
repay all amounts so advanced if it is ultimately determined that such person is
not entitled to indemnification by the Company. The Board took this action.
Numico and the Purchaser agree that, for a period of not less than six
years, the Bylaws of the Surviving Corporation shall include the same
indemnification provisions as those set forth in the Company's Bylaws in effect
on the date of the Merger Agreement (including the amendment referenced above),
and none of the Company, Numico or the Surviving Corporation shall take any
action which adversely affects the rights of any Indemnified Person who was an
officer or director on the date of the Merger Agreement.
REASONABLE BEST EFFORTS. The Merger Agreement further provides that each of
Numico, the Purchaser and the Company shall cooperate with the other and shall
use its respective reasonable best efforts to consummate and make effective the
Offer, the Merger and the other transactions contemplated by the Merger
Agreement, including, among other things, obtaining all Required Regulatory
Approvals (as defined below).
ACQUISITION PROPOSALS. Pursuant to the Merger Agreement, none of the
Company, its subsidiaries, or any of the respective officers and directors of
the Company or its subsidiaries, shall, and the Company shall direct and use its
best efforts to cause its employees, agents and representatives (including,
without limitation, any investment banker, attorney or accountant retained by
the Company or any of its subsidiaries) not to, take or cause, directly or
indirectly, any of the following actions with any party other than Numico, the
Purchaser or their respective designees: (i) directly or indirectly solicit,
encourage, initiate, participate in or otherwise facilitate (including by way of
furnishing information) any negotiations, inquiries or discussions with respect
to any offer, indication or proposal to acquire all or more than 15% of the
Company's businesses, assets or capital shares whether by merger, consolidation,
other business combination, purchase of assets, reorganization, tender or
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exchange offer or otherwise (each of the foregoing, an "Acquisition Proposal")
or (ii) disclose, in connection with an Acquisition Proposal, any information or
provide access to its properties, books or records. The Company also agreed that
it will immediately cease and cause to be terminated any previously existing
activities, discussions or negotiations with any parties with respect to any of
the foregoing. The Company agreed that it will take the necessary steps to
promptly inform the individuals or entities referred to in the first sentence of
this paragraph of such obligations that it has undertaken. The Company also
agreed to promptly request any person which may have executed a confidentiality
agreement in connection with its consideration of acquiring the Company and/or
any of its subsidiaries to return or destroy all confidential information
furnished to such person by or on behalf of the Company. If the Company receives
an Acquisition Proposal, or the Company learns that someone intends to solicit
tenders of Shares or otherwise proposes to acquire the Company or a significant
portion of its equity securities or its and its subsidiaries' assets if the
Company's shareholders do not approve the Merger, the Company will promptly
notify Numico of that fact and provide Numico promptly, from time to time, with
all information and documents in the possession of the Company and its legal or
financial advisors regarding the Acquisition Proposal, solicitation of tenders
or other proposed transaction.
Notwithstanding anything to the contrary referred to in the previous
paragraph or elsewhere in the Merger Agreement, the Merger Agreement provides
that, prior to the consummation of the Offer the Company may participate in
discussions or negotiations with, and furnish nonpublic information and afford
access to the properties, books, records, officers, employees and
representatives of the Company to, any person, entity or group, if such person,
entity or group has delivered to the Company, prior to the consummation of the
Offer and in writing, an Acquisition Proposal which the Board reasonably
determines in good faith (after consultation with its independent financial
advisor) constitutes a proposal, (i) which would result in the Company's
shareholders receiving per Share consideration which is superior, from a
financial point of view, to the per Share consideration in the Offer,
(ii) which is not subject to any financing contingency, (iii)(A) for which
financing, to the extent required, has at least the same degree of certainty as
Numico's financing (at the time the Board is making such determination), or
(B) to the extent financing is not required, is made by a person, entity or
group which the Board reasonably determines in its good faith judgment (after
consultation with its independent financial advisor) has the financial resources
necessary to carry out the transaction, and (iv) has been publicly disclosed (a
"Superior Proposal").
COMPANY STOCK OPTIONS. Under the terms of the Merger Agreement, the
Company's Board of Directors, including the members of the Compensation
Committee, acted to provide that each outstanding Company Stock Option (as
defined in the Merger Agreement) at the Effective Time will no longer represent
the right to receive Shares upon exercise, but instead will entitle the holder
thereof to receive the Merger Consideration, in cash, upon exercise. Although
the Offer and Merger will not constitute an acquisition of control resulting in
the acceleration of vesting of the Company Stock Options, pursuant to the Merger
Agreement, the Company's Board of Directors, including members of the
Compensation Committee, acted to provide that each holder of a Company Stock
Option may deliver a cancellation agreement upon which each outstanding Company
Stock Option (vested and unvested) will be canceled, and in exchange therefore,
each holder will receive a cash payment at the Effective Time (or, if later, on
the fifth business day after delivery of a cancellation agreement) equal to the
product of (x) the excess, if any, of the Merger Consideration per Share over
the exercise price per Share subject to the option, multiplied by (y) the number
of Shares covered by such option. The amounts payable will be subject to any
required withholding of taxes and will be paid without interest.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains certain
representations and warranties by the Company, including, among other things,
representations and warranties concerning: (i) the organization, good standing
and qualification of the Company and its subsidiaries; (ii) the capital
structure of the Company; (iii) the authority of the Company relative to the
execution and
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delivery of and consummation of the transactions contemplated by the Merger
Agreement; (iv) the absence of any Violations (as defined in the Merger
Agreement) of the corporate documents and certain instruments of the Company or
its subsidiaries or of any statute, rule, regulation, order or decree, subject
to certain exceptions; (v) the accuracy and timeliness of filings of reports and
documents filed with the SEC; (vi) the absence of any liabilities or obligations
except as set forth in the disclosure schedules to the Merger Agreement;
(vii) compliance with all applicable laws; (viii) the absence of any litigation,
investigation or proceeding; (ix) certain tax matters; (x) the absence of
certain changes or events since August 31, 1999; (xi) the validity and
enforceability of the Company's contracts; (xii) certain employee benefit and
labor matters; (xiii) the absence of brokers or finders entitled to a fee in
connection with the Offer and the Merger, except Morgan Stanley; (xiv) the
Company's receipt of a written fairness opinion by Morgan Stanley; (xv) the
absence of product liability claims against the Company; (xvi) its properties;
(xvii) the fact that no Takeover Statute (as defined in the Merger Agreement),
shareholder rights plan or other anti-takeover device is applicable regarding
any of the transactions contemplated by the Merger Agreement; (xviii) certain
environmental matters; (xix) the status of business relationships with customers
and suppliers; and (xx) the Company's regulatory compliance. A substantial
number of the representations and warranties of the Company contained in the
Merger Agreement will only be deemed to be inaccurate if such inaccuracy is
reasonably likely to have a Material Adverse Effect on the Company. Numico and
the Purchaser agreed to refrain from, and to cause its subsidiaries to refrain
from, taking any action that could reasonably be expected to (i) make a
representation or warranty inaccurate or (ii) cause a condition to the Offer to
not be satisfied.
The Merger Agreement also contains certain representations and warranties by
Numico and the Purchaser, including (i) the standing and power of Numico and the
Purchaser to carry on their respective businesses and to consummate the
transactions contemplated by the Merger Agreement; (ii) the authority of Numico
and the Purchaser relative to the execution and delivery of and consummation of
the transactions contemplated by the Merger Agreement, and the absence of any
Violations of corporate documents and instruments; (iii) the absence of brokers
or finders entitled to a fee in connection with the Offer and the Merger, except
J. Henry Schroder & Co. Limited and Salomon Smith Barney and their affiliates;
(iv) the lack of ownership of common stock of the Company by Numico or its
subsidiaries; (v) the absence of litigation that is reasonably likely to have a
Material Adverse Effect on Numico; and (vi) that Numico will have, and will make
available to the Purchaser, sufficient funds to consummate the Offer and the
Merger and the transactions contemplated thereby.
The Merger Agreement defines the term "Material Adverse Effect" to mean,
with respect to any person, any adverse change, circumstance, development, event
or effect that, individually or in the aggregate with all other adverse changes,
circumstances, developments, events and effects, is or could reasonably be
expected to be materially adverse to the business, operations, properties,
assets, liabilities, condition (financial or otherwise), results of operations
or prospects of such entity and its subsidiaries taken as a whole, or on the
ability of such person to perform its obligations under the Merger Agreement or
on the ability of such person to consummate the Merger and the other
transactions contemplated thereby without material delay other than any change
or effect attributable to the economy in general.
CONDITIONS TO THE MERGER. The conditions to the Offer are set forth in
Section 12 hereto. The Company's, Numico's and the Purchaser's obligations to
effectuate the Merger are subject to the satisfaction or waiver on or prior to
the Effective Time of the following conditions:
(a) SHAREHOLDER APPROVAL. The Company shall have obtained all approvals
of holders of Shares necessary to approve the Merger Agreement and all the
transactions contemplated thereby (including the Merger) to the extent
required by law.
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(b) NO INJUNCTION OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by a court
or other Governmental Entity of competent jurisdiction shall be in effect
and have the effect of making the Merger illegal or otherwise prohibiting
the consummation of the Merger.
(c) REQUIRED REGULATORY APPROVALS. All Required Regulatory Approvals
shall have been obtained and shall be in full force and effect.
(d) COMPLETION OF THE OFFER. The Purchaser shall have (i) commenced the
Offer pursuant to the Merger Agreement and (ii) subject to the satisfaction
or waiver of all the conditions to the Offer, purchased, pursuant to the
terms and conditions of such Offer, all Shares duly tendered and not
withdrawn; provided, however, that neither Numico nor the Purchaser shall be
entitled to rely on the condition in clause (ii) above if either of them
shall have failed to purchase Shares pursuant to the Offer in breach of
their obligations under the Merger Agreement.
TERMINATION. The Merger Agreement may be terminated at any time prior to
the Effective Time, by action taken or authorized by the Board of Directors of
the terminating party or parties, whether before or after approval of the Merger
Agreement and the matters contemplated therein, including the Merger, by the
shareholders of the Company:
(a) By mutual written consent of Numico and the Company, by action of
their respective Boards of Directors;
(b) By either the Company or Numico if the Offer shall not have been
consummated by the Outside Date (as defined in the Merger Agreement);
provided that the right to terminate the Merger Agreement under this
clause (b) shall not be available to any party whose failure to fulfill any
obligation or condition under the Merger Agreement has been the cause of, or
resulted in, the failure of the Offer to be consummated on or before such
date; notwithstanding the foregoing, if the sole reason the Offer shall not
have been consummated by the Outside Date is the failure to have obtained
all Required Regulatory Approvals prior to the date which is four months
from the date of the Merger Agreement, the Outside Date shall, at the
request of either Numico or the Company, be extended for a period of
60 days;
(c) By either the Company or Numico if any court or other Governmental
Entity shall have issued an order, decree or ruling or taken any other
action (which order, decree, ruling or other action the parties shall have
used their reasonable best efforts to resist, resolve or lift, as
applicable, subject to the provisions of the Merger Agreement) permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by the Merger Agreement, and such order, decree, ruling or
other action shall have become final and nonappealable;
(d) By Numico if (i) the Board (or any committee thereof) shall have
withdrawn or adversely modified (including by amendment of the
Schedule 14D-9) its approval or recommendation of the Offer, the Merger or
the Merger Agreement or the Board, upon request by Numico following receipt
by the Company of an Acquisition Proposal, shall fail to reaffirm such
approval or recommendation within ten business days after such request, or
shall have resolved to do any of the foregoing; (ii) the Board shall have
recommended to the shareholders of the Company that they approve an
Acquisition Proposal other than transactions contemplated by the Merger
Agreement; or (iii) a tender offer or exchange offer is commenced that, if
successful, would result in any person becoming a "beneficial owner" (as
such term is defined under Regulation 13D under the Exchange Act) of 15% or
more of the outstanding Shares (other than by Numico or an affiliate of
Numico) and the Board recommends that the shareholders of the Company tender
their Shares in such tender or exchange offer;
(e) By Numico, prior to the purchase by the Purchaser of Shares pursuant
to the Offer, upon a material breach of any material covenant or agreement
on the part of the Company set forth in
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the Merger Agreement, or if the Offer Condition contained in
paragraph (c)(i) or (ii) of Section 12 below is not capable of being
satisfied or cured by the earlier of (x) the Outside Date or (y) within
30 days after an executive officer of the Company becomes aware of the
breach of any representation or warranty resulting in the failure to satisfy
such Offer Condition;
(f) By the Company, upon a material breach of any material covenant or
agreement on the part of Numico or the Purchaser set forth in the Merger
Agreement, or upon the failure of any representation or warranty of Numico
or the Purchaser set forth in the Merger Agreement (i) to the extent such
representation or warranty is qualified by Material Adverse Effect, to be
true and correct and (ii) to the extent such representation or warranty is
not qualified by Material Adverse Effect, to be true and correct, except
that, in the case of this clause (ii), no failure shall be deemed to have
occurred so long as such failure, taken together with all other such
failures, does not have a Material Adverse Effect on Numico in the case of
each of clauses (i) and (ii) as of the date of the Merger Agreement and
(except to the extent such representation or warranty speaks as of an
earlier date) as of the consummation of the Offer as though made on and as
of such date, and except that, in the case of each of clauses (i) and (ii),
no failure shall be deemed to have occurred so long as such failure is
capable of being satisfied or cured by the earlier of (x) the Outside Date
or (y) within 30 days after any executive officer of Numico becomes aware of
the breach of any representation or warranty resulting in such failure;
(g) By the Company, if the Purchaser fails to (i) commence the Offer or
keep the Offer open as required in the Merger Agreement or (ii) purchase
validly tendered Shares in violation of the terms of the Offer and the
Merger Agreement;
(h) By Numico, if any person, entity or group, other than Numico, the
Purchaser, or any of their affiliates or any group of which any of them is a
member, shall have entered into a definitive agreement or an agreement in
principle with the Company or any of its subsidiaries with respect to an
Acquisition Proposal or the Board (or any committee thereof) shall have
adopted a resolution approving any of the foregoing;
(i) By the Company, prior to the purchase of Shares by the Purchaser
pursuant to the Offer, if (i) the Board determines to accept a Superior
Proposal, (ii) the Company notifies Numico in writing that it intends to
enter into such agreement, attaching the final version of such agreement to
such notice, and (iii) the Purchaser does not make, within 72 hours after
receipt of the Company's written notice of its intention to enter into a
binding agreement for a Superior Proposal, any offer the Board reasonably
and in good faith determines (after consultation with its independent
financial advisor and outside legal counsel) is at least as favorable to the
shareholders of the Company (other than the shareholders who are parties to
the Shareholder Agreement) as the Superior Proposal and during such period
the Company reasonably considers and discusses in good faith all proposals
submitted by Numico and, without limiting the foregoing, meets with, and
causes its financial advisors and legal advisors to meet with, Numico and
its advisors from time to time as required by Numico to consider and discuss
in good faith Numico's proposals. The Company agrees to notify Numico
immediately if its intention to enter into a binding agreement referred to
in its notice to Numico shall change at any time after giving such notice;
or
(j) By Numico, if the holders of Shares which are a party to the
Shareholder Agreement either (i) fail to tender into the Offer (and not
withdraw) a majority of the outstanding Shares or (ii) in any material
respect, fail to vote, fail to act by consent, or interfere with or
frustrate the exercise of the rights conferred upon the holders of proxies
identified and set forth in the Shareholder Agreement.
In the event that the Merger Agreement is terminated by either the Company
or Numico as provided above, the Merger Agreement shall become void and there
will be no liability or obligation on the part of Numico or the Company or their
respective officers or directors except (i) certain provisions
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as set forth in the Merger Agreement shall survive any termination of the Merger
Agreement, and (ii) notwithstanding anything to the contrary contained in the
Merger Agreement, neither Numico nor the Company shall be relieved or released
from any liability or damages arising out of its breach of any provision of the
Merger Agreement which shall include the obligation to pay all expenses incurred
by the non-breaching party in connection with the Merger Agreement.
In the event that the Merger Agreement is terminated as described in
paragraphs (d), (e) (for certain material violations of certain covenants
contained in the Merger Agreement), (h), (i) or (j) above, then the Company
shall pay Numico in cash (A) U.S. $65,000,000 plus (B) up to U.S. $14,000,000 of
Numico's Expenses (as defined in the Merger Agreement) incurred in connection
with the Offer and Merger ((A) and (B) together, the "Termination Fee"). The
Termination Fee shall be payable by wire transfer of immediately available funds
(A) prior to such termination by the Company pursuant to paragraph (i) above or
(B) the date of such termination by Numico pursuant to paragraphs (d), (e),
(h) or (j) above.
AMENDMENT. Subject to applicable law and the terms of the Merger Agreement,
the Merger Agreement may be amended by the parties thereto, by action taken or
authorized by their respective Boards of Directors, at any time before or after
approval of the matters presented in connection with the Merger by the
shareholders of the Company.
BOARD OF DIRECTORS. Pursuant to the Merger Agreement, promptly upon the
acceptance for payment of and payment for any Shares by the Purchaser in
accordance with the Offer for not less than a majority of the outstanding
Shares, Numico and Purchaser will be entitled to designate members of the Board
such that they will have a number of representatives on the Board, rounded up to
the next whole number, equal to the product of (x) the total number of directors
on the Board (giving effect to the directors elected pursuant to this sentence)
multiplied by (y) the percentage of such number of Shares owned in the aggregate
by Numico or the Purchaser bears to the number that Shares outstanding;
provided, however, that until the Effective Time, there shall be at least two
directors (the "Independent Directors") who are neither officers of Numico nor
designees, shareholders or affiliates of Numico or Numico's affiliates. The
Company will, upon request by Numico or Purchaser, on the date of such request,
(i) either increase the size of the Board or use its reasonable efforts to
secure the resignations of such number of its incumbent directors as is
necessary to enable Numico's and Purchaser's designees to be elected or
appointed to the Board (including by nomination and approval by the current
Company Board) and (ii) cause Numico's and Purchaser's designees to be so
elected or appointed, including mailing to its shareholders an information
statement containing the information required by Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder, which information statement is
attached as Annex A to the Schedule 14D-9.
Following the election or appointment of the Purchaser's designees and prior
to the Effective Time, except for certain actions which are legally required to
have full Board approval, any action to be taken by the Board with respect to
the Merger Agreement which adversely affects the interests of the Company's
shareholders will require approval by a majority of the Independent Directors.
CHARTER AND BYLAWS. The Merger Agreement provides that, at the Effective
Time and without any further action on the part of the Company and the
Purchaser, the Articles of Incorporation of the Company shall be amended to read
in its entirety as the Articles of Incorporation of the Purchaser as in effect
immediately prior to the Effective Time until thereafter amended, provided that
such Articles of Incorporation shall be amended to reflect "Rexall Sundown,
Inc." as the name of the Surviving Corporation.
Under the Merger Agreement, the Bylaws of the Purchaser at the Effective
Time shall be the Bylaws of the Surviving Corporation until thereafter changed
or amended. Under the Merger Agreement, subject to applicable law, the directors
of the Purchaser at the Effective Time will be the
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initial directors of the Surviving Corporation and will hold office until their
respective successors are duly elected or qualified, or until their earlier
resignation or removal. Pursuant to the Merger Agreement, the officers of the
Company at the Effective Time will be the initial officers of the Surviving
Corporation and will hold office until their respective successors are duly
elected or qualified, or until their earlier resignation or removal.
OTHER MATTERS.
SHAREHOLDER APPROVAL. Under the FBCA and the Company's Articles of
Incorporation, the approval of the Board of Directors of the Company and the
affirmative vote of the holders of a majority of the outstanding Shares are
required to adopt and approve the Merger Agreement and the transactions
contemplated thereby, unless the Merger is consummated pursuant to the
short-form merger provisions under the FBCA described below (in which case no
further corporate action by the shareholders of the Company will be required to
complete the Merger). The Merger Agreement provides that Numico and Purchaser
will cause to be voted in favor of the Merger all of the Shares then owned by
Numico, the Purchaser or any of their affiliates. In the event that the Minimum
Condition is satisfied, the Purchaser will have sufficient voting power to cause
the approval of the Merger Agreement and the transactions contemplated thereby
without the affirmative vote of any other shareholders of the Company.
SHORT-FORM MERGER. Section 607.1104 of the FBCA provides that, if the
parent corporation owns at least 80% of the outstanding shares of each class of
the subsidiary corporation, the merger into the subsidiary corporation of the
parent corporation may be effected by a plan of merger adopted by the board of
directors of the parent corporation and the appropriate filings with the Florida
Department of State, without the approval of the shareholders of the subsidiary
corporation (a "short-form merger"). Under the FBCA, if the Purchaser acquires
at least 80% of the outstanding Shares, the Purchaser will be able to effect the
Merger without a vote of the shareholders of the Company. In such event, the
Company has agreed in the Merger Agreement to take, at the request of Purchaser,
all necessary and appropriate action to cause the Merger to become effective, as
soon as practicable after such acquisition, without a meeting of the Company's
shareholders. In the event that less than 80% of the Shares then outstanding on
a fully diluted basis are tendered pursuant to the Offer on the Initial
Expiration Date, the Purchaser may extend the Offer for up to twenty business
days so that the merger may be consummated as a short-form merger.
APPRAISAL RIGHTS. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, if the Merger is consummated, holders of Shares
may have certain rights pursuant to the provisions of Section 607.1302 of the
FBCA to dissent and demand appraisal of, and to receive payment in cash of the
fair value of, their Shares. If the statutory procedures were complied with,
such rights could lead to a judicial determination of the fair value required to
be paid in cash to such dissenting holders for their Shares. Any such judicial
determination of the fair value of Shares could be based upon considerations
other than or in addition to the Offer price or the market value of the Shares,
including asset values and the investment value of the Shares. The fair value so
determined could be more or less than the Offer price or the Merger
Consideration.
If any holder of Shares who demands appraisal under Section 607.1302 of the
FBCA fails to perfect, or effectively withdraws or loses his right to appraisal,
as provided in the FBCA, the Shares of such holder will be converted into the
Merger Consideration in accordance with the Merger Agreement.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the FBCA and is qualified in its entirety by the full
text of Section 607.1302 of the FBCA.
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FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 607.1302 OF THE FBCA FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
GOING PRIVATE TRANSACTIONS. The Merger would have to comply with any
applicable Federal law operative at the time of its consummation. Rule 13e-3
under the Exchange Act is applicable to certain "going private" transactions.
The Purchaser does not believe that Rule 13e-3 will be applicable to the Merger
unless the Merger is consummated more than one year after the termination of the
Offer. If applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning the Company and certain information relating to
the fairness of the Merger and the consideration offered to minority
shareholders be filed with the SEC and disclosed to minority shareholders prior
to consummation of the Merger.
EMPLOYMENT AND CONSULTING AGREEMENTS.
EMPLOYMENT AGREEMENTS WITH SENIOR OFFICERS. Prior to execution of the
Merger Agreement, the Company had entered into or approved entering into an
employment agreement (the "Former Employment Agreements") with each of
Messrs. Damon DeSantis, Geary Cotton, Richard Werber, Richard Goudis and Gerald
Holly (the "Executive Officers") and 12 additional officers of the Company or
its subsidiaries (the Executive Officers and such additional officers, the
"Senior Officers"). Concurrent with the signing of the Merger Agreement, Numico
and the Company entered into replacement employment agreements (the "Employment
Agreements") with the Senior Officers effective as of April 30, 2000. These
agreements replace the Former Employment Agreements, provide certain assurances
with respect to the employment of the Senior Officers, including retention
payments, and obtain for Numico and the Company non-competition covenants from
the Senior Officers. Copies of the Employment Agreements with the Executive
Officers have been filed as exhibits to the Schedule TO and are incorporated
herein by reference, and the following summary is qualified in its entirety by
reference to such agreements. The Employment Agreements may be examined, and
copies thereof may be obtained, as set forth in Section 8 above.
The Employment Agreements provide for an initial employment term ending on
December 31, 2003. Unless earlier terminated by the Company or the Senior
Officer, the Employment Agreements will renew for additional one-year periods
effective each January 1 commencing in 2004. The Employee Agreements provide
that in the event neither the closing of the Offer nor the Merger contemplated
by the Merger Agreement shall occur, then the Employment Agreements shall be of
no force or effect and the Former Employment Agreements shall be reinstated.
In general, the Employment Agreements provide for continuation of the Senior
Officer's employment at the same base salary, an increased, performance-based
annual bonus opportunity, and other benefits as in effect as of the date of the
Merger Agreement, and the entitlement to participate in the Numico Equity
Incentive Programs described below and any other long-term incentive plans which
may be implemented for the Company's Senior Officers. The Employment Agreements
provide severance benefits in the event a Senior Officer is terminated without
cause or resigns due to a significant reduction in duties or an uncured breach
of the compensation provisions of the Employment Agreement by the Company or
Numico. In addition, the Employment Agreements provide a retention bonus equal
to approximately 150% of current base salary and target bonus for the Executive
Officers and certain other Senior Officers, and 100% of current base salary and
target bonus for the other Senior Officers. The amount of the retention bonus
payable to Messrs. Damon DeSantis, Geary Cotton, Richard Werber, Richard Goudis
and Gerald Holly under the Employment Agreements is $1,140,000, $821,250,
$675,000, $675,000 and $675,000, respectively. The retention bonus is payable in
three installments for the Executive Officers and certain Senior Officers, and
two installments for the other Senior Officers, on anniversaries of the
Effective Time provided the Senior Officer remains continuously employed through
such date. The Employment Agreements bar the Senior Officers from
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using or disclosing confidential information or trade secrets and from engaging
in a competing business (as defined in the Employment Agreement) prior to the
later of the third anniversary of the Merger or the second anniversary of the
termination of employment. The Employment Agreements provide that a separate
payment equal to the amount of the retention bonus will be made within 30 days
following the Effective Time as consideration for the foregoing restrictions.
CONSULTING AGREEMENTS. In order to assure itself of continued limited
services and certain non-competition covenants from Messrs. Carl DeSantis,
Christian Nast and Nickolas Palin (the "Consultants"), Numico and the Company
have entered into consulting agreements (the "Consulting Agreements") with these
Consultants, which agreements replace the Former Employment Agreements. Under
the Consulting Agreements, each of the Consultants has agreed to make himself
available to Numico and the Company during a twelve-month transition period
following the Effective Time and has agreed to refrain from using confidential
information or trade secrets and from engaging in a competing business prior to
December 31, 2003. The Consulting Agreements provide for a cash payment of
$800,000, $350,000 and $1,250,000, respectively, to Messrs. Carl DeSantis,
Christian Nast and Nickolas Palin as consideration for the non-competition
covenants and for quarterly payments of $81,250, $37,500 and $143,500,
respectively, during the transition period.
NUMICO EQUITY INCENTIVE PROGRAMS.
In addition to the provisions of the Employment Agreements described above,
the Benefits Letter (as defined below) also contemplates that Numico will
establish certain programs intended to provide the Senior Officers and other key
managers and employees of the Company with a long term incentive program based
on shares of Numico.
NUMICO MANAGEMENT STOCK PURCHASE PLAN. Numico plans to establish a
Numico/Rexall Sundown Management Stock Purchase Plan for the benefit of the
Senior Officers and other key managers. Pursuant to the proposed plan, each
eligible individual will be entitled to purchase (the "initial purchase")
directly from Numico shares with an aggregate purchase price of up to two times
annual salary in the case of the Executive Officers and certain Senior Officers
and one times salary in the case of the other Senior Officers and certain key
managers. In addition, each participant who purchases shares will be permitted
to borrow (the "loan") from Numico to purchase additional shares from Numico in
an amount up to two dollars for each dollar of his or her initial purchase. The
loan will be secured by a pledge of the shares purchased with the loan proceeds,
as well as those purchased in the initial purchase, and will be subject to
repayment in full, with interest at the appropriate applicable federal rate, on
the third anniversary of the Merger, or earlier in the event of termination of
employment. The loan balance and interest, however, will be subject to
forgiveness in whole or in part as set forth below if the individual remains in
the continuous employ of the Company through the maturity date. In such case,
50% of the loan balance and interest due will be forgiven and the remaining 50%
will be forgiven if the Company has achieved its operating EBITDA goals for the
three-year period. A portion of the loan will be forgiven in the event of early
termination of employment due to death, disability or termination by the Company
without cause. Shares purchased under the plan will be held in an account and
may not be sold by the participant until the loan maturity date, or earlier in
the event of termination of employment.
NUMICO STOCK OPTION PROGRAM. Numico has agreed to make available options to
purchase up to 400,000 shares for grant to key employees of the Company and its
subsidiaries following the Merger. In addition, Numico has agreed to make
available options with respect to not less than 200,000 shares annually
following the first, second and third anniversaries of the Merger. The options
with respect to the 400,000 shares will be granted to those key employees
identified by Mr. Damon DeSantis, including Senior Officers, other than
Mr. Damon DeSantis. In general, the options will not be exercisable unless the
option holder remains in the continuous employ of the Company through the third
anniversary of
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the Merger. Partial vesting will occur in the event of early termination of
employment due to death or disability or termination without cause.
OTHER PROVISIONS. The purchase price to be paid for the shares under the
Numico Management Stock Purchase Plan and for the initial 400,000 options will
be determined by reference to the 15-day average closing price for the Numico
shares on the Amsterdam Stock Exchange immediately prior to the date of the
Merger. For this purpose and for purposes of these programs Numico shares means
the depositary receipts representing ordinary shares of Numico that are directly
traded on the Amsterdam Stock Exchange. Implementation of these programs is
subject to compliance with applicable laws. In the event such compliance is
unduly burdensome, Numico has agreed to establish cash-based programs that will
provide substantially equivalent benefits.
EMPLOYEE BENEFITS.
Concurrent with the signing of the Merger Agreement, Numico and the Company
entered into a letter agreement (the "Benefits Letter") relating to certain
employee benefit matters. The Benefits Letter has been filed as an exhibit to
the Schedule TO and is incorporated herein by reference, and the following
summary is qualified in its entirety by reference to the Benefits Letter. The
Benefits Letter may be examined, and copies thereof may be obtained, as set
forth in Section 8 above.
In addition to certain commitments relating to the Employment Agreements and
Consulting Agreements and the Numico Equity Incentive Programs described above
(see "--Employment and Consulting Agreements" and "--Numico Equity Incentive
Programs"), the Benefits Letter contains certain covenants and agreements from
Numico relating to certain actions to be taken in connection with or following
the Merger. Numico has agreed to cause the Company to continue to honor the
Company's employee benefit plans and agreements in effect as of the date of the
Merger, except as contemplated by the Merger Agreement or the Benefits Letter.
Numico has agreed that the Company will maintain its employee benefit
programs, through at least the end of the current plan years, at a level that,
when taken as a whole, is no less favorable to the Company employees as those
benefits provided immediately prior to the Merger, except alterations made with
the written consent of Mr. Damon DeSantis.
As of the date of the Merger Agreement, the Company had in place annual
incentive bonus arrangements tied to financial and individual performance
targets for the fiscal year ending August 31, 2000. Pursuant to the Benefits
Letter, Numico has agreed to maintain such program through the end of
August 2000, at which time a new annual incentive program will be implemented.
SHAREHOLDER AGREEMENT.
The following is a summary of material terms of the Shareholder Agreement
dated as of April 30, 2000. This summary is not a complete description of the
terms and conditions thereof and is qualified in its entirety by reference to
the full text thereof, which is incorporated herein by reference and a copy of
which has been filed with the SEC as an exhibit to Schedule TO. The Shareholder
Agreement may be examined, and copies thereof may be obtained, as set forth in
Section 8 above.
Pursuant to the Shareholder Agreement, certain shareholders of the Company,
including the executive officers, who hold in the aggregate 32,239,270 Shares,
which represent approximately 50.3% of the votes of all the outstanding Shares,
have agreed to validly tender and sell pursuant to the Offer all such Shares
beneficially owned by such shareholders, as such Shares may be adjusted by stock
dividend, stock split, recapitalization, combination or exchange of Shares,
merger, consolidation, reorganization or other change or transaction of or by
the Company, together with Shares that may be acquired after April 30, 2000 by
such shareholder, including Shares issuable upon the exercise of options,
warrants or rights, the conversion or exchange of convertible or exchangeable
securities, or by
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means of purchase, dividend, distribution, or otherwise. In addition, each such
shareholder has also granted to the Purchaser an irrevocable option to purchase
all such Shares subject to the Shareholder Agreement at a purchase price of
$24.00 per Share; provided that, in the event the consideration per Share
payable in the Offer, the Merger or any alternative transaction between the
Company and Numico is increased above $24.00 (a "Higher Purchase Price"), then
with respect to Shares purchased from Christian Nast, Nickolas Palin, Geary
Cotton, Patricia Cotton, Richard Goudis, Richard Werber, Gerald Holly, Stephen
Frabitore and David Schofield (the "Exempt Sellers"), the option price will be
increased to the Higher Purchase Price and provided, further, that if after the
option is exercised, the Company enters into a transaction constituting an
Acquisition Proposal and Numico or the Purchaser disposes of the Shares so
purchased within one year after termination of the Merger Agreement at a price
per share higher than $24.00, Numico must pay the Exempt Sellers the difference
between such higher price and $24.00. Subject to certain exceptions in the
Shareholder Agreement, such option may be exercised by the Purchaser, in whole
or in part, during the period commencing on the earlier of (i) the second
business day after the commencement of the Offer or (ii) on May 10, 2000, and
ending on the date which is the thirtieth business day after the termination of
the Merger Agreement in accordance with the terms thereof.
Each such shareholder severally has agreed, subject to certain exceptions,
that:
(a) each shareholder will not (i) offer to sell, sell, transfer, pledge,
hypothecate, grant a security interest in, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement
(including any profit sharing arrangement) or understanding with respect to
the sale, transfer, pledge, hypothecation, grant of security interest in,
encumbrance, assignment or other disposition of, any of the Shares
(including any options or warrants to purchase Shares) to any person other
than the Purchaser or the Purchaser's designee, except as otherwise set
forth in the Shareholder Agreement, (ii) enter into any voting arrangement
with respect to any Shares, or (iii) take any other action that would in any
way restrict, limit or interfere with the performance of each shareholder's
obligations under the Shareholder Agreement or the transactions contemplated
thereby;
(b) until the Merger is consummated or the Merger Agreement is
terminated, each shareholder will not, nor will it permit any investment
banker, financial advisor, attorney, accountant or other representative or
agent of such shareholder to, directly or indirectly, (i) solicit, initiate
or encourage (including by way of furnishing nonpublic information), or take
any other action designed or reasonably likely to facilitate, any inquiries
or the making of any Acquisition Proposal, or (ii) participate in any
discussions or negotiations regarding any Acquisition Proposal;
(c) each shareholder will notify and provide details to Numico if
approached or solicited, directly or indirectly, by any person with respect
to an Acquisition Proposal;
(d) at any meeting of shareholders of the Company called to vote upon
the Merger and the Merger Agreement or at any adjournment thereof or in any
other circumstances upon which a vote, consent or other approval (including
by written consent) with respect to the Merger and the Merger Agreement is
sought, such shareholder will (i) vote (or cause to be voted) such
shareholder's shares in favor of the Merger, the adoption by the Company of
the Merger Agreement and the approval of the other transactions contemplated
by the Merger Agreement and (ii) vote (or cause to be voted) such
shareholder's Shares against any Alternative Transaction or Frustrating
Transaction (each as defined in the Shareholder Agreement);
(e) if Numico increases the price per Share payable in the Offer for any
reason (and Numico accepts Shares for payments pursuant to the Offer), then
immediately following payment for the Shares, each shareholder (other than
Exempt Sellers) will pay Numico on demand an amount in cash equal to the
product of (x) the number of such shareholder's Shares and Shares
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subject to options as identified in the Shareholder Agreement and (y) the
excess of (A) the per Share cash consideration received by the shareholder
as a result of the Offer, over (B) $24.00;
(f) in the event the Merger Agreement is terminated and the Purchaser is
entitled to purchase such shareholder's Shares pursuant to the Shareholder
Agreement, the Purchaser may elect, in lieu of purchasing such Shares, to
receive from such shareholders, and each such shareholder (other than Exempt
Sellers) agrees to pay the Purchaser on demand, an amount equal to 80% of
all profit of such shareholder from the consummation (i) of any Acquisition
Proposal with a Prior Person (as defined in the Shareholder Agreement) that
is consummated within one year of the termination of the Merger Agreement,
or (ii) any Acquisition Proposal that is consummated pursuant to a
definitive agreement entered into within six months after the termination of
the Merger Agreement with a person other than a Prior Person; and
(g) each shareholder with any Shares or options to acquire Shares which
are subject to the Shareholder Agreement will supply written evidence
reasonably satisfactory to the Purchaser within three business days after
the commencement of the Offer that such shareholder has made suitable
arrangements for the tender, sale and purchase of such Shares pursuant to
the Offer and in accordance with the Shareholder Agreement.
Furthermore, certain designated shareholders have agreed, that if so
requested by Numico at any time and from time to time when Numico reasonably
believes the number of outstanding Shares owned by the shareholders who are a
party to the Shareholder Agreement in the aggregate is less than a majority of
the total issued and outstanding Shares on a fully diluted basis, each such
designated shareholder will exercise such number of their options to acquire
Shares as are sufficient, after giving effect to the exercises, to ensure that
the number of outstanding Shares owned by the shareholders who are a party to
the Shareholder Agreement in the aggregate continue at all times to represent a
majority of the total issued and outstanding Shares on a fully diluted basis. At
the request of any such shareholder, Numico will loan to such shareholder the
exercise price of such options. In addition, certain shareholders have
covenanted that he, she or it shall not, for a period of five years from and
after the date of consummation of the Merger, subject to certain exceptions,
(i) provide or perform services which are in competition with the Company's
Business (as defined in the Shareholder Agreement) or (ii) have a financial
interest in or be in any way connected with or affiliated with any person which
is in competition with the Company's Business.
The Shareholder Agreement contains certain representations and warranties by
the shareholders subject to such agreement, including, among other things,
representations and warranties concerning: (i) the authority of the shareholder
relative to the execution and delivery of and consummation of the transactions
contemplated by the Shareholder Agreement, (ii) the absence of any violation or
breach of, or default under, any contract, agreement, injunction, court order or
regulation, (iii) the valid record and beneficial ownership, as to both voting
and dispositive power, of all Shares indicated on Exhibit A to the Shareholder
Agreement, (iv) the absence of brokers or finders entitled to a fee in
connection with the Shareholder Agreement, and (v) the acknowledgment that
Numico and the Purchaser are entering into the Merger Agreement in reliance upon
the Shareholder Agreement.
The Shareholder Agreement also contains certain representations and
warranties by Numico and the Purchaser, including, among other things,
representations and warranties concerning: (i) the authority of Numico and the
Purchaser relative to the execution and delivery of and consummation of the
transactions contemplated by the Shareholder Agreement, (ii) the fact that the
Shares will be acquired in compliance with the Securities Act of 1933, as
amended (the "Securities Act") and the Purchaser will not dispose of the Shares
in violation of the Securities Act, and (iii) the fact that Numico will have the
financing needed to consummate the Offer and the Merger, and will provide such
financing to the Purchaser.
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The closing of each purchase of Shares is subject to the following
conditions: (i) no temporary restraining order, injunction or other order of a
court or other government entity shall be in effect and have the effect of
making the option illegal or otherwise prohibiting consummation of the option,
(ii) any applicable waiting period under the HSR Act shall have expired or been
terminated, and (iii) all actions by, or any filing with, any government entity
or official required to permit the consummation of the purchase and sale of the
Shares pursuant to the exercise of the option shall have been obtained or made
and shall be in full force and effect.
As part of the Shareholder Agreement, each of the shareholders irrevocably
granted to, and appointed, certain individuals of Numico (each a "Proxy
Holder"), as such shareholder's proxy and attorney-in-fact to vote such
shareholder's Shares, or grant a consent or approval in respect of such Shares,
at any meeting of shareholders of the Company or any adjournment thereof or in
any other circumstance upon which their vote, consent or approval is sought, in
favor of the Merger, the adoption by the Company of the Merger Agreement and the
approval of the other transactions contemplated by the Merger Agreement against
any Alternative Transaction or Frustrating Transaction. Unless the Shareholder
Agreement is properly terminated, the Company has agreed to recognize and give
effect immediately to any vote, consent or approval exercised or expressed by a
Proxy Holder.
Notwithstanding any other provision of the Shareholder Agreement, Carl
DeSantis will be permitted at any time to transfer record ownership of an
aggregate of up to 300,000 outstanding Shares to non-profit institutions
designated by Mr. DeSantis, provided that, immediately prior to such transfer,
Mr. DeSantis exercises sufficient options on Shares so as to maintain the voting
interest in the outstanding Shares held by Mr. DeSantis as of the date of the
Shareholder Agreement.
Subject to certain exceptions, all of the rights and obligations of the
parties to the Shareholder Agreement shall terminate upon the earliest of
(i) the date upon which the Merger Agreement is terminated pursuant to the terms
thereof and (ii) the effective time of the Merger.
The Shareholder Agreement provides that no shareholder who is a party to the
Shareholder Agreement and who is or becomes a director or officer of the Company
make any agreement or understanding under the Shareholder Agreement in his or
her capacity as a director or officer, that each such shareholder signs only in
the capacity of a shareholder of the Company and nothing in the Shareholder
Agreement shall limit or affect any actions taken by a shareholder in his or her
capacity as a director or officer of the Company.
CONFIDENTIALITY AGREEMENT.
The following is a summary of the material terms of the Confidentiality
Agreement (as defined below), which is incorporated herein by reference and a
copy of which has been filed with the SEC as an exhibit to the Schedule TO.
Pursuant to a letter agreement, dated March 22, 2000, between Numico and the
Company (the "Confidentiality Agreement"), the Company and Numico agreed to keep
confidential certain information exchanged between such parties. The
Confidentiality Agreement also contains customary non-solicitation and
standstill provisions. The Merger Agreement provides that the provisions of the
Confidentiality Agreement shall remain binding and in full force and effect
after the termination or Effective Time of the Merger Agreement.
Except as otherwise specified, the capitalized terms used but not otherwise
defined in this Section 11 shall have the meanings set forth in the Merger
Agreement.
12. CERTAIN CONDITIONS TO THE OFFER.
Notwithstanding any other provision of the Offer, and subject to the terms
and conditions of the Merger Agreement, the Purchaser shall not be obligated to
accept for payment any Shares until all
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authorizations, consents, orders and approvals of, and declarations and filings
with, and all expirations of waiting periods imposed by, any Governmental Entity
which, if not obtained in connection with the consummation of the transactions
contemplated by the Merger Agreement, could reasonably be expected to have a
Material Adverse Effect on the Company or prevents the Company, Numico or
Purchaser from consummating the transactions contemplated by the Merger
Agreement (collectively, "Required Regulatory Approvals") shall have been
obtained, made or satisfied, including the expiration or earlier termination of
any waiting periods applicable under the HSR Act, and the Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC (including Rule 14e-1(c) promulgated under the Exchange
Act) pay for, and may delay the acceptance for payment of or payment for, any
Shares tendered in the Offer and (subject to the terms and conditions of the
Merger Agreement, including Section 1.1(b) thereof), may amend, extend or
terminate the Offer if, immediately prior to the expiration of the Offer (as
extended in accordance with the Merger Agreement) the Minimum Condition shall
not have been satisfied or any of the following shall occur:
(a) there shall be threatened or pending any action, litigation or
proceeding (hereinafter, an "Action") by any Governmental Entity or other
Person: (i) challenging the acquisition by Numico or the Purchaser of Shares
or seeking to restrain or prohibit the consummation of the Offer or the
Merger; (ii) seeking to prohibit or impose any material limitation
(including any hold separate obligation) on Numico's, the Purchaser's or any
of their respective affiliates' ownership or operation of all or any
material portion of the business or assets of the Company and its
subsidiaries taken as a whole or Numico and its subsidiaries taken as a
whole; or (iii) seeking to impose material limitations on the ability of
Numico or the Purchaser effectively to acquire or hold, or to exercise full
rights of ownership of, the Shares including the right to vote the Shares
purchased by them on an equal basis with all other Shares on all matters
properly presented to the shareholders of the Company; or
(b) any statute, rule, regulation, order or injunction shall be enacted,
promulgated, entered, enforced or deemed to or become applicable to the
Merger Agreement, the Offer, the Merger, the Shareholder Agreement or any
other action shall have been taken by any court or other Governmental
Entity, that could reasonably be expected to result in any of the effects
of, or have any of the consequences sought to be obtained or achieved in,
any Action referred to in clauses (i) through (iii) of paragraph (a) above;
or
(c) (i) the representations and warranties of the Company as set forth
in Section 3.1(b) of the Merger Agreement shall not be true and correct in
all material respects as of the date of the Merger Agreement and (except to
the extent such representations and warranties speak as of an earlier date)
as of the consummation of the Offer as though made on and as of such date;
(ii) the representations and warranties of the Company set forth in the
Merger Agreement (other than those set forth in Section 3.1(b) of the Merger
Agreement), (x) to the extent qualified by Material Adverse Effect shall not
be true and correct and (y) to the extent not qualified by Material Adverse
Effect shall not be true and correct, except that this clause (y) shall be
deemed satisfied so long as any failures of such representations and
warranties to be true and correct, taken together, do not have a Material
Adverse Effect on the Company, in the case of each of clauses (x) and
(y) as of the date of the Merger Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
consummation of the Offer as though made on and as of such date; (iii) the
Company shall have breached or failed to comply in any material respect with
any of its material obligations, covenants or agreements under the Merger
Agreement; or (iv) any change or event shall have occurred that has, or
could reasonably be expected to have, a Material Adverse Effect on the
Company; or
(d) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq
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National Market; (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, the
European Union or the United Kingdom; (iii) any material limitation (whether
or not mandatory) by any Governmental Entity on the extension of credit by
banks or other lending institutions; (iv) a suspension of, or limitation on,
the currency exchange markets or the imposition of, or material changes in,
any currency or exchange control laws in the United States or abroad; (v) a
commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United States or
the Netherlands which could reasonably be expected to have a Material
Adverse Effect on Numico or the Company or prevent (or materially delay) the
consummation of the Offer; or (vi) in the case of any of the foregoing
existing at the time of the commencement of the Offer, a material
acceleration or a worsening thereof; or
(e) (i) if the holders of Shares which are the subject of the
Shareholder Agreement shall have either (A) failed to tender in the Offer
(and not withdrawn) a majority of the outstanding Shares or (B) in any
material respect, failed to vote, failed to act by consent or have
interfered with or have frustrated the exercise of the rights conferred upon
the holders of proxies identified and set forth in the Shareholder
Agreement, or (ii) any of the representations and warranties of any such
party set forth in the Shareholder Agreement shall not be true in any
material respect, in each case, when made or at any time prior to the
consummation of the Offer as if made at and as of such time, or (iii) the
Shareholder Agreement shall have been invalidated or terminated with respect
to any Shares subject thereto; or
(f) the Board of Directors of the Company (or any special committee
thereof) shall have withdrawn or materially modified in any manner adverse
to Numico or the Purchaser its approval or recommendation of the Offer, the
Merger or the Merger Agreement; or
(g) the Company shall have entered into or shall have publicly announced
its intention to enter into, an agreement or agreement in principle with
respect to any Acquisition Proposal; or
(h) the Merger Agreement or the Shareholder Agreement shall have been
terminated in accordance with its terms.
The conditions set forth in clauses (a) through (h) are for the sole benefit
of Numico and the Purchaser and may be asserted by Numico and the Purchaser
regardless of the circumstances giving rise to such condition and may be waived
by Numico and the Purchaser in whole or in part at any time and from time to
time, by express and specific action to that effect in their sole discretion.
The failure by Numico or the Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances, and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
The capitalized terms used in this Section 12 shall have the meanings set
forth in the Merger Agreement.
13. SOURCE AND AMOUNT OF FUNDS.
The Offer is not conditioned upon obtaining any financing arrangements. The
Purchaser estimates that the total amount of funds required to purchase all of
the outstanding Shares on a fully diluted basis pursuant to the Offer and the
Merger, to pay related fees and expenses of Numico and the Purchaser and to
effect the Merger will be approximately $1.8 billion. The Purchaser will obtain
these funds from Numico, either directly or indirectly via Nutricia LP,
Nutricia, Inc. and/or Nutricia International, and/or any other wholly owned
subsidiary of Numico through loans, advances or capital contributions. Numico
currently intends to obtain such funds through a short-term bridge facility.
Numico is currently negotiating with various financial institutions with regard
to obtaining such a
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facility. To date, Numico has not accepted any commitment offers nor executed
any definitive financing agreements. If and when definitive agreements regarding
the financing of the Offer are executed, copies will be filed as exhibits to the
Schedule TO. Numico is confident it will be successful in arranging a short-term
bridge facility for the Offer. In the event Numico is unable to secure such a
facility with acceptable terms and conditions, it will investigate alternative
financing arrangements. Currently, Numico is in the process of identifying any
such alternative arrangements.
14. DIVIDENDS AND DISTRIBUTIONS.
Pursuant to the Merger Agreement, the Company shall not, and shall not
propose to, without the consent of Numico: (i) declare or pay any dividends on
or make other distributions in respect of any of its capital stock, (ii) split,
combine or reclassify any of its capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock, (iii) repurchase, redeem or
otherwise acquire any shares of its capital stock or any securities convertible
into or exercisable for any shares of its capital stock except as otherwise
permitted with respect to the payment of the option exercise price or tax
withholding under certain option agreements in effect on the date of the Merger
Agreement under the Company Equity Plans or (iv) effect any reorganization or
recapitalization.
Furthermore, until the Effective Time, the Company shall not, and shall
cause its subsidiaries not to, issue, pledge, dispose of or encumber, deliver or
sell, or authorize or propose the issuance, disposition, encumbrance, pledge,
delivery or sale of, any Shares of its capital stock of any class, any Company
Voting Debt or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such shares or Company Voting Debt,
or enter into any agreement with respect to any of the foregoing, other than the
issuance of Shares upon the exercise of stock options or rights to purchase
Shares outstanding on the date of the Merger Agreement in accordance with the
terms of the Company Equity Plans as in effect on the date of the Merger
Agreement.
15. CERTAIN LEGAL MATTERS.
GENERAL. Except as otherwise described herein, based on a review of
publicly available filings made by the Company with the SEC and other publicly
available information concerning the Company, neither Numico nor the Purchaser
is aware of any license or regulatory permit that appears to be material to the
business of the Company and its subsidiaries, taken as a whole, that might be
adversely affected by the Purchaser's acquisition of Shares pursuant to the
Offer or of any approval or other action by any governmental, administrative or
regulatory agency or authority that would be required for the acquisition or
ownership of Shares by the Purchaser pursuant to the Offer. Should any such
approval or other action be required, the Purchaser and Numico currently
contemplate that such approval or other action will be sought or taken. There
can be no assurance that any such approval or other action, if needed, would be
obtained or would be obtained without substantial conditions or that failure to
obtain any such approval or other action might not result in consequences
adverse to the Company's or Numico's business or that certain parts of the
Company's or Numico's business might not have to be disposed of in the event
such approvals were not obtained or such other actions were not taken, any of
which could cause the Purchaser to elect to terminate the Offer without the
purchase of Shares thereunder. The Purchaser's obligation under the Offer to
accept for payment and pay for Shares is subject to certain conditions. See
Section 12.
STATE TAKEOVER LAWS. The Company is subject to Section 607.0901 (the
"Affiliated Transactions Statute") of the FBCA. The Affiliated Transactions
Statute generally prohibits a Florida corporation from engaging in an
"affiliated transaction" with an "interested shareholder," unless the affiliated
transaction is approved by a majority of the disinterested directors or by the
affirmative vote of the holders of two-thirds of the voting shares other than
the shares beneficially owned by the interested shareholder, the corporation has
not had more than 300 shareholders of record at any time for three
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years prior to the public announcement relating to the affiliated transaction or
the corporation complies with certain statutory fair price provisions.
Subject to certain exceptions, under the FBCA an "interested shareholder" is
a person who beneficially owns more than 10% of the corporation's outstanding
voting shares. In general terms, an "affiliated transaction" includes: (i) any
merger or consolidation with an interested shareholder; (ii) the transfer to any
interested shareholder of corporate assets with a fair market value equal to 5%
or more of the corporation's consolidated assets or outstanding shares or
representing 5% or more of the corporation's earning power on net income;
(iii) the issuance to any interested shareholder of shares with a fair market
value equal to 5% or more of the aggregate fair market value of all outstanding
shares of the corporation; (iv) any reclassification of securities or corporate
reorganization that will have the effect of increasing by more than 5% the
percentage of the corporation's outstanding voting shares beneficially owned by
any interested shareholder; (v) the liquidation or dissolution of the
corporation if proposed by any interested shareholder; and (vi) any receipt by
the interested shareholder of the benefit of any loans, advances, guaranties,
pledges or other financial assistance or any tax credits or other tax advantages
provided by or through the corporation.
Because a majority of the disinterested directors of the Company's Board of
Directors has approved the Merger Agreement and the Shareholder Agreement and
the transactions contemplated thereby, the provisions of the Affiliated
Transactions Statute are not applicable to the Offer and the Merger and other
such transactions.
The Company is also subject to Section 607.0902 of the FBCA (the "Control
Share Acquisition Statute"). The Control Share Acquisition Statute provides that
shares of publicly held Florida corporations that are acquired in a "control
share acquisition" generally will have no voting rights unless such rights are
conferred on those shares by the vote of the holders of a majority of all the
outstanding shares other than interested shares. A control share acquisition is
defined, with certain exceptions, as the acquisition of the ownership of voting
shares which would cause the acquiror to have voting power within the following
ranges or to move upward from one range into another: (i) 20%, but less than
33 1/3%; (ii) 33 1/3%, but less than 50%; or (iii) 50% or more of such votes.
The Control Share Acquisition Statute does not apply to an acquisition of
shares of a publicly held Florida corporation (i) pursuant to a merger or share
exchange effected in compliance with the FBCA if the publicly held Florida
corporation is a party to the merger or share exchange agreement, or (ii) if
such acquisition has been approved by the board of directors of that corporation
before the acquisition.
Because the Control Share Acquisition Statute specifically exempts a merger
effected in compliance with the FBCA if the publicly held Florida corporation is
a party to the merger agreement and an acquisition which has been approved by
the board of directors before the acquisition, the provisions of the Control
Share Acquisition Statute are not applicable to the Offer or the Merger or the
Shareholder Agreement.
Except as described herein, the Purchaser has not attempted to comply with
any state takeover statutes in connection with the Offer. The Purchaser reserves
the right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer to Purchase nor any action
taken in connection with the Offer or the Merger is intended as a waiver of that
right. In the event that any state takeover statute is found applicable to the
Offer or the Merger, the Purchaser might be unable to accept for payment or pay
for Shares tendered pursuant to the Offer or be delayed in continuing or
consummating the Offer or the Merger. In such case, the Purchaser might not be
obligated to accept for payment or pay for any Shares tendered. See Section 12.
ANTITRUST COMPLIANCE. Under the HSR Act and the rules promulgated
thereunder by the Federal Trade Commission ("FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the "Antitrust
39
<PAGE>
Division") and the FTC and certain waiting period requirements have been
satisfied. The acquisition of the Shares by the Purchaser is subject to these
requirements.
Pursuant to the HSR Act, Numico filed a Notification and Report Form with
respect to the acquisition of Shares pursuant to the Offer and the Merger with
the Antitrust Division and the FTC on May 2, 2000. Under the provisions of the
HSR Act applicable to the purchase of Shares pursuant to the Offer, such
purchases may not be made until the expiration of a 15-calendar day waiting
period following the filing made by Numico. Accordingly, the waiting period
under the HSR Act will expire at 11:59 p.m., New York City time, on May 17,
2000, unless early termination of the waiting period is granted, or Numico
and/or the Company receives a request for additional information or documentary
material prior thereto. If either the FTC or the Antitrust Division were to make
such a request(s) for additional information or documentary material, the
waiting period would expire at 11:59 p.m., New York City time, on the tenth
calendar day after the date of substantial compliance with such request(s),
unless the waiting period is sooner terminated by the FTC or the Antitrust
Division. Thereafter, the waiting period could be extended only by agreement or
by court order. Only one extension of such waiting period pursuant to a request
for additional information is authorized by the rules promulgated under the HSR
Act, except by agreement or by court order. Any such extension of the waiting
period will not give rise to any withdrawal rights not otherwise provided for by
applicable law. See Section 4.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's acquisition of
Shares pursuant to the Offer, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger, or seeking the divestiture of Shares
acquired by the Purchaser, or the divestiture of substantial assets of the
Company or its subsidiaries, or of Numico or its subsidiaries. Private parties
also may bring legal action under the antitrust laws under certain
circumstances. There can be no assurance that a challenge to the Offer or the
Merger on antitrust grounds will not be made or, if such a challenge is made, of
the result thereof.
FOREIGN APPROVALS. The Company and Numico each own property or conduct
business in various foreign countries and jurisdictions. In connection with the
acquisition of the Shares pursuant to the Offer or the Merger, the laws of
certain of those foreign countries and jurisdictions may require the filing of
information with, or obtaining the approval of, governmental authorities in such
countries and jurisdictions. The governments in such countries and jurisdictions
might attempt to impose additional conditions on the Company's operations
conducted in such countries and jurisdictions as a result of the acquisition of
the Shares pursuant to the Offer. There can be no assurance that Numico will be
able to cause the Company or its subsidiaries to satisfy or comply with such
laws, or that compliance or noncompliance with such laws will not have a
material adverse effect on the financial condition, properties, business,
results of operations or prospects of the Company and its subsidiaries taken as
a whole, or will not impair the Company, or any of their respective affiliates,
following consummation of the Offer or the Merger, to conduct any material
business or operations in any jurisdiction where they now are being conducted.
See Section 12 of this Offer to Purchase for certain conditions to the Offer
that could become applicable in the event that any such foreign approvals give
rise to the above-described effects.
16. FEES AND EXPENSES.
Salomon Smith Barney is acting as Dealer Manager for the Offer and as
financial advisor to Numico in connection with Numico's proposed acquisition of
the Company, for which services Salomon Smith Barney will receive customary
compensation. Numico also has agreed to reimburse Salomon Smith Barney for
reasonable costs and expenses, including reasonable fees and expenses of its
legal counsel, and to indemnify Salomon Smith Barney and certain related parties
against certain liabilities,
40
<PAGE>
including liabilities under the federal securities laws, arising out of its
engagement. In the ordinary course of business, Salomon Smith Barney and its
affiliates may actively trade or hold the securities of Numico and the Company
for their own account or for the account of customers and, accordingly, may at
any time hold a long or short position in such securities.
The Purchaser has also retained Innisfree M&A Incorporated to act as the
Information Agent in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telephone, telex, facsimile, telegraph and
personal interviews and may request brokers, dealers and other nominee
shareholders to forward materials relating to the Offer to beneficial owners of
Shares. The Information Agent will receive reasonable and customary compensation
for such services, plus reimbursement of out-of-pocket expenses. The Purchaser
will also indemnify the Information Agent against certain liabilities and
expenses in connection with the Offer, including liabilities under the federal
securities laws.
The Purchaser will pay the Depositary reasonable and customary compensation
for its services in connection with the Offer, plus reimbursement for
out-of-pocket expenses, and will indemnify the Depositary against certain
liabilities and expenses in connection therewith, including liabilities under
the federal securities laws. Brokers, dealers, commercial banks and trust
companies will be reimbursed by the Purchaser for customary mailing and handling
expenses incurred by them in forwarding material to their customers.
17. LEGAL PROCEEDINGS.
On May 1, 2000, a shareholder of the Company filed an action in the Circuit
Court of the 15th Judicial Circuit, in and for Palm Beach County, Florida,
against the Company and its directors seeking, among other remedies, to enjoin
the Merger. The complaint alleges that the individual defendants failed to
exercise ordinary care and diligence in the exercise of their fiduciary
obligations toward the plaintiff and the other Company shareholders. The
substantive allegations contained in the complaint include (i) that while the
plaintiff and other public shareholders are cashed out in the Merger, Damon
DeSantis and numerous other Company executives have signed new employment
contracts with Numico and will remain with the combined entity, and (ii) the
consideration being offered to plaintiff and the other public shareholders is
inadequate because it did not result from an appropriate consideration of the
value of the Company, as the directors were presented with and asked to evaluate
the proposed Merger without any attempt to ascertain the true value of the
Company through open bidding or a market check mechanism. The plaintiff has
requested that the lawsuit be maintained as a class action on behalf of himself
and all holders of Shares other than the named defendants and any of their
affiliates, that the directors of the Company be directed to maximize
shareholder value and resolve all conflicts of interest in the best interests of
the shareholders, and that the defendants be enjoined from consummating the
transactions until defendants adopt and implement a procedure or process to
obtain the highest price possible for the Shares.
Numico has been informed by representatives of the Company that the Company
believes the complaint to be without basis in fact or law and intends to oppose
the litigation vigorously. Although Numico is not a party to this action, Numico
anticipates that the litigation will continue and that other similar claims may
be brought in the future relating to the Offer and the Merger. No assurances can
be given as to the outcome or effect of the foregoing or any possible future
litigation on the Offer, the Merger, the Company or Numico.
18. MISCELLANEOUS.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, the Purchaser may, in its sole discretion, take
41
<PAGE>
such action as it may deem necessary to make the Offer in any such jurisdiction
and extend the Offer to holders of Shares in such jurisdiction. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of the Purchaser by the Dealer Manager or by one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
Neither the Purchaser nor Numico is aware of any jurisdiction in which the
making of the Offer or the acceptance of Shares in connection therewith would
not be in compliance with the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR NUMICO NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser and Numico have filed with the SEC the Schedule TO pursuant to
Rule 14d-3 under the Exchange Act, together with exhibits, furnishing certain
additional information with respect to the Offer, and may file amendments
thereto. The Schedule TO and any amendments thereto, including exhibits, may be
examined and copies may be obtained from the principal office of the SEC in
Washington, D.C., in the manner set forth in Section 8.
NUTRICIA INVESTMENT CORP.
May 5, 2000
42
<PAGE>
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS OF
NUMICO, THE PURCHASER, NUTRICIA LP, NUTRICIA, INC.
NUTRICIA INTERNATIONAL
KONINKLIJKE NUMICO N.V. ("Numico") and
NUTRICIA INTERNATIONAL B.V. ("Nutricia International")
The following table sets forth the name, business address, present principal
occupation or employment and five-year employment history of each of the
directors and executive officers of Nutricia International. Each person has a
business address at Rokkeveenseweg 49, 2712 PJ Zoetermeer, P.O. Box 1, 2700 MA
Zoetermeer, the Netherlands, and is a citizen of the Netherlands, unless a
different business address and/or citizenship is indicated under his or her
name. Directors are indicated by an asterisk.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY
- ---- ----------------------------------------------------------
<S> <C>
Erlend Jan van der Hagen*.............. Chairman of the Supervisory Board of Numico and Nutricia
International since January 1992. Mr. van der Hagen is
also Chairman of the Supervisory Board of Hagemeijer N.V.
Petrus Adrianus Wilhelmus Roef*........ Member of the Supervisory Board of Numico and Nutricia
International since May 1987. Mr. Roef is also a member of
the Supervisory Board of Hagemeijer N.V., VNU N.V., Gamma
Holding N.V., Parcon N.V. and Robeco N.V.
Ellis Joost Ruitenberg*................ Member of the Supervisory Board of Numico and Nutricia
International since May 1996. Mr. Ruitenberg has also
served as the General and Scientific Manager of Central
Blood Transfusion Laboratories of the Red Cross in
Amsterdam for the past five years.
Robert Zwartendijk*.................... Member of the Supervisory Board of Numico and Nutricia
International since May 1998. Mr. Zwartendijk served as a
member of the Board of Managing Directors of Koninklijke
Ahold N.V. from 1981 until his retirement in May 1999. Mr.
Zwartendijk also holds the following positions: Chairman
of the Supervisory Boards of Nutreco Holding N.V. and
Blokker Holding N.V., a member of the Supervisory Boards
of Buhrmann N.V., Randstad Holdings N.V. and Innoconcepts
N.V., and a member of the Board of Telepanel Systems Inc.,
Lincoln Snacks, Luis Paez, Disco Ahold International
Holdings N.V. and Ahold Supermercados.
Cornelius Johannes Brakel*............. Member of the Supervisory Board of Numico and Nutricia
International since May 1999. Mr. Brakel was Chairman and
Chief Executive Officer of Wolters Kluwer from 1991 to May
1999. Mr. Brakel also holds the following positions:
Chairman of the Executive Board of Wolters Kluwer N.V.;
Chairman of the Supervisory Board of Kappa Packaging
Nederland B.V., Bols Royal Distilleries and Unique
International N.V.; member of the Supervisory Board of
Maxeres N.V. and Kempen & Co. N.V.
Johannes C. T. van der Wielen.......... President, Chief Executive Officer of Numico and Nutricia
International since January 1992 and member of the
Executive Board of Numico and Nutricia International since
January 1989. Mr. van der Wielen is also a member of the
Supervisory Boards of Maxeres Holding N.V., Gouda Vuurvast
Holding N.V. and Benckiser N.V. In addition, he is a
member of "Raad van Bestuur" Telindus B.V., a member of
the Advisory Board of ABN AMRO, Chairman of "Stichting
Continuiteit Wolters Kluwer" and a director of Numico
National B.V.
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY
- ---- ----------------------------------------------------------
<S> <C>
Philippe J.M. Misteli.................. Chief Financial Officer and a member of the Executive
Board of Numico and Nutricia International since
May 2000. From July 1997 to May 2000, Mr. Misteli served
as the Chief Financial Officer and a member of the
Executive Board of Euro Disney. Prior to that, Mr. Misteli
held various positions with Unilever, including Chief
Financial Officer North American Division and Head of
Commercial Services.
</TABLE>
A-2
<PAGE>
NUTRICIA INVESTMENT CORP. ("Purchaser")
The following table sets forth the name, business address, present
occupation or employment and five-year employment history of the sole director
and executive officer of Nutricia Investment Corp. The person listed below has a
business address at Rokkeveenseweg 49, 2712 PJ Zoetermeer, P.O. Box 1, 2700 MA
Zoetermeer, the Netherlands and is a citizen of the Netherlands.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY
- ---- ----------------------------------------------------------
<S> <C>
Julitte van der Ven.................... President and director of Nutricia Investment Corp. since
its inception on April 28, 2000. Mrs. van der Ven is also
General Counsel for Numico, a position she has held since
July 1989. In addition, she is the sole director and
executive officer of Nutricia Florida, Inc., Nutricia
Delaware, Inc., a Delaware corporation ("Nutricia
Delaware, Inc.") and Numico, Inc., a Delaware corporation
("Numico, Inc.").
</TABLE>
A-3
<PAGE>
NUTRICIA FLORIDA, L.P. ("Nutricia LP") and NUTRICIA FLORIDA, INC.
("Nutricia, Inc.")
The following table sets forth name, business address, present occupation or
employment and five-year employment history of the sole director and executive
officer of Nutricia, Inc. Nutricia, Inc. is the sole general partner of
Nutricia LP. The person listed below has a business address at Rokkeveenseweg
49, 2712 PJ Zoetermeer, P.O. Box 1, 2700 MA Zoetermeer, the Netherlands and is a
citizen of the Netherlands.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY
- ---- ----------------------------------------------------------
<S> <C>
Julitte van der Ven.................... President and director of Nutricia, Inc. since its
inception on April 28, 2000. Mrs. van der Ven is also
General Counsel for Numico, a position she has held since
July 1989. In addition, she is the sole director and
executive officer of the Purchaser, Nutricia Delaware,
Inc. and Numico, Inc.
</TABLE>
A-4
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal, properly
completed and duly signed, will be accepted. The Letter of Transmittal,
certificates for the Shares and any other required documents should be sent or
delivered by each shareholder of the Company or such shareholder's broker,
dealer, commercial bank, trust company or other nominee to the Depositary as
follows:
<TABLE>
<S> <C> <C>
THE DEPOSITARY FOR THE OFFER IS:
WILMINGTON TRUST COMPANY
FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
BY MAIL: (FOR ELIGIBLE INSTITUTIONS Wilmington Trust Company
Corporate Trust Operations ONLY) 1105 North Market Street,
Wilmington Trust Company (302) 651-1079 First Floor
1100 North Market Street Wilmington, DE 19801
Rodney Square North FOR CONFIRMATION TELEPHONE: Attn: Corporate Trust
Wilmington, DE 19890-0001 (302) 651-8869 Operations
</TABLE>
Any questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective telephone numbers and locations
listed below. Requests for additional copies of this Offer to Purchase, the
Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to
the Information Agent. You may also contact your broker, dealer, commercial bank
or trust company or other nominee for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
501 MADISON AVENUE, 20TH FLOOR
NEW YORK, NEW YORK 10022
(212) 750-5833 (CALL COLLECT)
OR
CALL TOLL-FREE (888) 750-5834
THE DEALER MANAGER FOR THE OFFER IS:
Salomon Smith Barney
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
CALL TOLL-FREE (877) 755-4456
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
REXALL SUNDOWN, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED MAY 5, 2000
BY
NUTRICIA INVESTMENT CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
KONINKLIJKE NUMICO N.V.
(ROYAL NUMICO)
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, JUNE 2, 2000, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
This Letter of Transmittal, the certificates for Shares (as defined below)
and any other required documents should be sent or delivered by each shareholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary (as defined below) at one of its addresses set forth
below.
THE DEPOSITARY FOR THE OFFER IS:
WILMINGTON TRUST COMPANY
<TABLE>
<S> <C> <C>
BY MAIL: FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
Corporate Trust Operations (FOR ELIGIBLE INSTITUTIONS ONLY) Wilmington Trust Company
Wilmington Trust Company (302) 651-1079 1105 North Market Street, First Floor
1100 North Market Street Rodney Square North
Rodney Square North FOR CONFIRMATION TELEPHONE: Wilmington, DE 19801
Wilmington, DE 19890-0001 (302) 651-8869 Attn: Corporate Trust Operations
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY. YOU MUST SIGN THIS
LETTER OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9
PROVIDED BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used either if certificates are to be
forwarded herewith or, unless an Agent's Message (as defined in Section 3 of the
Offer to Purchase (as defined below)) is utilized, if delivery is to be made by
book-entry transfer to the Depositary's account at The Depository Trust Company
(the "Book-Entry Transfer Facility"), pursuant to the procedures set forth in
Section 3 of the Offer to Purchase. Shareholders who deliver Shares by
book-entry transfer are referred to herein as "Book-Entry Shareholders" and
other shareholders are referred to herein as "Certificate Shareholders."
Shareholders whose certificates for Shares are not immediately available or who
cannot comply with the procedure for book-entry transfer on a timely basis, or
who cannot deliver all required documents to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase), may tender
their Shares in accordance with the guaranteed delivery procedure set forth in
Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO
THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DESCRIPTION OF SHARES TENDERED
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of RegisterSharelCertificates and Shares Tendered
(Please fill in, if blank, exactly as name(s) app(Attachoadditionalalist)if necessary)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Certificate Total Number of Number of Shares
Number(s)(1) Shares Tendered(2)
Represented by
Certificate(s)(1)
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
Total shares
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(1) Need not be completed by Book-Entry Shareholders.
(2) Unless otherwise indicated, it will be assumed that all Shares described
above are being tendered. See Instruction 4.
/ / CHECK HERE IF CERTIFICATE HAS BEEN LOST OR DESTROYED. SEE INSTRUCTION 11.
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY
TRANSFER FACILITY, AND COMPLETE THE FOLLOWING (ONLY FINANCIAL INSTITUTIONS
THAT ARE PARTICIPANTS IN THE SYSTEM OF THE BOOK-ENTRY TRANSFER FACILITY MAY
DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution: _____________________________________________
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY, ENCLOSE A PHOTOCOPY
OF SUCH NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s): ____________________________________________
Date of Execution of Notice of Guaranteed Delivery: ________________________
Name of Institution which Guaranteed Delivery: _____________________________
If delivered by book-entry transfer, check box: / /
Name of Tendering Institution: _____________________________________________
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Nutricia Investment Corp., a Florida
corporation (the "Purchaser") and an indirect wholly owned subsidiary of
Koninklijke Numico N.V., a company incorporated under the laws of the
Netherlands ("Numico"), the above-described shares of common stock, par value
$0.01 per share (the "Shares"), of Rexall Sundown, Inc., a Florida corporation
(the "Company"), pursuant to the Offer to Purchase dated May 5, 2000 (as amended
or supplemented from time to time, the "Offer to Purchase"), all outstanding
Shares at $24.00 per Share, net to the seller in cash, without interest thereon,
less any required tax withholding, upon the terms and subject to the conditions
set forth in the Offer to Purchase, receipt of which is hereby acknowledged, and
in this Letter of Transmittal (the "Letter of Transmittal," which, together with
the Offer to Purchase, as each may be amended or supplemented from time to time,
collectively constitute the "Offer"). The undersigned understands that the
Purchaser reserves the right to transfer or assign, from time to time, in whole
or in part, to one or more of its affiliates, the right to purchase the Shares
tendered herewith.
On the terms and subject to the conditions of the Offer (including the
conditions set forth in Section 12 of the Offer to Purchase and together with,
if the Offer is extended or amended, the terms and conditions of such extension
or amendment), subject to, and effective upon, acceptance for payment of, and
payment for, the Shares tendered herewith in accordance with the terms of the
Offer, the undersigned hereby sells, assigns and transfers to, or upon the order
of, the Purchaser, all right, title and interest in and to all of the Shares
being tendered hereby and any and all cash dividends, distributions, rights,
other Shares or other securities issued or issuable in respect of such Shares
(including, without limitation, the issuance of additional Shares pursuant to a
stock dividend or stock split, or the issuance of other rights) that is declared
or paid by the Company on or after April 30, 2000 (collectively,
"Distributions"), and irrevocably appoints Wilmington Trust Company (the
"Depositary") the true and lawful agent and attorney-in-fact of the undersigned
with respect to such Shares (and any Distributions), with full power of
substitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest), to the fullest extent of such shareholder's rights
with respect to such Shares (and any Distributions) (a) to deliver such Share
Certificates (as defined herein) (and any Distributions) or transfer ownership
of such Shares (and any Distributions) on the account books maintained by the
Book-Entry Transfer Facility, together in either such case with all accompanying
evidences of transfer and authenticity, to or upon the order of the Purchaser,
(b) to present such Shares (and any Distributions) for transfer on the books of
the Company and (c) to receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares (and any Distributions), all in accordance
with the terms and the conditions of the Offer.
The undersigned hereby irrevocably appoints the designees of the Purchaser,
and each of them, the attorneys-in-fact and proxies of the undersigned, each
with full power of substitution, to the full extent of such shareholder's rights
with respect to the Shares tendered hereby which have been accepted for payment
by the Purchaser and with respect to any Distributions. The designees of the
Purchaser will, with respect to the Shares (and any associated Distributions)
for which the appointment is effective, be empowered to exercise all voting and
any other rights of such shareholder, as they, in their sole discretion, may
deem proper at any annual, special or adjourned meeting of the Company's
shareholders, by written consent in lieu of any such meeting or otherwise. This
proxy and power of attorney shall be irrevocable and coupled with an interest in
the tendered Shares. Such appointment is effective when, and only to the extent
that, the Purchaser accepts such Shares for payment pursuant to the Offer. Upon
the effectiveness of such appointment, without further action, all prior powers
of attorney, proxies and consents given by the undersigned with respect to such
Shares (and any associated Distributions) will be revoked, and no subsequent
powers of attorney, proxies, consents or revocations may be given (and, if
given, will not be deemed effective). The Purchaser reserves the right to
require that, in order for Shares to be deemed validly tendered, immediately
upon the Purchaser's acceptance for payment for such Shares, the Purchaser must
be able to exercise full voting rights with respect to such Shares (and any
associated Distributions), including voting at any meeting of shareholders.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares (and any
Distributions) tendered hereby and, when the same are accepted for payment by
the Purchaser, the Purchaser will acquire good, marketable and unencumbered
title thereto, free and clear of all liens, restrictions, charges and
encumbrances, and the same will not be subject to any adverse claim. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Depositary or the Purchaser to be necessary or desirable to
complete the sale, assignment and transfer of the Shares (and any Distributions)
tendered hereby. In addition, the undersigned shall promptly remit and transfer
to the Depositary for
1
<PAGE>
the account of the Purchaser any and all Distributions in respect of the Shares
tendered hereby, accompanied by appropriate documentation of transfer, and,
pending such remittance or appropriate assurance thereof, the Purchaser shall be
entitled to all rights and privileges as owner of any such Distributions, and
may withhold the entire purchase price or deduct from the purchase price the
amount or value thereof, as determined by the Purchaser in its sole discretion.
All authority conferred or agreed to be conferred pursuant to this Letter of
Transmittal shall not be affected by, and shall survive, the death or incapacity
of the undersigned, and any obligation of the undersigned hereunder shall be
binding upon the heirs, personal representatives, successors and assigns of the
undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable.
The undersigned understands that the valid tender of Shares pursuant to one
of the procedures described in Section 3 of the Offer to Purchase and the
Instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer,
including, without limitation, the undersigned's representation and warranty
that the undersigned owns the Shares being tendered hereby. The undersigned
recognizes that under certain circumstances set forth in the Offer to Purchase,
the Purchaser may not be required to accept for payment any of the Shares
tendered hereby. The undersigned acknowledges that no interest will be paid on
the purchase price for tendered Shares regardless of any extension of the Offer
or any delay in making such payment.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any certificates for
Shares not tendered or not accepted for payment in the name(s) of the registered
owner(s) appearing under "Description of Shares Tendered." Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail the check
for the purchase price and/or return any certificates for Shares not tendered or
not accepted for payment (and accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing under "Description of Shares
Tendered." In the event that both the Special Delivery Instructions and the
Special Payment Instructions are completed, please issue the check for the
purchase price and/or issue any certificates for Shares not tendered or not
accepted for payment (and any accompanying documents, as appropriate) in the
name of, and deliver such check and/or return such certificates (and any
accompanying documents, as appropriate) to, the person or persons so indicated.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please credit any Shares tendered hereby and delivered by
book-entry transfer, but which are not purchased by crediting the account at the
Book-Entry Transfer Facility. The undersigned recognizes that the Purchaser has
no obligation pursuant to the Special Payment Instructions to transfer any
Shares from the name of the registered holder thereof if the Purchaser does not
accept for payment any of the Shares so tendered.
- ------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificate(s) for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment (less the amount of any federal income tax required to
be withheld) are to be issued in the name of someone other than the
undersigned.
Issue: / / Check / / Certificate(s) to:
Name: ______________________________________________________________________
(Please Print)
Address: ___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
(Include Zip Code)
__________________________________________________________________________
(Tax Identification or Social Security No.
(See Substitute Form W-9))
- --------------------------------------------------------------------
- --------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5 AND 7)
To be completed ONLY if certificate(s) for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment (less the amount of any federal income tax required to
be withheld) are to be sent to someone other than the undersigned, or to the
undersigned at an address other than that shown above.
Deliver: / / Check / / Certificate(s) to:
Name: ______________________________________________________________________
(Please Print)
Address: ___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
(Include Zip Code)
------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
IMPORTANT
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
X __________________________________________________________________________
X __________________________________________________________________________
(Signature(s) of Holder(s))
Dated: _____________, 2000
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, please set forth
full title and see Instruction 5.)
Name(s): ___________________________________________________________________
(Please type or print)
Capacity (Full Title): _____________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
(Including zip code)
Area Code and Telephone No.: _______________________________________________
Tax Identification or Social Security No.: _________________________________
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: ______________________________________________________
Name: ______________________________________________________________________
(Please type or print)
Address: ___________________________________________________________________
____________________________________________________________________________
(Including zip code)
Full Title and Name of Firm: _______________________________________________
(Please type or print)
Address of Firm: ___________________________________________________________
____________________________________________________________________________
(Including zip code)
Area Code and Telephone No.: _______________________________________________
Dated: _____________, 2000
- --------------------------------------------------------------------------------
3
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a financial
institution (including most commercial banks, savings and loan associations and
brokerage houses) that is a participant in the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program (each, an "Eligible
Institution"). Signatures on this Letter of Transmittal need not be guaranteed
(a) if this Letter of Transmittal is signed by the registered holders (which
term, for purposes of this document, includes any participant in the Book-Entry
Transfer Facility's system whose name appears on a security position listing as
the owner of the Shares) of Shares tendered herewith and such registered owner
has not completed the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on this Letter of Transmittal, or
(b) if such Shares are tendered for the account of an Eligible Institution. See
Instruction 5 of this Letter of Transmittal.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES OR BOOK-ENTRY
CONFIRMATIONS. This Letter of Transmittal is to be used either if certificates
are to be forwarded herewith or if tenders are to be made pursuant to the
procedures for tender by book-entry transfer set forth in Section 3 of the Offer
to Purchase. Certificates for all physically tendered Shares ("Share
Certificates"), or confirmation of any book-entry transfer ("Book-Entry
Confirmation") into the Depositary's account at the Book-Entry Transfer Facility
of Shares tendered by book-entry transfer, as well as this Letter of Transmittal
(or a manually signed facsimile hereof), properly completed and duly executed
with any required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message), and any other documents required by this Letter
of Transmittal, must be received by the Depositary at one of its addresses set
forth herein on or prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase).
Shareholders whose certificates for Shares are not immediately available or
who cannot deliver all other required documents to the Depositary on or prior to
the Expiration Date, or who cannot comply with the procedures for book-entry
transfer on a timely basis, may nevertheless tender their Shares by properly
completing and duly executing a Notice of Guaranteed Delivery pursuant to the
guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
Pursuant to such procedure: (i) such tender must be made by or through an
Eligible Institution; (ii) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form provided by the Purchaser, must
be received by the Depositary prior to the Expiration Date; and (iii) Share
Certificates, in proper form for transfer (or a Book-Entry Confirmation with
respect to all Shares), together with a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof), with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message), and all other documents required by this Letter of
Transmittal, must be received by the Depositary within three Nasdaq National
Market trading days after the date of execution of such Notice of Guaranteed
Delivery all as provided in Section 3 of the Offer to Purchase.
If Share Certificates are forwarded separately to the Depositary, a properly
completed and duly executed Letter of Transmittal must accompany each such
delivery.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT
THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. THE DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF A
BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF SUCH DELIVERY IS BY MAIL,
IT IS RECOMMENDED THAT SUCH CERTIFICATES AND DOCUMENTS BE SENT BY REGISTERED
MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering shareholders, by execution of
this Letter of Transmittal (or manually signed facsimile thereof), waive any
right to receive any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
signed schedule attached hereto.
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE SHAREHOLDERS ONLY). If fewer
than all the Shares evidenced by any certificate submitted are to be tendered,
fill in the number of Shares that are to be tendered in the box entitled "Number
of Shares Tendered." In such cases, new certificate(s) for the remainder of the
Shares that were evidenced by the old certificate(s) will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the Expiration Date. All
Shares represented by certificates delivered to the Depositary will be deemed to
have been tendered unless otherwise indicated.
4
<PAGE>
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without alteration, enlargement or any other
change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to, or
certificates for Shares not tendered or not accepted for payment are to be
issued in the name of, a person other than the registered holder(s), in which
case the certificate(s) evidencing the Shares tendered hereby must be endorsed
or accompanied by appropriate stock powers, in each case signed exactly as the
name(s) of the registered holder(s) appear(s) on such certificate(s). Signatures
on such certificates or stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificates(s) listed, the certificate(s) must be
endorsed or accompanied by the appropriate stock powers, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the certificate(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact, agent,
officer of a corporation or any person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to the Purchaser of such person's authority so to act must be
submitted.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay any stock transfer taxes with respect to the transfer and
sale of Shares to it or its order pursuant to the Offer. If, however, payment of
the purchase price is to be made to, or (in the circumstances permitted hereby)
if certificates for Shares not tendered or accepted for payment are to be
registered in the name of, any person other than the registered holder, or if
tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder or such person) payable on
account of the transfer to such person will be deducted from the purchase price
if satisfactory evidence of the payment of such taxes, or exemption therefrom,
is not submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price is to be issued in the name of, and/or certificates for Shares not
tendered or not accepted for payment are to be issued or returned to, a person
other than the signer of this Letter of Transmittal or if a check and/or such
certificates are to be mailed to a person other than the signer of this Letter
of Transmittal or to an address other than that shown above, the appropriate
boxes on this Letter of Transmittal should be completed. Shareholders tendering
Shares by book-entry transfer may request that Shares not purchased be credited
to such account at the Book-Entry Transfer Facility as such shareholder may
designate under "Special Payment Instructions." If no such instructions are
given, any such Shares not purchased will be returned by crediting the account
designated above at the Book-Entry Transfer Facility.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions and
requests for assistance may be directed to the Information Agent or the Dealer
Manager at their respective telephone numbers and locations listed below.
Requests for additional copies of the Offer to Purchase, this Letter of
Transmittal and the Notice of Guaranteed Delivery may be directed to the
Information Agent. You may also contact your broker, dealer, commercial bank,
trust company or other nominee for assistance concerning the Offer.
9. BACKUP FEDERAL INCOME TAX WITHHOLDING AND SUBSTITUTE FORM W-9. Under
the "backup withholding" provisions of U.S. Federal tax law, the Depositary may
be required to withhold 31% of the purchase price of Shares purchased pursuant
to the Offer. To prevent backup withholding, each tendering shareholder should
complete and sign the Substitute Form W-9 included in this Letter of
Transmittal, and either: (a) provide the shareholder's correct taxpayer
identification number ("TIN") and certify, under penalties of perjury, that the
TIN provided is correct (or that such shareholder is awaiting a TIN), and that
(i) the shareholder has not been notified by the Internal Revenue Service
("IRS") that the shareholder is subject to backup withholding as a result of
failure to report all interest or dividends, or (ii) the IRS has notified the
shareholder that the shareholder is no longer subject to backup withholding;
5
<PAGE>
or (b) provide an adequate basis for exemption. If "Applied for" is written in
Part I of the substitute Form W-9, the Depositary will retain 31% of any payment
of the purchase price for tendered Shares during the 60-day period following the
date of the Substitute Form W-9. If the shareholder furnishes the Depositary
with his or her TIN within 60 days of the date of the Substitute W-9, the
Depositary will remit such amount retained during the 60-day period to the
shareholder, and no further amounts will be retained or withheld from any
payment made to the shareholder thereafter. If, however, the shareholder has not
provided the Depositary with his or her TIN within such 60-day period, the
Depositary will remit such previously retained amounts to the IRS as backup
withholding and shall withhold 31% of any payment of the purchase price for the
tendered Shares made to the shareholder thereafter unless the shareholder
furnishes a TIN to the Depositary prior to such payment. In general, an
individual's TIN is the individual's Social Security Number. If a certificate
for tendered Shares is registered in more than one name or is not in the name of
the actual owner, consult the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report. If the Depositary is not provided with the correct TIN or an
adequate basis for exemption, the shareholder may be subject to a $50 penalty
imposed by the IRS and backup withholding at a rate of 31%. Certain holders
(including, among others, certain corporations and certain foreign individuals)
are not subject to these backup withholding and reporting requirements. Exempt
holders should indicate their exempt status on the Substitute Form W-9.
Additionally, in order to satisfy the Depositary that a foreign individual
qualifies as an exempt recipient, such foreign individual must submit a
statement (generally, IRS Form W-8), signed under penalties of perjury,
attesting to that individual's exempt status. A form for such statements can be
obtained from the Depositary.
If payment for tendered Shares is to be made, pursuant to Special Payment
Instructions, to a person other than the tendering shareholder, backup
withholding will apply unless such other person, rather than the tendering
shareholder, complies with the procedures described above to avoid backup
withholding.
For further information concerning backup withholding and instructions for
completing the Substitute Form W-9 (including how an individual who does not
have a TIN can obtain one and how to complete the Substitute Form W-9 if Shares
are held in more than one name), consult the Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 attached to this Letter of
Transmittal.
Failure to complete the Substitute Form W-9 will not, by itself, cause
Shares to be deemed invalidly tendered, but may require the Depositary to
withhold 31% of the amount of any payments for such Shares. Backup withholding
is not an additional federal income tax. Rather, the federal income tax
liability of a person subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained, provided the appropriate returns are filed with the IRS.
10. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by the
Purchaser (subject to certain limitations), in whole or in part, at any time or
from time to time, in the Purchaser's sole discretion in accordance with
Section 12 of the Offer to Purchase.
11. LOST OR DESTROYED CERTIFICATES. If any Certificate(s) representing
Shares has (have) been lost or destroyed, the holders should promptly notify the
Company's Transfer Agent, American Stock Transfer and Trust Company, at
(800) 937-5449. The holders will then be instructed as to the procedure to be
followed in order to replace the Certificate(s). This Letter of Transmittal and
related documents cannot be processed until the procedures for replacing lost or
destroyed Certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE THEREOF
(TOGETHER WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL
OTHER REQUIRED DOCUMENTS) OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED
BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE.
6
<PAGE>
<TABLE>
<C> <S> <C>
- ------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE Name: Individual / /
FORM W-9 Address: Partnership / /
DEPARTMENT OF THE TREASURY Corporation / /
INTERNAL REVENUE SERVICE Other (specify) / /
REQUEST FOR TAXPAYER
IDENTIFICATION
NUMBER (TIN) AND CERTIFICATION
- ------------------------------------------------------------------------------------------------------------------------
PART I. PLEASE PROVIDE YOUR TAXPAYER IDENTIFICATION NUMBER IN THE SPACE AT SSN:
RIGHT AND CERTIFY BY SIGNING AND DATING BELOW. IF AWAITING TIN, OR
WRITE "APPLIED FOR." EIN:
- ------------------------------------------------------------------------------------------------------------------------
PART II. FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING. SEE THE ENCLOSED "GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9."
- ------------------------------------------------------------------------------------------------------------------------
CERTIFICATION--UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
(1) THE NUMBER SHOWN ON THIS FORM IS MY CORRECT TAXPAYER IDENTIFICATION NUMBER (OR I AM WAITING FOR A NUMBER TO BE
ISSUED TO ME); AND
(2) I AM NOT SUBJECT TO BACKUP WITHHOLDING EITHER BECAUSE: (A) I AM EXEMPT FROM BACKUP WITHHOLDING, OR (B) I HAVE NOT
BEEN NOTIFIED BY THE IRS THAT I AM SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A FAILURE TO REPORT ALL INTEREST OR
DIVIDENDS, OR (C) THE IRS HAS NOTIFIED ME THAT I AM NO LONGER SUBJECT TO BACKUP WITHHOLDING; AND
(3) ANY OTHER INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have been notified by the IRS that you are subject
to backup withholding because of underreporting interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you
are no longer subject to backup withholding, do not cross out item (2).
Signature
Date: , 2000
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN IRS PENALTIES AND
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING
(OR WILL SOON APPLY FOR) A TAXPAYER IDENTIFICATION NUMBER.
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has not been issued to
me, and either (i) I have mailed or delivered an application to receive a taxpayer identification number
to the appropriate Internal Revenue Service Center or Social Security Administration Office, or (ii) I
intend to mail or deliver an application in the near future. I understand that if I do not provide a
taxpayer identification number by the time of payment, 31% of all reportable payments made to me will be
withheld until I provide a taxpayer identification number to the Depositary.
Date: , 2000
Signature
Name (Please Print)
- --------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
Manually signed facsimile copies of this Letter of Transmittal, properly
completed and duly signed, will be accepted. This Letter of Transmittal,
certificates for Shares and any other required documents should be sent or
delivered by each shareholder of the Company or such shareholder's broker,
dealer, commercial bank, trust company or other nominee to the Depositary at one
of its addresses set forth below.
THE DEPOSITARY FOR THE OFFER IS:
WILMINGTON TRUST COMPANY
<TABLE>
<S> <C> <C>
BY MAIL: FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
Corporate Trust Operations (For Eligible Institutions Only) Wilmington Trust Company
Wilmington Trust Company (302) 651-1079 1105 North Market Street, First Floor
1100 North Market Street Market Square North
Market Square North FOR CONFIRMATION TELEPHONE: Wilmington, DE 19801
Wilmington, DE 19890-0001 (302) 651-8869 Attn: Corporate Trust Operations
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
Any questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective telephone numbers and locations
listed below. Requests for additional copies of the Offer to Purchase, this
Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to
the Information Agent. You may also contact your broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
501 MADISON AVENUE, 20TH FLOOR
NEW YORK, NEW YORK 10022
(212) 750-5833 (CALL COLLECT)
OR
CALL TOLL-FREE (888) 750-5834
THE DEALER MANAGER FOR THE OFFER IS:
Salomon Smith Barney
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
CALL TOLL-FREE (877) 755-4456
8
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
REXALL SUNDOWN, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED MAY 5, 2000
OF
NUTRICIA INVESTMENT CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
KONINKLIJKE NUMICO N.V.
(ROYAL NUMICO)
As set forth in Section 3 of the Offer to Purchase (as defined below), this
form or one substantially equivalent may be used to accept the Offer (as defined
below) if certificates for shares of common stock, par value $0.01 per share
(the "Shares"), of Rexall Sundown, Inc., a Florida corporation (the "Company"),
are not immediately available, or if the procedure for book-entry transfer
cannot be complied with on a timely basis, or all required documents cannot be
delivered to the Depositary prior to the Expiration Date (as defined in
Section 1 of the Offer to Purchase). This form may be delivered by hand or
overnight courier to the Depositary or transmitted by telegram, telex, facsimile
or mail to the Depositary and must include a guarantee by an Eligible
Institution (as defined in Section 3 of the Offer to Purchase). See Section 3 of
the Offer to Purchase.
<TABLE>
<S> <C> <C>
THE DEPOSITARY FOR THE OFFER IS:
WILMINGTON TRUST COMPANY
BY MAIL: FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER:
Corporate Trust Operations (FOR ELIGIBLE INSTITUTIONS Wilmington Trust Company
Wilmington Trust Company ONLY) 1105 North Market Street
1100 North Market Street (302) 651-1079 First Floor
Rodney Square North Rodney Square North
Wilmington, DE 19890-0001 FOR CONFIRMATION TELEPHONE: Wilmington, DE 19801
(302) 651-8869 Attn: Corporate Trust
Operations
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET
FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Nutricia Investment Corp., a Florida
corporation and an indirect wholly owned subsidiary of Koninklijke Numico N.V.,
a company incorporated under the laws of the Netherlands, on the terms and
subject to the conditions set forth in the Offer to Purchase dated May 5, 2000
(as amended or supplemented from time to time, the "Offer to Purchase"), and the
Letter of Transmittal (the "Letter of Transmittal," which, together with the
Offer to Purchase, as each may be amended or supplemented from time to time,
collectively constitute the "Offer"), receipt of which is hereby acknowledged,
the number of shares of common stock, par value $0.01 per share (the "Shares"),
of Rexall Sundown, Inc., a Florida corporation, set forth below, all pursuant to
the guaranteed delivery procedures set forth in Section 3 of the Offer to
Purchase.
<TABLE>
<S> <C>
- ------------------------------------------- -------------------------------------------
Number of Shares Name(s) of
Record Holder(s):
Certificate Nos. (if available)
PLEASE PRINT
Address(es):
(Check box if Shares will be tendered by
book-entry transfer) / / Zip Code
Daytime Area Code and Tel. No.:
Account Number Signature(s)
Dated , 2000
- ------------------------------------------- -------------------------------------------
</TABLE>
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a participant in the Securities Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby guarantees (a) that the above-named
person(s) "own(s)" the Shares tendered hereby within the meaning of Rule 14e-4
under the Securities Exchange Act of 1934, as amended, (b) that such tender of
Shares complies with Rule 14e-4, and (c) to deliver to the Depositary either the
certificates representing the Shares tendered hereby, in proper form for
transfer, or a Book-Entry Confirmation (as defined in the Offer to Purchase)
with respect to such Shares, in any such case together with a properly completed
and duly executed Letter of Transmittal (or a manually signed facsimile
thereof), with any required signature guarantees, or an Agent's Message (as
defined in the Offer to Purchase), and any other required documents, within
THREE Nasdaq National Market trading days after the date hereof.
The Eligible Institution that completes this form must communicate this
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
<TABLE>
<S> <C>
- ------------------------------------------- -------------------------------------------
Name of Firm: AUTHORIZED SIGNATURE
Address: Name:
PLEASE PRINT
Zip Code
Area Code and Tel. No.: Title:
Dated: , 2000
- ------------------------------------------- -------------------------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR
SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
REXALL SUNDOWN, INC.
AT
$24.00 NET PER SHARE
BY
NUTRICIA INVESTMENT CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
KONINKLIJKE NUMICO N.V.
(ROYAL NUMICO)
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JUNE 2, 2000, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
May 5, 2000
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged by Nutricia Investment Corp., a Florida corporation
(the "Purchaser") and an indirect wholly owned subsidiary of Koninklijke Numico
N.V., a company incorporated under the laws of the Netherlands ("Numico"), to
act as Dealer Manager in connection with the Purchaser's offer to purchase all
outstanding shares of common stock, par value $0.01 per share (the "Shares"), of
Rexall Sundown, Inc., a Florida corporation (the "Company"), at $24.00 per
Share, net to the seller in cash, without interest thereon, on the terms and
subject to the conditions set forth in the Offer to Purchase dated May 5, 2000
(as amended or supplemented from time to time, the "Offer to Purchase"), and in
the related Letter of Transmittal (the "Letter of Transmittal," which, together
with the Offer to Purchase, as each may be amended or supplemented from time to
time, collectively constitute the "Offer").
Please furnish copies of the enclosed materials to those of your clients for
whom you hold Shares registered in your name or in the name of your nominee.
Enclosed herewith are the following documents:
1. The Offer to Purchase dated May 5, 2000;
2. The letter to shareholders of the Company from the President and Chief
Executive Officer of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9;
3. The Letter of Transmittal to be used by shareholders of the Company in
accepting the Offer;
4. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to
the Offer;
5. The Notice of Guaranteed Delivery with respect to Shares;
6. The Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. A return envelope addressed to Wilmington Trust Company, the Depositary.
<PAGE>
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES EQUIVALENT TO A MAJORITY OF THE TOTAL ISSUED AND OUTSTANDING SHARES ON A
FULLY DILUTED BASIS AS OF THE DATE SUCH SHARES ARE PURCHASED PURSUANT TO THE
OFFER AND (ii) THE EXPIRATION OR TERMINATION OF ANY APPLICABLE WAITING PERIOD
UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED. THE
OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS DESCRIBED IN SECTION 12 OF THE
OFFER TO PURCHASE.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE OFFER AND
WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY,
JUNE 2, 2000, UNLESS THE OFFER IS EXTENDED.
The Offer is being made pursuant to an Agreement and Plan of Merger (the
"Merger Agreement"), dated as of April 30, 2000, by and among the Company,
Numico and the Purchaser. The Merger Agreement provides that, among other
things, following the consummation of the Offer and the satisfaction or waiver
of the other conditions set forth in the Merger Agreement, the Purchaser will be
merged with and into the Company (the "Merger"). Pursuant to the Merger
Agreement, each issued and outstanding Share (other than Shares owned by the
Company, Numico or the Purchaser or Shares that are held by shareholders
exercising dissenters' rights under Florida law) shall, by virtue of the Merger
and without any action on the part of the holder thereof, be converted into and
represent the right to receive an amount in cash, without interest thereon,
equal to the price paid for each Share pursuant to the Offer.
The Board of Directors of the Company has unanimously approved the Merger
Agreement, the Offer and the Merger, determined that the Offer and the Merger
are fair to, and in the best interests of, the shareholders of the Company, and
recommends that shareholders tender their Shares pursuant to the Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by Wilmington Trust Company (the
"Depositary") of (i) certificates for such Shares or timely confirmation of the
book-entry transfer of such Shares into the Depositary's account at the Book-
Entry Transfer Facility (as defined in the Offer to Purchase) pursuant to the
procedures set forth in Section 3 of the Offer to Purchase, (ii) the Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message (as defined in the Offer to Purchase))
and (iii) any other documents required by such Letter of Transmittal. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE FOR SHARES, REGARDLESS
OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT PURSUANT TO
THE OFFER.
Neither Numico nor the Purchaser will pay any fees or commissions to any
broker or dealer or other person (other than the Depositary, the Information
Agent and the Dealer Manager, as disclosed in the Offer to Purchase) in
connection with the solicitation of tenders of Shares pursuant to the Offer. You
will be reimbursed upon request for customary mailing and handling expenses
incurred by you in forwarding the enclosed offering materials to your clients.
The Purchaser will pay all stock transfer taxes applicable to its purchase of
Shares pursuant to the Offer, subject to Instruction 6 of the Letter of
Transmittal.
2
<PAGE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of the enclosed Offer to Purchase. Requests for
additional copies of the enclosed materials may be directed to the Information
Agent or to brokers, dealers, commercial banks or trust companies.
Very truly yours,
SALOMON SMITH BARNEY INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON AS AN AGENT OF NUMICO, THE PURCHASER, THE DEALER MANAGER, THE
DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR
MAKE ANY REPRESENTATION ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER NOT
CONTAINED IN THE OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
REXALL SUNDOWN, INC.
AT
$24.00 NET PER SHARE
BY
NUTRICIA INVESTMENT CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
KONINKLIJKE NUMICO N.V.
(ROYAL NUMICO)
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JUNE 2, 2000, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
To Our Clients: May 5, 2000
Enclosed for your consideration is an Offer to Purchase dated May 5, 2000
(as amended or supplemented from time to time, the "Offer to Purchase"), and the
related Letter of Transmittal (the "Letter of Transmittal," which, together with
the Offer to Purchase, as each may be amended or supplemented from time to time,
collectively constitute the "Offer") relating to the Offer by Nutricia
Investment Corp., a Florida corporation (the "Purchaser") and an indirect wholly
owned subsidiary of Koninklijke Numico N.V., a corporation incorporated under
the laws of the Netherlands ("Numico"), to purchase all outstanding shares of
common stock, par value $0.01 per share (the "Shares"), of Rexall Sundown, Inc.,
a Florida corporation (the "Company"), at $24.00 per Share, net to the seller in
cash, without interest thereon, on the terms and subject to the conditions set
forth in the Offer.
Also enclosed is the letter to the shareholders from the President and Chief
Executive Officer of the Company, accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9.
THIS MATERIAL IS BEING SENT TO YOU AS THE BENEFICIAL OWNER OF SHARES HELD BY
US FOR YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. WE ARE (OR OUR NOMINEE IS)
THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH
SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR
INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION
ONLY AND CANNOT BE USED TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish us to tender on your behalf
any or all the Shares held by us for your account, pursuant to the terms and
conditions set forth in the Offer.
Your attention is directed to the following:
1. The Offer price is $24.00 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions of the
Offer.
2. The Offer is being made for all outstanding Shares.
3. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn prior to the expiration of the Offer,
a number of Shares equivalent to a majority of the total issued and
outstanding Shares on a fully diluted basis as of the date such Shares
are
<PAGE>
purchased pursuant to the Offer (the "Minimum Condition") and (ii) the
expiration or termination of any applicable writing period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The
Offer is also subject to certain other conditions described in
Section 12 of the Offer to Purchase.
4. The Offer is being made pursuant to an Agreement and Plan of Merger (the
"Merger Agreement"), dated as of April 30, 2000, by and among the
Company, Numico and the Purchaser. The Merger Agreement provides that,
among other things, following the consummation of the Offer and the
satisfaction or waiver of the other conditions set forth in the Merger
Agreement, the Purchaser will be merged with and into the Company (the
"Merger"). Pursuant to the Merger Agreement, each issued and outstanding
Share (other than Shares owned by the Company, Numico or the Purchaser or
Shares that are held by shareholders exercising dissenters' rights under
Florida law) shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into and represent the right to
receive an amount in cash, without interest thereon, equal to the price
paid for each Share pursuant to the Offer.
5. The Board of Directors of the Company has unanimously determined that
each of the Offer and the Merger are fair to, and in the best interests
of, the shareholders of the Company, has approved the Merger Agreement
and the transactions contemplated therein, including the Offer and the
Merger, has declared that the Merger Agreement is advisable, and
recommends that shareholders tender their shares pursuant to the Offer.
6. Any stock transfer taxes applicable to a sale of Shares to the Purchaser
will be borne by the Purchaser, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
7. Tendering shareholders will not be charged brokerage fees or commissions
by the Dealer Manager, the Depositary, or the Information Agent or,
except as set forth in Instruction 6 of the Letter of Transmittal,
transfer taxes on the purchase of Shares by Purchaser pursuant to the
Offer. However, federal income tax backup withholding at a rate of 31%
may be required, unless an exemption is provided or unless the required
taxpayer identification information is provided. See Instruction 9 of the
Letter of Transmittal.
Your instructions to us should be forwarded promptly to permit us to submit
a tender on your behalf prior to the Expiration Date.
If you wish to have us tender on your behalf any or all of the Shares held
by us for your account, please so instruct us by completing, executing,
detaching and returning to us the instruction form contained in this letter. An
envelope in which to return your instructions to us is enclosed. If you
authorize tender of your Shares, all such Shares will be tendered unless
otherwise indicated in such instruction form. YOUR INSTRUCTIONS SHOULD BE
FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF
PRIOR TO THE EXPIRATION DATE.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by Wilmington Trust Company (the
"Depositary") of (a) certificates for (or a timely Book-Entry Confirmation (as
defined in the Offer to Purchase) with respect to) such Shares, (b) a Letter of
Transmittal (or a manually signed facsimile thereof), properly completed and
duly executed, with any required signature guarantees, or, in the case of a
book-entry transfer effected pursuant to the procedure set forth in Section 3 of
the Offer to Purchase, an Agent's Message, and (c) any other documents required
by the Letter of Transmittal. Accordingly, tendering shareholders may be paid at
different times depending upon when certificates for Shares or Book-Entry
Confirmations with respect to Shares are actually received by the Depositary.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE FOR SHARES,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING PAYMENT PURSUANT
TO THE OFFER.
The Offer is not being made to, nor will tenders be accepted from, or on
behalf of, holders of Shares in any jurisdiction in which the making or
acceptance of the Offer would not be in compliance with the laws of such
jurisdiction. In any jurisdiction where the securities or blue sky laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed
made on behalf of the Purchaser by Salomon Smith Barney Inc., the Dealer Manager
for the Offer, or one or more registered brokers or dealers that are licensed
under the laws of such jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
REXALL SUNDOWN, INC.
The undersigned acknowledge(s) receipt of your letter, the Offer to Purchase
dated May 5, 2000 (as amended or supplemented from time to time, the "Offer to
Purchase"), and the related Letter of Transmittal (the "Letter of Transmittal,"
which, together with the Offer to Purchase, as each may be amended or
supplemented from time to time, collectively constitute the "Offer") relating to
the Offer by Nutricia Investment Corp., a Florida corporation and an indirect
wholly owned subsidiary of Koninklijke Numico N.V., a company incorporated under
the laws of the Netherlands, to purchase for $24.00 per Share, net to the seller
in cash, without interest thereon, all outstanding shares of common stock, par
value $0.01 per share (the "Shares"), of Rexall Sundown, Inc., a Florida
corporation.
This will instruct you to tender to the Purchaser the number of Shares
indicated below held by you for the account of the undersigned, on the terms and
subject to the conditions set forth in the Offer to Purchase and the related
Letter of Transmittal.
<TABLE>
<S> <C>
Number of Shares to be Tendered:* SIGN HERE:
Shares
Account Number:
Daytime Area Code and Tel. No. Signature(s)
Taxpayer Identification No. or Social
Security No.
Dated: , 2000
(Please print name(s) and address(es))
</TABLE>
- ------------------------
* Unless otherwise indicated, it will be assumed that all your Shares held by
us for your account are to be tendered.
3
<PAGE>
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN
OFFER TO SELL SHARES (AS DEFINED BELOW). THE OFFER (AS DEFINED BELOW) IS MADE
SOLELY BY THE OFFER TO PURCHASE DATED MAY 5, 2000 AND THE RELATED LETTER OF
TRANSMITTAL AS EACH MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME. THE
OFFER IS NOT BEING MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF
OF) HOLDERS OF SHARES IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER OR
THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH
JURISDICTION. IN ANY JURISDICTION WHERE THE SECURITIES, BLUE SKY OR OTHER
LAWS REQUIRE THE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER
SHALL BE DEEMED TO BE MADE ON BEHALF OF THE PURCHASER (AS DEFINED BELOW) BY
SALOMON SMITH BARNEY INC., THE DEALER MANAGER, OR BY ONE OR MORE REGISTERED
BROKERS OR DEALERS LICENSED UNDER THE LAWS OF SUCH JURISDICTION.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Rexall Sundown, Inc.
at
$24.00 Net Per Share
by
Nutricia Investment Corp.
an indirect wholly owned subsidiary of
Koninklijke Numico N.V.
(Royal Numico)
Nutricia Investment Corp., a Florida corporation (the "Purchaser") and an
indirect wholly owned subsidiary of Koninklijke Numico N.V., a company
incorporated under the laws of the Netherlands ("Numico"), is offering to
purchase all outstanding shares of common stock, par value $0.01 per share
(the "Shares"), of Rexall Sundown, Inc., a Florida corporation (the
"Company"), at $24.00 per Share, net to the seller in cash, without interest,
upon the terms and subject to the conditions set forth in the Offer to
Purchase dated May 5, 2000 (as amended or supplemented from time to time, the
"Offer to Purchase"), and in the related Letter of Transmittal (the "Letter
of Transmittal," which, together with the Offer to Purchase, as each may be
amended or supplemented from time to time, collectively constitute the
"Offer"). Tendering shareholders who have Shares registered in their name and
who tender directly will not be charged brokerage fees or commissions or,
subject to Instruction 6 of the Letter of Transmittal, transfer taxes on the
purchase of Shares pursuant to the Offer.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, JUNE 2, 2000, UNLESS THE OFFER IS EXTENDED.
The Offer is being made pursuant to an Agreement and Plan of Merger (the
"Merger Agreement") dated as of April 30, 2000 by and among the Company,
Numico and the Purchaser. Pursuant to the Merger Agreement, after completion
of the Offer, and subject to the satisfaction or waiver of all conditions,
the Purchaser will be merged with and into the Company (the "Merger") and
each issued and outstanding Share (other than Shares which are held by the
Company, Numico or the Purchaser or by shareholders exercising dissenters'
rights under Florida law) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive $24.00 per Share in cash, or any higher price per Share paid pursuant
to the Offer, without interest thereon. The Merger Agreement is more fully
described in the Offer to Purchase.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT, THE OFFER AND THE MERGER, DETERMINED THAT THE OFFER AND THE MERGER
ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF SHARES AND
<PAGE>
RECOMMENDS THAT HOLDERS OF SHARES TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
SHARES EQUIVALENT TO A MAJORITY OF THE TOTAL ISSUED AND OUTSTANDING SHARES ON
A FULLY DILUTED BASIS AS OF THE DATE SUCH SHARES ARE PURCHASED PURSUANT TO
THE OFFER AND (ii) THE EXPIRATION OR TERMINATION OF ANY APPLICABLE WAITING
PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS DESCRIBED IN
SECTION 12 OF THE OFFER TO PURCHASE.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not withdrawn as,
if and when the Purchaser gives oral or written notice to Wilmington Trust
Company (the "Depositary") of its acceptance for payment of such Shares
pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer, payment for Shares
accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for all
tendering shareholders for the purpose of receiving payments from Purchaser
and transmitting such payments to tendering shareholders whose Shares have
been accepted for payment.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates
for (or a timely Book-Entry Confirmation (as defined in the Offer to
Purchase) with respect to) such Shares, (b) a Letter of Transmittal (or a
manually signed facsimile thereof), properly completed and duly executed,
with any required signature guarantees (or, in the case of a book-entry
transfer, an Agent's Message (as defined in the Offer to Purchase) in lieu of
the Letter of Transmittal) and (c) any other documents required by the Letter
of Transmittal. UNDER NO CIRCUMSTANCES WILL ANY INTEREST BE PAID ON THE OFFER
PRICE FOR TENDERED SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT.
The purpose of the Offer is to acquire control of, and all of the equity
interests in, the Company. The Offer is subject to certain conditions set
forth in the Offer to Purchase. If any such condition is not satisfied, the
Purchaser may, except as provided in the Merger Agreement, (i) terminate the
Offer and return all tendered Shares to tendering shareholders, (ii) extend
the Offer and, subject to withdrawal rights as set forth below, retain all
such Shares until the expiration of the Offer as so extended, (iii) waive
such condition and purchase all Shares validly tendered and not withdrawn
prior to the expiration of the Offer or (iv) delay acceptance for payment or
payment for Shares, subject to applicable laws, until satisfaction or waiver
of the conditions to the Offer.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Friday, June 2, 2000, unless and until the Purchaser, in its sole
discretion (but subject to the terms of the Merger Agreement), shall have
extended the period of time during which the Offer is open, in which event
the term "Expiration Date" shall mean the latest time and date on which the
Offer, as so extended by the Purchaser, shall expire. Subject to the
applicable rules and regulations of the Securities and Exchange Commission
and the terms of the Merger Agreement, the Purchaser expressly reserves the
right, in its sole discretion, at any time or from time to time, to extend
the period of time during which the Offer is open by giving oral or written
notice of such extension to the Depositary. Any such extension will be
followed as promptly as possible by a public announcement thereof. During any
such extension, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the right of a tendering shareholder to
withdraw its Shares.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to June 2, 2000. Thereafter, such tenders are irrevocable, except that
they may be withdrawn at any time after July 3, 2000, unless
theretofore accepted for payment as provided in the Offer to Purchase.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Depositary
at one of its addresses set forth on the back cover of the Offer to Purchase.
Any such notice of withdrawal must specify the name of the person having
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the names in which the certificate(s) evidencing the Shares to be withdrawn
are registered, if different from that of the person who tendered such
Shares. The signatures(s) on the notice of withdrawal must be guaranteed by
an Eligible Institution (as defined in the Offer to Purchase), unless such
Shares have been tendered for the account of any Eligible Institution. If
Shares have been tendered pursuant to the procedures for book-entry tender as
set forth in Section 3 of the Offer to Purchase, any notice of withdrawal
must specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Shares and must otherwise comply
with such Book-Entry Transfer Facility's procedures. If certificates for
Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, the name of the registered holder and the serial numbers of the
particular certificates evidencing the Shares to be withdrawn must also be
2
<PAGE>
furnished to the Depositary as aforesaid prior to the physical release of
such certificates. All questions as to the form and validity (including time
of receipt) of any notice of withdrawal will be determined by the Purchaser,
in its sole discretion, which determination shall be final and binding. None
of the Purchaser, Numico, the Dealer Manager (listed below), the Depositary,
the Information Agent (listed below) or any other person will be under any
duty to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give such notification.
Withdrawals of tenders for Shares may not be rescinded, and any Shares
properly withdrawn will be deemed not to have been validly tendered for
purposes of the Offer. However, withdrawn Shares may be retendered by
following one of the procedures described in Section 3 of the Offer to
Purchase at any time prior to the Expiration Date. Under the Merger Agreement
and pursuant to Rule 14d-11 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), Purchaser
may, subject to certain conditions, include a subsequent offering period
following the Expiration Date. Purchaser does not currently intend to include
a subsequent offer period in the Offer, although it reserves the right to do
so in its sole discretion. Under the Exchange Act, no withdrawal rights apply
to Shares tendered during a subsequent offering period and no withdrawal
rights apply during the subsequent offering period with respect to Shares
tendered in the Offer and accepted for payment. See Section 1 of the Offer to
Purchase.
The information required to be disclosed by paragraph (d)(1) of Rule 14d-6 of
the General Rules and Regulations under the Exchange Act is contained in the
Offer to Purchase and is incorporated herein by reference.
The Company has provided Purchaser with the Company's shareholder list and
security position listings for the purpose of disseminating the Offer to
shareholders. The Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares and will
be furnished to brokers, banks and similar persons whose names, or the names
of whose nominees, appear on the shareholder list or, if applicable, who are
listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Information Agent
or the Dealer Manager at their respective addresses and telephone numbers set
forth below. Requests for additional copies of the Offer to Purchase, the
related Letter of Transmittal and other tender offer materials may be directed
to the Information Agent or brokers, dealers, commercial banks and trust
companies. Such additional copies will be furnished at the Purchaser's
expense. No fees or commissions will be paid to brokers, dealers or other
persons (other than the Dealer Manager and the Information Agent) for
soliciting tenders of Shares pursuant to the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
INNISFREE M&A INCORPORATED
501 Madison Avenue, 20th Floor
New York, New York 10022
Telephone: (212) 750-5833 (Call Collect)
OR
CALL TOLL-FREE (888) 750-5834
THE DEALER MANAGER FOR THE OFFER IS:
SALOMON SMITH BARNEY
388 Greenwich Street
New York, New York 10013
CALL TOLL-FREE (877) 755-4456
May 5, 2000
3
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER--Social Security numbers have nine digits separated by two hyphens: e.g.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: e.g., 00-0000000. The table below will help determine the name and
number to give the payer.
<TABLE>
<CAPTION>
GIVE THE NAME AND
FOR THIS TYPE OF ACCOUNT TAXPAYER IDENTIFICATION NUMBER OF--
- ------------------------ -----------------------------------
<C> <S> <C>
1. An individual's account The individual
2. Two or more individuals (joint account) The actual owner of the account or, if combined
funds, any one of the individuals(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. a. The usual revocable savings trust account The grantor-trustee(1)
(grantor is also trustee)
b. So-called trust account that is not a legal The actual owner(1)
or valid trust under state law
5. Sole proprietorship The owner(3)
6. A valid trust, estate, or pension trust The legal entity(4)
7. Corporate account The corporation
8. Association, club, religious, charitable, The organization
educational, or other tax-exempt organization
account
9. Partnership account The partnership
10. A broker or registered nominee The broker or nominee
11. Account with the Department of Agriculture in The public entity
the name of a public entity (such as a state or
local government, school district, or prison)
that receives agricultural program payments
</TABLE>
- --------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your Social Security Number or
Employer Identification Number.
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the identifying number of the personal representative or
trustee unless the legal entity itself is not designated in the account
title.)
NOTE: If no name is circled when more than one name is listed, the number will
be considered to be that of the first name listed.
OBTAINING A TAXPAYER IDENTIFICATION NUMBER
Persons without a taxpayer identification number should apply for one and
write "Applied for" in Part I of Substitute Form W-9. Individuals should file
Form SS-5, Application for a Social Security Card (or, in the case of resident
aliens who do not have and are not eligible for Social Security numbers, Form
W-7, Application for IRS Individual Taxpayer Identification Number),
corporations, partnerships or other entities should file Form SS-4, Application
for Employer Identification Number. Form SS-5 may be obtained from local Social
Security Administration offices. Forms W-7 and SS-4 may be obtained from the IRS
by calling 1-800-TAX-FORM (1-800-829-3676).
NOTE: Writing "Applied for" in Part I means that you have already applied for a
TIN or that you intend to apply for one soon.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
The following persons are exempt from backup withholding on payments from
the sale of Shares pursuant to the Offer:
1. An organization exempt from tax under section 501(a) of the Internal Revenue
Code ("IRC"), any IRA, or a custodial account under section 403(b)(7) of the
IRC if the account satisfies the requirements of section 401(f)(2) of the
IRC.
2. The United States or any of its agencies or instrumentalities.
3. A state, the District of Columbia, a possession of the United States.
4. A foreign government or any of its political subdivisions, agencies, or
instrumentalities.
5. An international organization or any of its agencies or instrumentalities.
The following persons may be exempt from backup withholding on payments from
the sale of Shares pursuant to the Offer:
6. A corporation.
7. A foreign central bank of issue.
8. A dealer in securities or commodities required to register in the United
States, the District of Columbia, or a possession of the United States.
9. A futures commission merchant registered with the Commodity Futures Trading
Commission.
10. A real estate investment trust.
11. An entity registered at all times during the tax year under the Investment
Company Act of 1940.
12. A common trust fund operated by a bank under Section 584(a) of the IRC.
13. A financial institution.
14. A middleman known in the investment community as a nominee or who is listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
15. A trust exempt from tax under section 664 of the IRC or described in
section 4947 of the IRC.
Such persons should nevertheless complete Substitute Form W-9 to avoid
possible erroneous withholding. An exempt person should enter the correct TIN in
Part I, write "Exempt" in Part II, and sign and date the form.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A, 6042, 6044, 6045,
6049, 6050A, and 6050N of the IRC, and their regulations.
CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you make a
false statement with no reasonable basis that results in no backup withholding,
you are subject to a $500 penalty.
CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Willfully falsifying certifications
or affirmations may subject you to criminal penalties including fines and/or
imprisonment.
PRIVACY ACT NOTICE--Section 6109 of the IRC requires most recipients of
dividend, interest, or other payments to give taxpayer identification numbers to
payers who must report the payments to IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of individuals' tax
returns. The IRS may also provide this information to the Department of Justice
for civil and criminal litigation and to states, cities and the District of
Columbia to help carry out their tax laws.
Payers must be given the numbers whether or not recipients are required to file
tax returns. Payers must generally withhold 31% of taxable interest, dividend,
and certain other payments to a payee who does not furnish a taxpayer
identification number to a payer. Certain penalties may also apply.
<PAGE>
FOR IMMEDIATE RELEASE
MAY 5, 2000
CONTACTS: Royal Numico N.V.
Klaas A. de Jong, Director Corporate
Affairs
31-79-353-9028
[email protected]
Media: BSMG Worldwide
Edward Nebb, 212-445-8213
ROYAL NUMICO COMMENCES TENDER OFFER
TO PURCHASE ALL OUTSTANDING SHARES OF REXALL SUNDOWN COMMON STOCK
AT $24.00 PER SHARE
ZOETERMEER, THE NETHERLANDS, MAY 5, 2000: Royal Numico N.V. ("Numico")
(Amsterdam Stock Exchange: NUM) announced today that through a wholly owned
subsidiary it has commenced a cash tender offer to purchase all outstanding
shares of common stock, par value $0.01 per share (the "Common Stock"), of
Rexall Sundown, Inc. ("Rexall Sundown") (Nasdaq: RXSD) at a price of $24.00
per share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase and
related Letter of Transmittal, both dated today.
The offer is being made pursuant to the previously announced Merger Agreement
between Numico and Rexall Sundown, and is conditioned upon the tender of that
number of shares of Common Stock of Rexall Sundown equivalent to a majority
of the total issued and outstanding shares of such Common Stock on a fully
diluted basis and certain other customary conditions. Rexall Sundown's Board
of Directors unanimously approved the tender offer and Merger Agreement, and
recommends Rexall Sundown shareholders tender their shares of Common Stock
pursuant to the offer. The offer and withdrawal rights are scheduled to
expire at 12:00 Midnight, New York City time on Friday, June 2, 2000, unless
the offer is otherwise extended in accordance with the terms of the Merger
Agreement.
The necessary filings with the Securities and Exchange Commission in
connection with the tender offer are being made today, and the offer
documents will be mailed to Rexall Sundown shareholders promptly. Salomon
Smith Barney Inc. is acting as financial advisor to Numico and as the Dealer
Manager, and Innisfree M&A Incorporated is acting as the Information Agent in
connection with the tender offer.
Royal Numico N.V. (www.numico.com), headquartered in Zoetermeer, the
Netherlands, is a world leader in specialized nutrition. A holding company
for a group of companies including General Nutrition Companies, Inc.,
Nutricia, Milupa and Cow & Gate, its products include infant nutrition,
medical nutrition and nutritional supplements. Numico concentrates on the
development, manufacture and sales of specialized nutrition products based
upon medical scientific concepts with a high added value. The company
operates in some 100 countries.
Rexall Sundown, Inc. (www.rexallsundown.com), headquartered in Boca Raton,
Florida, is a leading manufacturer and marketer of vitamins, nutritional
supplements and consumer health products primarily for the U.S. mass market.
This press release is neither an offer to purchase nor a solicitation of an
offer to sell securities. The tender offer is made solely through the Offer
to Purchase and the related Letter of Transmittal, which will be mailed to
shareholders of Rexall Sundown. The offer is not being made to (nor will
tenders be accepted from or on behalf of) holders of Common Stock in any
jurisdiction in which the making of the offer or the acceptance thereof would
not be in compliance with the laws of such jurisdiction. In any jurisdiction
where the securities, blue sky or other laws require the offer to be made by
a licensed broker or dealer, the offer shall be deemed to be made on behalf
of Numico by Salomon Smith Barney Inc. or one or more registered brokers or
dealers licensed under the laws of such jurisdiction. Additional copies of
the Offer to Purchase and related Letter of Transmittal may be obtained for
free at the SEC's website at www.sec.gov. Copies of such documents can also
be obtained for free by contacting Innisfree M&A Incorporated, the
Information Agent, at (888) 750-5834.
<PAGE>
AGREEMENT AND PLAN OF MERGER
DATED AS OF APRIL 30, 2000
AMONG
KONINKLIJKE NUMICO N.V.,
a company incorporated under the laws of the Netherlands,
NUTRICIA INVESTMENT CORP.,
a Florida corporation,
AND
REXALL SUNDOWN, INC.
a Florida corporation
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I.
THE TENDER OFFER.........................................................................................1
1.1 The Offer.......................................................................................1
1.2 SEC Filings.....................................................................................3
1.3 Company Action..................................................................................4
1.4 Composition of the Company Board................................................................4
ARTICLE II.
THE MERGER...............................................................................................6
2.1 The Merger......................................................................................6
2.2 Closing.........................................................................................6
2.3 Effective Time..................................................................................6
2.4 Effect of the Merger............................................................................6
2.5 Articles of Incorporation.......................................................................6
2.6 Bylaws..........................................................................................6
2.7 Officers and Directors of Surviving Corporation.................................................6
2.8 Effect on Capital Stock.........................................................................7
2.9 Surrender and Payment...........................................................................7
ARTICLE III.
REPRESENTATIONS AND WARRANTIES..........................................................................10
3.1 Representations and Warranties of the Company..................................................10
3.2 Representations and Warranties of Parent.......................................................24
3.3 Representations and Warranties of Parent and Merger Sub........................................27
ARTICLE IV.
COVENANTS RELATING TO CONDUCT OF BUSINESS...............................................................28
4.1 Covenants of the Company.......................................................................28
4.2 Covenants of Parent and Merger Sub.............................................................31
4.3 Advice of Changes; Government Filings..........................................................31
ARTICLE V.
ADDITIONAL AGREEMENTS...................................................................................32
5.1 Approval by the Company's Shareholders.........................................................32
5.2 Access to Information..........................................................................33
5.3 Approvals and Consents; Cooperation............................................................33
5.4 Acquisition Proposals..........................................................................34
5.5 Employee Benefits..............................................................................35
5.6 Fees and Expenses..............................................................................35
5.7 Indemnification; Directors' and Officers' Insurance............................................35
i
<PAGE>
5.8 Public Announcements...........................................................................36
5.9 Takeover Statutes..............................................................................36
5.10 Third Party Standstill Agreements; Tortious Interference.......................................36
5.11 Company Option Plans...........................................................................36
ARTICLE VI.
CONDITIONS PRECEDENT....................................................................................37
6.1 Conditions to Each Party's Obligation to Effect the Merger.....................................37
ARTICLE VII.
TERMINATION AND AMENDMENT...............................................................................38
7.1 Termination....................................................................................38
7.2 Effect of Termination..........................................................................40
7.3 Amendment......................................................................................40
7.4 Extension; Waiver..............................................................................41
ARTICLE VIII.
GENERAL PROVISIONS......................................................................................41
8.1 Non-Survival of Representations and Warranties.................................................41
8.2 Notices........................................................................................41
8.3 Interpretation.................................................................................42
8.4 Counterparts...................................................................................42
8.5 Entire Agreement; No Third Party Beneficiaries.................................................42
8.6 Governing Law; Jurisdiction; Waiver of Jury Trial..............................................43
8.7 Severability...................................................................................43
8.8 Assignment.....................................................................................44
8.9 Enforcement....................................................................................44
8.10 Definitions....................................................................................44
8.11 Performance by Merger Sub......................................................................46
8.12 Disclosure Schedules...........................................................................46
</TABLE>
ii
<PAGE>
GLOSSARY OF DEFINED TERMS
<TABLE>
<CAPTION>
LOCATION OF
DEFINITION DEFINED TERM
- ---------- ------------
<S> <C>
Acquisition Proposal.................................................................................Section 5.4(a)
Action......................................................................................................Annex A
Affiliate...........................................................................................Section 8.10(a)
Agreement..................................................................................................Preamble
Articles of Merger......................................................................................Section 2.3
Benefits Letter.........................................................................................Section 5.5
Board ..............................................................................................Section 8.10(b)
Business Day........................................................................................Section 8.10(c)
Certificates.........................................................................................Section 2.9(b)
Closing.................................................................................................Section 2.2
Closing Date............................................................................................Section 2.2
Code................................................................................................Section 8.10(d)
Company....................................................................................................Preamble
Company Assets.......................................................................................Section 3.1(s)
Company Benefit Plans.............................................................................Section 3.1(1)(i)
Company Board..............................................................................................Recitals
Company Common Stock.................................................................................Section 1.1(a)
Company Disclosure Schedule.............................................................................Section 3.1
Company Equity Plans................................................................................Section 8.10(e)
Company Material Contracts..........................................................................Section 8.10(f)
Company Permits......................................................................................Section 3.1(f)
Company Products.....................................................................................Section 3.1(p)
Company SEC Reports...............................................................................Section 3.1(d)(i)
Company Stock Option...................................................................................Section 5.11
Company Stock Options Plans.........................................................................Section 8.10(e)
Company Stock Purchase Plans........................................................................Section 8.10(e)
Company Shareholders Meeting.........................................................................Section 5.1(a)
Company Voting Debt.............................................................................Section 3.1(b)(iii)
Confidentiality Agreement...............................................................................Section 5.2
CPSC.................................................................................................Section 3.1(v)
Dissenting Shareholders..............................................................................Section 2.9(h)
Effective Time..........................................................................................Section 2.3
ERISA.............................................................................................Section 3.1(1)(i)
ERISA Affiliate..................................................................................Section 3.1(1)(iv)
Environmental Law....................................................................................Section 3.1(r)
Exchange Act.........................................................................................Section 1.1(b)
Exchange Agent.......................................................................................Section 2.9(a)
Expenses................................................................................................Section 5.6
FBCA.......................................................................................................Recitals
FDA..................................................................................................Section 3.1(v)
iii
<PAGE>
FTC..................................................................................................Section 3.1(v)
GAAP..............................................................................................Section 3.1(d)(i)
Governmental Entity.............................................................................Section 3.1(c)(iii)
Hazardous Substance..................................................................................Section 3.1(r)
HSR Act.....................................................................................................Annex A
Indemnified Party.......................................................................................Section 5.7
Independent Directors................................................................................Section 1.4(c)
Intellectual Property...............................................................................Section 8.10(g)
Liens............................................................................................Section 3.1(b)(ii)
Material Adverse Effect.............................................................................Section 8.10(h)
Maximum Premium.........................................................................................Section 5.7
Merger.....................................................................................................Recitals
Merger Consideration.................................................................................Section 2.8(c)
Merger Fees..........................................................................................Section 3.1(n)
Merger Sub.................................................................................................Preamble
Minimum Condition....................................................................................Section 1.1(b)
Multiemployer Plan................................................................................Section 3.1(1)(i)
Nasdaq..........................................................................................Section 3.1(c)(iii)
Offer...............................................................................................Section 1.1.(a)
Offer Conditions.....................................................................................Section 1.1(a)
Offer Documents......................................................................................Section 1.2(a)
Organizational Documents............................................................................Section 8.10(i)
Outside Date.........................................................................................Section 7.1(b)
Outstanding Options ..............................................................................Section 3.1(b)(i)
Parent.....................................................................................................Preamble
Parent Representatives..................................................................................Section 5.2
Payment Fund.........................................................................................Section 2.9(a)
Person..............................................................................................Section 8.10(j)
Price Per Share......................................................................................Section 1.1(a)
Proxy Statement...................................................................................Section 3.1(e)(i)
Required Company Votes...............................................................................Section 3.1(j)
Required Regulatory Approvals........................................................................Section 6.1(c)
Schedule 14D-9.......................................................................................Section 1.2(b)
Schedule TO..........................................................................................Section 1.2(a)
SEC..................................................................................................Section 1.1(b)
Securities Act....................................................................................Section 3.1(d)(i)
Shareholder Agreement......................................................................................Recitals
Subsidiary..........................................................................................Section 8.10(k)
Superior Proposal....................................................................................Section 5.4(c)
Surviving Corporation...................................................................................Section 2.1
Takeover Statute.....................................................................................Section 3.1(q)
Tax..............................................................................................Section 8.10(l)(i)
Tax Return......................................................................................Section 8.10(l)(ii)
Taxable..........................................................................................Section 8.10(l)(i)
Taxes............................................................................................Section 8.10(l)(i)
iv
<PAGE>
Top 20 List..........................................................................................Section 3.1(u)
USDA.................................................................................................Section 3.1(v)
Violation........................................................................................Section 3.1(c)(ii)
</TABLE>
v
<PAGE>
This AGREEMENT AND PLAN OF MERGER, dated as of April 30, 2000 (this
"Agreement"), by and among KONINKLIJKE NUMICO N.V., a company incorporated under
the laws of the Netherlands ("Parent"), NUTRICIA INVESTMENT CORP., a Florida
corporation and an indirect wholly owned Subsidiary of Parent ("Merger Sub"),
and REXALL SUNDOWN, INC., a Florida corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub
and the Company have each approved the Offer (as defined herein) and the
Merger (as defined herein) and have determined that it is in the best
interests of their respective companies and shareholders for Parent to
acquire the Company upon the terms and subject to the conditions set forth
herein;
WHEREAS, in order to complete such acquisition, the respective Boards
of Directors of Parent, Merger Sub and the Company have approved the merger of
Merger Sub with and into the Company (the "Merger"), upon the terms and subject
to the conditions of this Agreement and in accordance with the Florida Business
Corporation Act (the "FBCA"), whereby each issued and outstanding share of
Company Common Stock (as defined herein) not owned directly or indirectly by
Parent or the Company will be converted into the right to receive the price per
share in cash actually paid in the Offer;
WHEREAS, the Board of Directors of the Company (the "Company Board")
has unanimously approved this Agreement, the Shareholder Agreement (as defined
below), the Offer and the Merger, has determined that the Offer and the Merger
are fair to, and in the best interests of, the Company's shareholders, and is
recommending that the Company's shareholders accept the Offer, tender their
shares of Company Common Stock thereunder and adopt and approve the Merger and
this Agreement;
WHEREAS, Parent, Merger Sub, the Company and the shareholders named
therein have entered into a Shareholder Agreement dated as of April 30, 2000
(the "Shareholder Agreement");
WHEREAS, simultaneously with the execution and delivery of this
Agreement certain executive officers of the Company are entering into
employment agreements with the Company, which will become effective upon the
Merger;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
<PAGE>
ARTICLE I.
THE TENDER OFFER
1.1 THE OFFER.
(a) Provided that this Agreement shall not have been
terminated in accordance with Article VII hereof and none of the conditions set
forth in Annex A hereto (the "Offer Conditions") shall have occurred or be
existing, within seven (7) Business Days of the date hereof, Merger Sub will
commence a tender offer (the "Offer") for all of the outstanding shares of
common stock, par value $0.01 per share, of the Company (the "Company Common
Stock") at a price per share of the Company Common Stock of U.S. $24.00 net to
the seller in cash (such price, or any higher price paid in the Offer, the
"Price Per Share") upon the terms and conditions set forth in this Agreement,
including Annex A hereto.
(b) Provided that this Agreement shall not have been
terminated in accordance with Article VII hereof, the obligation of Merger Sub
to accept for payment, purchase and pay for any Company Common Stock tendered
pursuant to the Offer shall be subject only to the satisfaction or waiver of the
Offer Conditions including the condition that at least that number of shares of
Company Common Stock equivalent to a majority of the total issued and
outstanding shares of Company Common Stock on a fully diluted basis on the date
such shares are purchased pursuant to the Offer shall have been validly tendered
and not withdrawn prior to the expiration of the Offer (the "Minimum
Condition"). Merger Sub will not, without the prior written consent of the
Company (such consent to be authorized by the Company Board): (i) waive the
Minimum Condition, (ii) decrease the amount or change the form of consideration
payable in the Offer, (iii) decrease the number of shares of Company Common
Stock sought in the Offer, (iv) impose additional conditions to the Offer, (v)
change any Offer Condition or amend any other term of the Offer if any such
change or amendment would be materially adverse to the holders of the Company
Common Stock (other than Parent or Merger Sub) or (vi) except as provided below,
extend the Offer if all of the Offer Conditions have been satisfied. Subject to
the terms and conditions hereof, the Offer shall remain open until midnight, New
York City time, on the date that is twenty (20) Business Days after the Offer is
commenced (within the meaning of Rule 14d-2 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")); provided, however, that
without the consent of the Company Board, Merger Sub may (w) extend the Offer,
if at the scheduled expiration date of the Offer any of the Offer Conditions
shall not have been satisfied or waived for one (1) or more periods (none of
which shall exceed ten (10) Business Days) until such time as such conditions
are satisfied or waived, (x) extend the Offer for such period as may be required
by any rule, regulation, interpretation or position of the Securities and
Exchange Commission ("SEC") or the staff thereof applicable to the Offer, (y)
extend the Offer for one (1) or more periods (each such period to be for not
more than five (5) Business Days and such extensions to be for an aggregate
period of not more than twenty (20) Business Days beyond the latest expiration
date that would otherwise be permitted under clause (w) or (x) of this sentence)
if on such expiration date the Offer Conditions shall have been satisfied or
waived but there shall not have been tendered that number of shares of Company
Common Stock which would equal more than 80% of the outstanding shares of
Company Common Stock or (z) extend the Offer for any reason for one (1) or more
periods, each period to be for not more than ten (10) Business Days and such
extensions to be for an aggregate period of not more than
2
<PAGE>
twenty (20) Business Days beyond the latest expiration date that would otherwise
be permitted under clause (w) or (x) of this sentence. Merger Sub agrees that if
all of the Offer Conditions are not satisfied on any expiration date of the
Offer, then, Merger Sub shall extend the Offer for periods of not more than ten
(10) Business Days each if requested to do so by the Company; provided that (A)
the Company shall be entitled to make only two (2) of such requests; and (B)
Merger Sub shall not be required to extend the Offer beyond the Outside Date or,
if earlier, the date of termination of this Agreement in accordance with the
terms hereof. On the terms of the Offer and subject to the Offer Conditions and
this Agreement, Merger Sub shall pay for all shares of Company Common Stock
validly tendered and not withdrawn pursuant to the Offer that Merger Sub becomes
obligated to purchase pursuant to the Offer as soon as practicable after the
expiration of the Offer. Merger Sub may, at its election, provide for a
"subsequent offering period" (as contemplated by and in accordance with Rule
14d-11 promulgated under the Exchange Act).
1.2 SEC FILINGS.
(a) As soon as reasonably practicable on the date of
commencement of the Offer, Parent and Merger Sub shall file with the SEC a
Tender Offer Statement on Schedule TO with respect to the Offer (as supplemented
or amended from time to time, the "Schedule TO") to provide for the purchase of
the issued and outstanding shares of Company Common Stock in accordance with the
terms hereof. Parent and Merger Sub agree, as to the Schedule TO, the Offer to
Purchase and related Letter of Transmittal (which documents, as supplemented or
amended from time to time, together constitute the "Offer Documents") will
comply as to form and content in all material respects with the applicable
provisions of the federal securities laws. The Company and its counsel shall be
given a reasonable opportunity to review and comment upon the Offer Documents
and any amendment or supplement thereto prior to the filing thereof with the
SEC, and Parent and Merger Sub shall consider such comments in good faith.
Parent and Merger Sub agree to provide to the Company and its counsel any
comments which Parent, Merger Sub or their counsel may receive from the Staff of
the SEC promptly after receipt thereof, and any proposed responses thereto, with
respect to the Offer Documents and any amendment or supplement thereto. Parent,
Merger Sub and the Company agree to promptly provide corrections to any
information provided by any of them for use in the Offer Documents (to the party
responsible for filing such documents) which shall have become false or
misleading in any material respect, and Parent and Merger Sub further agree to
take all steps necessary to cause the Schedule TO as so corrected to be filed
with the SEC and to disseminate any revised Offer Documents to the Company's
shareholders, in each case as and to the extent required by the applicable
provisions of the federal securities laws.
(b) The Company Board shall recommend acceptance of the Offer
to its shareholders in a Solicitation/Recommendation Statement on Schedule 14D-9
(as supplemented or amended from time to time, the "Schedule 14D-9"), which the
Company shall file with the SEC upon commencement of the Offer and which will
comply as to form and content in all material respects with the applicable
provisions of the federal securities laws; provided, however, that the Company
Board may amend, modify or withdraw its recommendation, or make no
recommendation, if the Company Board determines, following consultation with the
Company's outside legal counsel, that such action is required in order to comply
with applicable law. The Company will cooperate with Parent and Merger Sub in
mailing or otherwise disseminating the Schedule 14D-9 with the
3
<PAGE>
appropriate Offer Documents to the shareholders of the Company. Parent and its
counsel shall be given a reasonable opportunity to review and comment upon the
Schedule 14D-9 and any amendment or supplement thereto prior to the filing
thereof with the SEC, and the Company shall consider any such comments in good
faith. The Company agrees to provide to Parent and Merger Sub and their counsel
any comments which the Company or its counsel may receive from the Staff of the
SEC promptly after receipt thereof, and any proposed responses thereto, with
respect to the Schedule 14D-9 and any amendment or supplement thereto. The
Company, Parent and Merger Sub agree to correct promptly any information
provided by any of them for use in the Schedule 14D-9 which shall have become
false or misleading in any material respect, and the Company further agrees to
take all steps necessary to cause such Schedule 14D-9 as so corrected to be
filed with the SEC and disseminated to the Company's shareholders, in each case
as and to the extent required by the applicable provisions of the federal
securities laws. Parent, Merger Sub and the Company each hereby agree to provide
promptly such information necessary to the preparation of the exhibits and
schedules to the Schedule 14D-9 and the Offer Documents which the respective
party responsible therefor shall reasonably request. The Company hereby consents
to the inclusion in the Offer Documents of the recommendations and approvals
referred to in this Section 1.2.
1.3 COMPANY ACTION.
(a) The Company hereby represents and warrants to Parent and
Merger Sub that, the Company Board (at a meeting duly called and held) has
unanimously (i) determined that each of this Agreement, the Offer and the Merger
is fair to, and in the best interests of, the Company and the holders of Company
Common Stock; (ii) approved this Agreement, the Offer, the Merger and the
Shareholder Agreement, and the transactions contemplated hereby, in accordance
with the provisions FBCA; and (iii) recommended the acceptance of the Offer, the
tender of the Company Common Stock in the Offer and the approval and adoption of
this Agreement and the Merger by the shareholders of the Company. Such approval
by the Company Board constitutes approval of this Agreement, the Offer, the
Merger and the Shareholder Agreement for purposes of Sections 607.0901 and
607.0902 of the FBCA.
(b) In connection with the Offer, the Company shall, not later
than two (2) Business Days after the date of this Agreement, furnish Merger Sub
with such information (including a list of the record holders of the Company
Common Stock and their addresses, as well as mailing labels containing the names
and addresses of all record holders of Company Common Stock, lists of
non-objecting beneficial owners of Company Common Stock and lists of security
positions of Company Common Stock held in stock depositories, in each case as of
the most recent practicable date), and shall thereafter render such assistance
as Parent, Merger Sub or their agents may reasonably request in communicating
the Offer to the record and beneficial holders of Company Common Stock. Subject
to the requirements of applicable law and except for such steps as are necessary
to disseminate the Offer Documents and any other documents necessary to
consummate the Offer and the Merger, Parent and Merger Sub shall (i) hold in
confidence the information contained in any of such labels and lists; (ii) use
such information only in connection with the Offer and the Merger; and (iii) if
this Agreement is terminated, shall, upon request, deliver to the Company or
destroy all copies of such information then in their possession.
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1.4 COMPOSITION OF THE COMPANY BOARD.
(a) Promptly upon the acceptance for payment of, and payment
by Merger Sub in accordance with the Offer for, not less than a majority of the
outstanding shares of Company Common Stock pursuant to the Offer, Parent and
Merger Sub shall be entitled to designate such number of members of the Company
Board, rounded up to the next whole number, equal to that number of directors
which equals the product of the total number of directors on the Company Board
(giving effect to the directors elected pursuant to this sentence) multiplied by
the percentage that such number of shares of Company Common Stock owned in the
aggregate by Merger Sub or Parent, upon such acceptance for payment, bears to
the number of shares of Company Common Stock outstanding. Upon the written
request of Parent or Merger Sub, the Company shall, on the date of such request,
(i) either increase the size of the Company Board or use its reasonable efforts
to secure the resignations of such number of its incumbent directors as is
necessary to enable Parent's and Merger Sub's designees to be so elected or
appointed to the Company Board (including by nomination and approval by the
current Company Board) and (ii) cause Parent's and Merger Sub's designees to be
so elected or appointed, in each case as may be necessary to comply with the
foregoing provisions of this Section 1.4(a). The provisions of this Section
1.4(a) are in addition to and shall not limit any rights which Parent or Merger
Sub may have as a holder or beneficial owner of Company Common Stock as a matter
of applicable law with respect to the election of directors or otherwise.
(b) The Company's obligation to cause designees of Parent and
Merger Sub to be elected or appointed to the Company Board shall be subject to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The
Company shall promptly take all actions required pursuant to Section 14(f) and
Rule 14f-1 in order to fulfill its obligations under this Section 1.4, and shall
include in the Schedule 14D-9 such information with respect to Parent or Merger
Sub and their designees as is required under Section 14(f) and Rule 14f-1.
Parent and Merger Sub will supply to the Company in writing and be solely
responsible for any information with respect to any of them and their designees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1 and
any other applicable rules and regulations.
(c) After the time that Merger Sub's designees constitute at
least a majority of the Company Board and until the Effective Time, the Company
Board shall always have at least two (2) members (the "Independent Directors")
who are neither officers of Parent nor designees, shareholders or affiliates of
Parent or Parent's affiliates. During such period, any (i) amendment or
termination of this Agreement, (ii) extension of time for the performance or
waiver of the obligations or other acts of Parent or Merger Sub or waiver of the
Company's rights hereunder or (iii) action or inaction by the Company with
respect to this Agreement and the transactions contemplated hereby which
adversely affects the interests of the shareholders of the Company, including
the consummation of the Merger, shall require the approval of a majority of the
Independent Directors in addition to any required approval thereof by the full
Company Board. If the number of Independent Directors shall be reduced below two
(2) for any reason whatsoever, the remaining Independent Director shall be
entitled to designate a person to fill the vacancy, which designee shall not be
a current or former officer or affiliate of Parent or any of Parent's
affiliates, or, if no Independent Directors then remain, the other directors
shall designate two (2) persons to fill such
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vacancies who shall not be current or former officers or affiliates of Parent or
any of Parent's affiliates, and such persons shall be deemed to be Independent
Directors for purposes of this Agreement. The Company Board shall not delegate
any matter set forth in this Section 1.4(c) to any committee of the Company
Board.
ARTICLE II.
THE MERGER
2.1 THE MERGER. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the FBCA, Merger Sub shall be merged
with and into the Company at the Effective Time. Following the Merger, the
separate corporate existence of Merger Sub shall cease, and the Company shall
continue as the surviving corporation (the "Surviving Corporation") in
accordance with the FBCA.
2.2 CLOSING. The closing of the Merger (the "Closing") will take place
as soon as practicable (but not later than the third Business Day) after
satisfaction or waiver (as permitted by this Agreement and applicable law) of
the conditions (excluding conditions that, by their terms, cannot be satisfied
until the Closing Date) set forth in Article VI hereof (the "Closing Date"),
unless another time or date is agreed to in writing by the parties hereto. The
Closing shall be held at the offices of Vedder, Price, Kaufman & Kammholz, 222
North LaSalle Street, Suite 2600, Chicago, Illinois 60601, unless another place
is agreed to in writing by the parties hereto.
2.3 EFFECTIVE TIME. Upon the Closing, the parties shall file with the
Department of State of the State of Florida articles of merger (the "Articles of
Merger") executed in accordance with the relevant provisions of the FBCA and
shall make all other filings, recordings or publications required under the FBCA
in connection with the Merger. The Merger shall become effective at such time as
the Articles of Merger are duly filed with the Department of State of the State
of Florida, or at such other time as the parties may agree and specify in the
Articles of Merger (the time the Merger becomes effective being the "Effective
Time").
2.4 EFFECT OF THE MERGER. At and after the Effective Time, the Merger
will have the effects specified in the FBCA.
2.5 ARTICLES OF INCORPORATION. At the Effective Time and without any
further action on the part of the Company and Merger Sub, the articles of
incorporation of the Company shall be amended to read in their entirety as the
articles of incorporation of Merger Sub in effect immediately prior to the
Effective Time until thereafter changed or amended as provided therein or by
applicable law, provided that such articles of incorporation shall be further
amended to reflect Rexall Sundown, Inc. as the name of the Surviving
Corporation.
2.6 BYLAWS. The bylaws of Merger Sub as in effect at the Effective Time
shall be the bylaws of the Surviving Corporation until thereafter changed or
amended as provided therein or by
applicable law.
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2.7 OFFICERS AND DIRECTORS OF SURVIVING CORPORATION. The directors of
Merger Sub and/or any individuals designated by Merger Sub immediately prior to
the Effective Time shall be the initial directors of the Surviving Corporation,
until the earlier of their resignation or removal or otherwise ceasing to be a
director or until their respective successors are duly elected and qualified, as
the case may be. The officers of the Company immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation, until the
earlier of their resignation or removal or otherwise ceasing to be an officer or
until their respective successors are duly elected and qualified, as the case
may be.
2.8 EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue of the
Merger and without any action on the part of Parent, Merger Sub, the Company or
the holder of any shares of Company Common Stock or any shares of capital stock
of Merger Sub:
(a) CAPITAL STOCK OF MERGER SUB. Each issued and outstanding
share of capital stock of Merger Sub shall be converted into and become one
fully paid and nonassessable share of common stock, par value $0.01 per share,
of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK.
Each share of Company Common Stock that is owned by the Company and each share
of Company Common Stock that is owned by Parent or Merger Sub shall
automatically be canceled and shall cease to exist, and no Merger Consideration
shall be delivered in exchange therefor.
(c) CONVERSION OF COMPANY COMMON STOCK. Subject to Section
2.9(h), at the Effective Time each issued and outstanding share of Company
Common Stock (other than shares to be canceled in accordance with Section
2.8(b)) shall be converted into the right to receive the Price Per Share in
cash, without interest (the "Merger Consideration"). Subject to Section 2.9(h),
as of the Effective Time, all such shares of Company Common Stock shall no
longer be outstanding and shall automatically be canceled and shall cease to
exist, and each holder of a certificate representing any such shares of Company
Common Stock shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration upon surrender of such certificate in
accordance with Section 2.9.
2.9 SURRENDER AND PAYMENT.
(a) EXCHANGE AGENT. Prior to the Effective Time, Parent shall
designate a bank or trust company reasonably acceptable to the Company to act as
agent for the holders of shares of Company Common Stock in connection with the
Merger (the "Exchange Agent") to receive the Merger Consideration to which
holders of shares of Company Common Stock shall become entitled pursuant to
Section 2.8. Prior to the filing of the Articles of Merger with the Department
of State of the State of Florida, Parent or Merger Sub shall deposit with the
Exchange Agent cash in an aggregate amount equal to the product of (i) the
number of shares of Company Common Stock outstanding (and not to be canceled
pursuant to Section 2.8(b)) immediately prior to the Effective Time, multiplied
by (ii) the Merger Consideration (the "Payment Fund"). The Exchange Agent shall
cause the Payment Fund to be (A) held for the benefit of the holders of Company
Common Stock
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and (B) promptly applied to making the payments provided for in Section 2.8(c).
The Payment Fund shall not be used for any purpose that is not provided for
herein.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable
after the Effective Time, Parent shall cause the Exchange Agent to mail to each
holder of record of a certificate or certificates (the "Certificates") which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock, other than shares to be canceled in accordance with
Section 2.8(b), (i) a Letter of Transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration. Upon surrender of a Certificate for cancellation
to the Exchange Agent, together with such Letter of Transmittal, duly executed,
and such other documents as may reasonably be required by the Exchange Agent,
the Exchange Agent shall pay the holder of such Certificate the Merger
Consideration in respect of such Certificate, less any required withholding
taxes, and the Certificate so surrendered shall forthwith be canceled. If any
portion of the Merger Consideration is to be paid to a Person other than the
registered holder of the shares represented by the Certificate or Certificates
surrendered in exchange therefor, it shall be a condition to such payment that
the Certificate or Certificates so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the Person requesting such
payment shall pay to the Exchange Agent any transfer or other taxes required as
a result of such payment to a Person other than the registered holder of such
shares or establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not payable. Until surrendered as contemplated by this Section
2.9, each Certificate (other than Certificates representing Dissenting Shares
(as defined below) or shares of Company Common Stock to be canceled pursuant to
Section 2.8(b)) shall be deemed at any time after the Effective Time to
represent only the right to receive the Merger Consideration upon such
surrender.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All
Merger Consideration paid upon the surrender for exchange of Certificates in
accordance with the terms of this Article II shall be deemed to have been paid
in full satisfaction of all rights pertaining to the shares of Company Common
Stock theretofore represented by such Certificates. There shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Exchange Agent
for any reason, they shall be canceled and exchanged as provided in this Article
II, except as otherwise provided by law.
(d) UNCLAIMED FUNDS. Any portion of the Payment Fund made
available to the Exchange Agent pursuant to Section 2.9(a) that remains
unclaimed by holders of the Certificates for six (6) months after the Effective
Time shall be delivered to the Surviving Corporation or a United States parent
thereof, upon demand, and any holders of Certificates who have not theretofore
complied with this Article II shall thereafter look only to Parent for payment
of their claim for Merger Consideration. Any portion of the Merger Consideration
made available to the Exchange Agent to pay for Company Common Stock for which
dissenters' rights have been perfected shall be returned to Parent, upon demand.
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(e) NO LIABILITY. None of Parent, Merger Sub, the Company or
the Exchange Agent shall be liable to any Person in respect of any Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificate has not been
surrendered prior to five (5) years after the Effective Time (or immediately
prior to such earlier date on which Merger Consideration in respect of such
Certificate would otherwise escheat to or become the property of any public
official), any such shares, cash, dividends or distributions in respect of such
Certificate shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
(f) INVESTMENT OF FUNDS. The Payment Fund shall be invested by
the Exchange Agent in obligations of, or guaranteed by, the United States of
America, in commercial paper obligations rated A-1 or P-1 or better by Moody's
Investor Services or Standard & Poor's Corporation, respectively, in each case
with maturities not exceeding seven (7) days. All earnings thereon shall inure
to the benefit of Parent or Merger Sub.
(g) LOST CERTIFICATES. In the event that any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen or destroyed
and, if required by Parent, the granting of an indemnity reasonably satisfactory
to Parent against any claim that may be made against it, the Surviving
Corporation or the Exchange Agent, with respect to such Certificate, will issue
in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration with respect to such Certificate, to which such Person is entitled
pursuant hereto.
(h) DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, if required under the FBCA, but only to the extent
required thereby, shares of Company Common Stock that are issued and outstanding
immediately prior to the Effective Time and which are held by shareholders
("Dissenting Shareholders") who (i) have not voted in favor of or consented to
the Merger, (ii) in the manner provided in Section 607.1320 of the FBCA, shall
have delivered a written notice of intent to demand payment for such shares of
Company Common Stock if the Merger is effectuated in the time and manner
provided in FBCA and (iii) shall not have failed to perfect or shall not have
effectively withdrawn or lost their rights to appraisal and payment under the
FBCA shall not be converted into the right to receive the Merger Consideration,
but shall, in lieu thereof, be entitled to receive the consideration as shall be
determined pursuant to Sections 607.1301 through 607.1320 of the FBCA; provided,
however, that any such holder who shall have failed to perfect or shall have
effectively withdrawn or lost his, her or its right to appraisal and payment
under the FBCA, shall thereupon be deemed to have had such person's shares of
Company Common Stock converted, at the Effective Time, into the right to receive
the Merger Consideration set forth herein, without any interest or dividends
thereon. Notwithstanding anything to the contrary contained in this Section
2.9(h), if (A) the Merger is rescinded or abandoned or (B) the shareholders of
the Company revoke the authority to effect the Merger, then the right of any
Dissenting Shareholder to be paid the fair value of such Dissenting
Shareholder's Shares pursuant to Section 607.1302 of the FBCA shall cease as
provided in the FBCA. The Company will give Parent prompt notice of any demands
received by the Company for appraisals of Company Common Stock held by
Dissenting
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Shareholders. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to any demands for appraisal or offer to
settle or settle any such demands.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as
specifically set forth in the Company Disclosure Schedule delivered by the
Company to Parent on the date hereof (the "Company Disclosure Schedule") or as
disclosed in the Company SEC Reports (as defined below) filed with the SEC and
publicly available prior to the date hereof, the Company represents and warrants
to Parent and Merger Sub as follows:
(a) ORGANIZATION, STANDING AND POWER. Each of the Company and
its Subsidiaries has been duly organized and is validly existing and in good
standing under the laws of its jurisdiction of incorporation. Each of the
Company and its Subsidiaries is duly qualified and in good standing or otherwise
authorized or licensed to do business in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification necessary, except for any such failure to be so qualified,
authorized or licensed or in good standing when taken together with all other
such failures, could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company or materially impair or
delay the ability of the Company to consummate the transactions contemplated
hereby. The copies of the Organizational Documents of the Company and of each
Subsidiary which were previously furnished or made available to Parent are, in
each case, true, complete and correct copies of such documents as in effect on
the date of this Agreement. Each of the Company and its Subsidiaries has the
requisite corporate power and corporate authority to own, lease and operate its
properties and to carry on its respective businesses as they are now being
conducted. The Company's Articles of Incorporation and By-laws and the
comparable governing instruments of each of its Subsidiaries are in full force
and effect. Neither the Company nor any of its Subsidiaries is in violation of
any provisions of its Organizational Documents in any material respect. Section
3.1(a) of the Company Disclosure Schedule contains a true and accurate list of
all the Subsidiaries of the Company. Except for its interests in its
Subsidiaries, the Company does not own, directly or indirectly, any capital
stock, membership interest, partnership interest, joint venture interest or
other equity interest in any Person.
(b) CAPITAL STRUCTURE.
(i) The authorized capital stock of the Company
consists of 200,000,000 shares of Company Common Stock, of which, as of
the date hereof, 63,971,522 shares have been issued and are outstanding
and 19,816,271 shares have been reserved for issuance upon exercise of
outstanding options, warrants or other rights to acquire capital stock
from the Company. The Company has authorized 5,000,000 shares of
preferred stock, none of which is issued or outstanding. Except as
provided in this Section 3.1(b), there are no shares of capital stock
or other equity securities of the Company issued, reserved for issuance
or outstanding. All issued and outstanding shares of the capital stock
of the Company are duly authorized, validly issued, fully paid and
nonassessable, and no class of capital stock is entitled to preemptive
rights. As of the date of this Agreement, there are no outstanding
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options, warrants, convertible or exchangeable securities or other
rights to acquire capital stock from the Company other than options
representing in the aggregate the right to purchase not more than
13,245,023 shares of Company Common Stock under the Company Stock
Option Plans (the "Outstanding Options"), and options or rights to
purchase shares of Company Common Stock under the Company Stock
Purchase Plans. There are 11,879,215 Outstanding Options which have an
exercise price of less than the Price Per Share which options have an
aggregate weighted average exercise price of $12.40 per share of
Company Common Stock.
(ii) All of the issued and outstanding shares of
capital stock of the Company's Subsidiaries are duly authorized,
validly issued, fully paid and nonassessable and are owned solely by
the Company, free and clear of any liens, pledges, security interests,
claims, encumbrances, restrictions (including any restriction on the
right to vote or sell such shares, except as may be imposed as a matter
of law), preemptive rights or any other claims of any third party
("Liens").
(iii) As of the date of this Agreement, no bonds,
debentures, notes or other indebtedness of the Company having the right
to vote on any matters on which shareholders may vote ("Company Voting
Debt") are issued or outstanding.
(iv) Except as otherwise set forth in this Section
3.1(b), as of the date of this Agreement, there are no securities,
options, warrants, calls, rights, commitments, agreements, arrangements
or undertakings of any kind to which the Company or its Subsidiaries is
a party or by which any of them is bound obligating (and no contract,
agreement, understanding, arrangement or obligation, whether or not
contingent, providing for) the Company or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other voting securities of the
Company or such Subsidiary or obligating the Company or such Subsidiary
to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or
undertaking. Except as set forth on Section 3.1(b)(iv) of the Company
Disclosure Schedule, as of the date of this Agreement, there are no
outstanding obligations, arrangements, agreements or commitments of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or such Subsidiary.
Immediately prior to the consummation of the Offer and Merger, no
shares of Company Common Stock or other securities of the Company will
be issuable and, immediately after the Effective Time, the Surviving
Corporation will have no obligation to issue, transfer or sell any
shares of common stock of the Surviving Corporation pursuant to any
compensation and benefit plan of the Company or any of its
Subsidiaries.
(c) AUTHORITY; NO CONFLICTS.
(i) The Company has all requisite corporate power and
corporate authority to enter into this Agreement and, subject to the
adoption of this Agreement and approval of the Merger by the requisite
vote of the holders of Company Common Stock, to consummate the
transactions contemplated hereby. The execution and delivery of this
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Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action
on the part of the Company, subject in the case of the consummation of
the Merger to the adoption of this Agreement by the requisite vote of
the shareholders of the Company, and no other corporate proceedings are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by the Company and, assuming the due execution and delivery
of this Agreement by Parent and Merger Sub, constitutes a valid and
binding agreement of the Company, enforceable against it in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws
relating to or affecting creditors generally and by general equity
principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(ii) The execution, delivery and performance of this
Agreement do not or will not, as the case may be, and the consummation
of the transactions contemplated hereby will not, conflict with, or
result in any violation of, or constitute a default (with or without
notice or lapse of time, or both) under, or give rise to a right of
consent, termination, amendment, cancellation or acceleration of any
obligation or the loss of a material benefit under, or the creation of
a Lien on any assets (any such conflict, violation, default, right of
consent, termination, amendment, cancellation or acceleration of any
obligations or creation, a "Violation"), or result in any adverse
change in the rights or obligations of the Company pursuant to: (A) any
provision of the Organizational Documents of the Company or any of its
Subsidiaries or (B) except as could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the
Company or prevent, impair or materially delay the consummation of any
of the transactions contemplated hereby and, subject to obtaining or
making the consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in paragraph (iii) below, the
terms, provisions or conditions of any loan or credit agreement, note,
mortgage, bond, indenture, lease, compensation or benefit plan (or any
grant or award made pursuant thereto) or other agreement, obligation,
instrument, contract, permit, concession, franchise, license, judgment,
order, writ, injunction, award, decree, statute, law, ordinance, rule
or regulation applicable to the Company, the Company's Subsidiaries or
any of their respective properties or assets.
(iii) No consent, registration, permit, approval,
order or authorization of, or registration, declaration, notice,
report, or other filing with, any supranational, national, state,
municipal or local government, any instrumentality, subdivision, court,
administrative agency or commission or other authority thereof, or any
quasi-governmental or private body exercising any regulatory, taxing,
importing or other governmental or quasi-governmental authority,
whether U.S. or foreign (a "Governmental Entity"), is required by or
with respect to the Company or any of its Subsidiaries in connection
with the execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby,
except for (x) those required under or in relation to (A) the Exchange
Act, (B) the FBCA with respect to the filing and recordation of the
Articles of Merger and any other appropriate merger or other documents,
(C) the rules and regulations of The Nasdaq National Market System
("Nasdaq"), and (D) the filing of a pre-merger notification
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and report form by the Company under the HSR Act, and the rules and
regulations thereunder and (y) such other consents, registrations,
permits, approvals, orders, authorizations, registrations,
declarations, notices, reports and other filings the failure of which
to make or obtain could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the
Company or prevent, impair or materially delay the consummation of the
transactions contemplated hereby.
(d) REPORTS AND FINANCIAL STATEMENTS.
(i) Since August 31, 1998, the Company has timely
filed all required reports, schedules, forms, statements and other
documents required to be filed by it with the SEC (collectively,
including all exhibits thereto, the "Company SEC Reports"). The Company
SEC Reports, as of their respective dates (and, if amended or
superseded by a filing prior to the date of this Agreement, then on the
date of such filing), did not, and any Company SEC Reports filed with
the SEC subsequent to the date hereof and prior to the purchase of
shares pursuant to the Offer will not, contain any untrue statement of
a material fact or omit to state a material fact required to be stated
(or incorporated by reference) therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. Each of the financial statements (including
the related notes) included or to be included in, or incorporated by
reference into, the Company SEC Reports presents or will present
fairly, in all material respects, the consolidated financial position
and consolidated results of operations and cash flows of the Company
and its Subsidiaries as of the respective dates or for the respective
periods set forth therein, all in conformity with U.S. generally
accepted accounting principles ("GAAP") consistently applied during the
periods involved except as otherwise noted therein, and subject, in the
case of the unaudited interim financial statements, to normal
accounting year-end adjustments that have not been and will not be
material in amount or nature. All of such Company SEC Reports, as of
their respective dates (and as of the date of any amendment to the
respective Company SEC Report filed prior to the date hereof), complied
in all material respects with the applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), the Exchange
Act and the rules and regulations promulgated under such acts (as in
effect on the dates on which such SEC Reports were filed).
(ii) Except as set forth in Section 3.1(d)(ii) of the
Company Disclosure Schedule, and except for the Merger Fees as
estimated and set forth in Section 3.1(n) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has any
liabilities or obligations of any nature required to be set forth in a
consolidated balance sheet of the Company and its consolidated
Subsidiaries under GAAP (whether accrued, absolute, contingent or
otherwise) and there is no existing condition, situation or set of
circumstances, which could reasonably be expected to result in such a
liability or obligation, except for liabilities or obligations which
individually or in the aggregate could not reasonably be expected to
have a Material Adverse Effect on the Company.
(iii) The Company has delivered to Parent a complete
and correct copy of any amendments or modifications, which have not yet
been filed with the SEC, to all
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agreements, documents or other instruments which previously had been
filed by the Company with the SEC pursuant to the Exchange Act.
(e) INFORMATION SUPPLIED.
(i) None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in
(A) the proxy statement relating to the Company Shareholders Meeting
(as defined herein) or the information statement relating to approval
of the Merger and this Agreement by written consent (together, the
"Proxy Statement"), if applicable, (B) the Schedule 14D-9, (C) the
Offer Documents and (D) any other document filed or to be filed with
the SEC or any other Government Entity in connection with the Offer or
this Agreement will, at the respective times such documents or any
amendments or supplements thereto are filed, and, with respect to the
Offer Documents and the Proxy Statement, if any, when first published,
sent or given to the shareholders of the Company, contain any untrue
statement of material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they are made, not false or
misleading or, in the case of the Proxy Statement, if any, or any
amendment thereof or supplement thereto, at the time of the Company
Shareholders Meeting, if any, and at the Effective Time, contain an
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which
they are made, not false or misleading or necessary to correct any
statement in any earlier communication with respect to the Offer or the
solicitation of proxies for the Company Shareholders Meeting, if any,
which shall have become false or misleading. The Proxy Statement, if
any, and Schedule 14D-9 will comply as to form and content in all
material respects with the requirements of the Exchange Act and the
Securities Act and the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this
Section 3.1(e), no representation or warranty is made by the Company
with respect to statements made or incorporated by reference in the
Proxy Statement, if any, or the Offer Documents based on information
supplied by Parent or Merger Sub in writing specifically for inclusion
or incorporation by reference therein.
(f) COMPLIANCE WITH APPLICABLE LAWS; REGULATORY MATTERS. The
Company and each of its Subsidiaries hold all permits, licenses, certificates,
franchises, registrations, variances, exemptions, orders and approvals of all
Governmental Entities other than those the failure to so hold individually or in
the aggregate could not reasonably be expected to have a Material Adverse Effect
on the Company (the "Company Permits"). The Company and each of its Subsidiaries
have performed their respective obligations under and are in compliance with the
terms of the Company Permits, except where the failure so to comply or perform,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Company. No event has occurred or condition or
state of facts exists which constitutes or, after notice or lapse of time or
both, would constitute a breach or default under the Company Permits or, after
notice or lapse of time or both, would permit revocation or termination of the
Company Permits, except where such
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event, condition or state of facts, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Company. The
businesses of the Company and its Subsidiaries are not being and have not been
conducted in violation of any law, ordinance, regulation, judgment, decree,
injunction, rule or order of any Governmental Entity, except for violations
which could not reasonably be expected to have a Material Adverse Effect on the
Company. As of the date of this Agreement, no lawsuit, claim, suit, proceeding
or investigation by any Governmental Entity with respect to the Company or any
of its Subsidiaries is pending or, to the best knowledge of the Company,
threatened, nor, to the best knowledge of the Company, has any Governmental
Entity indicated an intention to conduct the same, other than lawsuits, claims,
suits, proceedings or investigations which, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect on the
Company.
(g) LITIGATION. There is no litigation, arbitration, claim,
suit, action, investigation or proceeding pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries
or any of their respective properties or assets, which could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company or could reasonably be expected to prevent or materially delay the
consummation of the transactions contemplated by this Agreement, nor is there
any judgment, award, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against the Company or any of its Subsidiaries
which could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company. This provision shall not apply to
environmental matters which are the subject of Section 3.1(r).
(h) TAXES. (i) The Company and its Subsidiaries have duly and
timely filed (taking into account any extension of time within which to file)
all Tax Returns required to be filed by any of them other than those the failure
of which to file could not reasonably be expected to have individually or in the
aggregate a Material Adverse Effect on the Company and all such filed Tax
Returns are complete and accurate in all material respects; (ii) the Company and
its Subsidiaries have paid all Taxes due and payable by them (whether or not
shown on any Tax Return), other than those the failure of which to pay could not
reasonably be expected to have individually or in the aggregate a Material
Adverse Effect on the Company; (iii) as of the date of this Agreement, there are
no pending or, to the knowledge of the Company, threatened in writing audits,
examinations, investigations or other proceedings in respect of Taxes or Tax
matters relating to the Company or any of its Subsidiaries which, if determined
adversely to the Company or such Subsidiary, could reasonably be expected to
have a Material Adverse Effect on the Company; (iv) no claim has ever been made
by an authority in a jurisdiction where the Company or any of its Subsidiaries
does not file tax returns that it is or may be subject to taxation by that
jurisdiction except as could not reasonably be expected to have a Material
Adverse Effect; (v) there are no deficiencies or claims for any Taxes that have
been proposed, asserted or assessed, or material issues that have been raised in
connection with the examination of Tax Returns and that could reasonably be
expected to give rise to such deficiencies or claims, against the Company or any
of its Subsidiaries which, if such deficiencies or claims were finally resolved
against the Company or such Subsidiary, could reasonably be expected to have a
Material Adverse Effect on the Company; (vi) there are no material Liens for
Taxes upon the assets of the Company or any of its Subsidiaries, other than
Liens for current Taxes not yet due and payable and Liens for Taxes that are
being contested in good faith by
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appropriate proceedings and that could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company if
any such contest is unsuccessful; (vii) neither the Company nor any of its
Subsidiaries is or was at any time during the five (5) year period ending on the
date on which the Effective Time occurs, a "United States real property holding
corporation" within the meaning of Section 897(c) of the Code; (viii) neither
the Company nor any of its Subsidiaries has made an election under Section
341(f) of the Code; (ix) neither the Company nor any of its Subsidiaries has
filed or been required to file any reports under Section 999 of the Code; (x)
the Company and each of its Subsidiaries has disclosed on its federal Income Tax
Returns all positions taken therein that could give rise to a substantial
understatement of federal income tax within the meaning of Section 6662 of the
Code; (xi) neither the Company nor any of its Subsidiaries is now or has ever
been a party to any tax allocation or sharing agreement; (xii) other than the
consolidated group of which the Company is now the common parent, neither the
Company nor any of its Subsidiaries has ever been (A) a member of an affiliated
group filing a consolidated federal income Tax Return or (B) responsible for any
liability for the Taxes of any Person as a transferee or successor, by contract,
by operation of law, or otherwise; and (xiii) except where the failure to do so
could not reasonably be expected to have individually or in the aggregate a
Material Adverse Effect on the Company, the Company and each of its Subsidiaries
has (A) withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, shareholder, or other third party and (B) collected any and all
amounts required from customers or other third parties in the form of sales,
use, or similar Taxes and paid, when due, such Taxes to the appropriate
governmental authority.
(i) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since August 31,
1999 (A) each of the Company and the Company's Subsidiaries has conducted its
business in the ordinary course; (B) there has not been any change in the
business, condition (financial or otherwise), prospects or results of operations
of the Company or its Subsidiaries that has had, or could reasonably be expected
to have, a Material Adverse Effect on the Company; (C) there has not been any
entry by the Company or its Subsidiaries into any employment agreement,
severance agreement or termination agreement with any employee of the Company
other than in the ordinary course of business and except as contemplated hereby;
(D) there has not been any declaration, setting aside or payment of any dividend
or other distribution with respect to the capital stock of the Company nor has
there been any repurchase, redemption or other acquisition by the Company or any
of its Subsidiaries of any outstanding shares of capital stock or other
securities of, or other ownership interests in, the Company or such Subsidiary;
(E) there has not been any material change by the Company in accounting
principles, practices or methods except as required by GAAP; (F) except as
provided or contemplated hereby for herein, there has not been any material
increase in the compensation payable or which could become payable by the
Company and its Subsidiaries to their officers or key employees, or any material
amendment of any compensation and benefit plans; (G) there has not been any
amendment of any material term of any outstanding security of the Company or any
of its Subsidiaries; (H) there has not been any acquisition, sale or transfer of
any material assets of the Company or any of its Subsidiaries; and (I) there has
not been any entry by the Company or its Subsidiaries into any material joint
venture or other similar arrangement with any Person.
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(j) VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock adopting this
Agreement (the "Required Company Votes") is the only vote of the holders of any
class or series of the Company capital stock necessary to approve this Agreement
and the transactions contemplated hereby and is only necessary in the event that
the number of shares of Company Common Stock tendered pursuant to the Offer
represents less than 80% of the issued and outstanding shares of Company Common
Stock. The Company Common Stock which is subject to the Shareholder Agreement
(not counting any option for Company Common Stock which is subject to the
Shareholder Agreement) constitutes a majority of the outstanding shares of the
Company Common Stock on the date hereof.
(k) CONTRACTS; DEBT INSTRUMENTS. (i) Except as disclosed in
the SEC Reports or on Section 3.1(k)(i) of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries is a party to or subject to:
(A) any employment, consulting, severance,
termination, or indemnification agreement, contract or
arrangement providing for future payments, written or oral,
with any current or former officer, consultant, director or
employee which (1) exceeds $200,000 per annum or (2) requires
aggregate annual payments or total payments over the life of
such agreement, contract or arrangement to such current or
former officer, consultant, director or employee in excess of
$200,000, and is not terminable by it or its subsidiary on 30
days' notice or less without penalty or obligation to make
payments related to such termination;
(B) any joint venture contract or
arrangement or any other agreement which has involved or is
expected to involve a sharing of revenues of $200,000 per
annum or more with other persons;
(C) any lease for real or personal property
in which the amount of payments which the Company is required
to make on an annual basis exceeds $200,000;
(D) any material agreement, contract,
policy, license, permit, document, instrument, arrangement or
commitment which has not been terminated or performed in its
entirety and not renewed which may be, by its terms,
terminated, impaired or adversely affected by reason of the
execution of this Agreement, the closing of the Offer or the
Merger, or the consummation of the other transactions
contemplated hereby;
(E) any agreement, contract, policy,
license, permit, document, instrument, arrangement or
commitment that limits in any material respect the freedom of
the Company or any Subsidiary of the Company to compete in any
line of business or with any person or in any geographic area
or which would so limit in any material respect the freedom of
the Company or any Subsidiary of the Company after the
Effective Time; or
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(F) any other agreement, contract, policy,
license, permit, document, instrument, arrangement or
commitment not made in the ordinary course of business which
is material to the Company and its Subsidiaries taken as a
whole.
(ii) All of the Company Material Contracts are valid
and in full force and effect, except to the extent they have previously
expired in accordance with their terms, and other than as could not
reasonably be expected to have a Material Adverse Effect on the
Company. Neither the Company nor its Subsidiaries has violated any
provision of, or committed or failed to perform any act which, with or
without notice, lapse of time, or both, could reasonably be expected to
constitute a default under the provisions of, any such Company Material
Contract, and neither the Company nor any of its Subsidiaries has
received notice that any party to any Company Material Contract intends
to cancel, terminate or otherwise modify the terms of any applicable
Company Material Contract, except in each case, as could not reasonably
be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. To the knowledge of the Company, no
counterparty to any such Company Material Contract has violated any
provision of, or committed or failed to perform any act which, with or
without notice, lapse of time, or both, could reasonably be expected to
constitute a default or other breach under the provisions of, such
Company Material Contract, except for defaults or breaches which could
not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect on the Company.
(iii) Set forth in Section 3.1(k)(iii) of the Company
Disclosure Schedule is (A) a list of all loan or credit agreements,
notes, bonds, mortgages, indentures and other agreements and
instruments pursuant to which any indebtedness of the Company or any of
its Subsidiaries in an aggregate principal amount in excess of $300,000
is outstanding or may be incurred and (B) the respective principal
amounts currently outstanding thereunder. For purposes of this Section
3.1(k)(iii), "indebtedness" shall mean, with respect to any Person,
without duplication, (A) all obligations of such Person for borrowed
money, or with respect to deposits or advances of any kind to such
Person, (B) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (C) all obligations of such
Person upon which interest charges are customarily paid, (D) all
obligations of such Person under conditional sale or other title
retention agreements relating to property purchased by such Person, (E)
all obligations of such Person issued or assumed as the deferred
purchase price of property or services (excluding obligations of such
Person to creditors for raw materials, inventory, services, supplies
and other trade payables incurred in the ordinary course of such
person's business), (F) all capitalized lease obligations of such
Person, (G) all obligations of others secured by any Lien on property
or assets owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (H) all obligations of
such Person under interest rate or currency swap transactions (valued
at the termination value thereof), (I) all letters of credit issued for
the account of such Person (excluding letters of credit issued for the
benefit of suppliers to support accounts payable to suppliers incurred
in the ordinary course of business), (J) all obligations of such Person
to purchase securities (or other property) which arises out of or in
connection with the sale of the same or substantially similar
securities or property, and (K) all guarantees and
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arrangements having the economic effect of a guarantee of such Person
of any indebtedness of any other Person.
(l) EMPLOYEE BENEFIT PLANS: LABOR MATTERS.
(i) With respect to each employee benefit plan as
defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and with respect to each other material
employee and/or director benefit plan, program, arrangement and
contract (including any bonus, deferred compensation, stock bonus,
stock purchase, restricted stock, stock option, fringe benefit, sick
pay, vacation, employment, termination, change in control and severance
plan, program, arrangement and contract), to which the Company or any
of its Subsidiaries is a party, which is maintained or contributed to
by the Company or any of its Subsidiaries, or with respect to which the
Company or any of its Subsidiaries could incur material liability under
Section 4069, 4201 or 4212(c) of ERISA other than any "multiemployer
plan" within the meaning of Section 3(37) of ERISA (a "Multiemployer
Plan") (collectively, together with any and all amendments thereto, and
any related trust agreement, insurance contract or other funding
instrument, the "Company Benefit Plans") the Company has listed such
Company Benefit Plan on Section 3.1(1)(i) of the Company Disclosure
Schedule and has made available to Parent a true and complete copy of
such Company Benefit Plan (or, to the extent no such copy exists, an
accurate description thereof). A true and complete copy of the most
recent annual report, actuarial reports, summary plan description or
other employee communication material (including any summary of
material modification) and Internal Revenue Service determination
letter with respect to each Company Benefit Plan (to the extent
applicable thereto) has been made available to Parent.
(ii) Each of the Company Benefit Plans that is an
"employee pension benefit plan" within the meaning of Section 3(2) of
ERISA and that is intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter from the United
States Internal Revenue Service, and the Company is not aware of any
circumstances likely to result in the revocation of any such favorable
determination letter.
(iii) With respect to the Company Benefit Plans and
any Multiemployer Plan, no event has occurred and, to the knowledge of
the Company, there exists no condition or set of circumstances,
including but not limited to any non-exempt "prohibited transactions"
(as described in ERISA or the Code) with respect to any Company Benefit
Plan, in connection with which the Company or any of its Subsidiaries
could be subject to any liability under the terms of such Company
Benefit Plans, Multiemployer Plan, ERISA, the Code or any other
applicable law which could reasonably be expected to have a Material
Adverse Effect on the Company.
(iv) All Company Benefit Plans, to the extent subject
to ERISA have been and are in substantial compliance with ERISA. There
is no material pending or, to the knowledge of the Company threatened,
litigation relating to the Company Benefit Plans. No Company Benefit
Plan is subject to Title IV of ERISA and no liability under Title IV of
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ERISA has been or is expected to be incurred by the Company or any of
its Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of
ERISA, of any entity which is considered one employer with the Company
under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate").
(v) Neither the Company nor any of its Subsidiaries
has any material obligations for retiree health and life benefits under
any Company Benefit Plan except to the extent required by applicable
law.
(vi) All Company Benefit Plans maintained outside of
the United States have been and are in substantial compliance with
applicable local law except where such failure to comply could not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
(vii) Neither the Company nor any of its Subsidiaries
is a party to any collective bargaining or other labor union contracts
and no collective bargaining agreement is being negotiated by the
Company or any of its Subsidiaries. There is no pending labor dispute,
strike or work stoppage against the Company or any of its Subsidiaries
which may interfere with the respective business activities of the
Company or any of its Subsidiaries, except where such dispute, strike
or work stoppage could not reasonably be expected to have individually
or in the aggregate a Material Adverse Effect on the Company. There is
no pending charge or complaint against the Company or any of its
Subsidiaries by the National Labor Relations Board or any comparable
state agency, except where such unfair labor practice, charge or
complaint could not reasonably be expected to have a Material Adverse
Effect on the Company.
(viii) Section 3.1(1)(viii) of the Company Disclosure
Schedule sets forth (A) the estimated maximum amount that could be paid
to or received by each "disqualified individual" (as defined in
proposed regulations under Section 280G of the Code) (whether in cash
or property or the vesting of property or the forgiveness of
indebtedness) as a result of the Offer, Merger or the other
transactions contemplated by this Agreement under all Company Benefit
Plans or otherwise; (B) the "base amount" (as defined in Section
280G(b)(3) of the Code) for each disqualified individual calculated as
of the date of this Agreement; and (C) a list of each employee of the
Company or any of its Subsidiaries who is entitled to receive a
retention bonus, severance and/or other payment as a result of the
Offer, Merger or any other transaction contemplated hereby, the amount
of each such bonus, severance and/or other payment and the date and
other terms relating to the payment thereof. Neither the Offer, Merger
or any other transaction or action contemplated by this Agreement will
constitute an "Acquisition Proposal" (or change in control or words of
similar import) as defined in any Company Benefit Plan.
(ix) Other than as set forth on Section 3.1(1)(viii)
of the Company Disclosure Schedule, or as set forth in the Company
Equity Plans, no employee of the Company or any of its Subsidiaries
will be entitled to any additional benefits or any
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acceleration of the time of payment or vesting of any benefits under
any Company Benefit Plan or otherwise as a result of the transactions
contemplated by this Agreement.
(x) No deduction for compensation payable by the
Company or any of its Subsidiaries to any of its employees under any
Company Benefit Plan or otherwise after the date of this Agreement
(including by reason of the Offer, Merger or other transactions
contemplated hereby) will be subject to disallowance under Section
162(m) of the Code.
(m) INTELLECTUAL PROPERTY.
(i) Except as could not reasonably be expected to
have a Material Adverse Effect on the Company, (A) all patents,
trademarks, trade names, service marks and copyrights and registrations
and applications relating thereto held by the Company and its
Subsidiaries are valid and enforceable, (B) neither the Company nor any
of its Subsidiaries is, nor will the Company or any of its Subsidiaries
be as a result of the execution and delivery of this Agreement or the
performance of the Company's obligations hereunder, in violation of,
and no claims are pending or, to the knowledge of the Company,
threatened that the Company or any of its Subsidiaries is infringing on
or otherwise violating the rights of any person with regard to any
Intellectual Property and (C) to the Company's knowledge, no person is
infringing on or otherwise violating any right of the Company or any of
its Subsidiaries with respect to any Intellectual Property owned by
and/or licensed to the Company or any of its Subsidiaries.
(ii) It is the general policy of the Company to
require that its employees execute agreements assigning to the Company
all rights such employees otherwise would have in Intellectual Property
developed by such employees while in the employ of the Company.
(n) BROKERS OR FINDERS. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee payable by the Company or
any of its Subsidiaries in connection with any of the transactions contemplated
by this Agreement, except Morgan Stanley & Co. Incorporated, the arrangements
with which have been disclosed in writing to Parent prior to the date hereof.
Section 3.1(n) of the Company Disclosure Schedule sets forth the Company's good
faith estimate of the Merger Fees (as defined herein) owed or which will be
owing by the Company and its Subsidiaries in connection with the Offer, the
Merger and the other transactions contemplated by this Agreement. The term
"Merger Fees" means all fees and expenses paid since December 31, 1999 or
payable by or on behalf of the Company or any of its Subsidiaries to all
attorneys, accountants, investment bankers, financial advisors and other experts
and advisers incident to the negotiation, preparation, execution and
consummation of this Agreement and the transactions contemplated hereby.
(o) OPINION OF FINANCIAL ADVISOR. The Company has received a
written opinion of Morgan Stanley & Co. Incorporated dated the date of this
Agreement, to the effect that, as of such
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date, the consideration to be paid in the Offer and the Merger is fair, from a
financial point of view, to the holders of Company Common Stock. A copy of this
opinion has been provided to Parent.
(p) PRODUCTS AND SERVICES.
(i) The Company has provided to Parent a written list
of each product under development, developed, manufactured, licensed,
distributed or sold by the Company and its Subsidiaries and any other
products in which the Company and its Subsidiaries have any proprietary
rights or beneficial interest (collectively, the "Company Products").
Each Company Product has been designed and manufactured in accordance
with (A) the specifications under which the Company Product is normally
and has normally been manufactured, and (B) the provisions of all
applicable laws, policies, guidelines and any other governmental
requirements, the violation of which could reasonably be expected to
have a Material Adverse Effect on the Company.
(ii) Except as set forth on Section 3.1(p)(ii) of the
Company Disclosure Schedule, to the Company's knowledge there exists no
set of facts which could reasonably be expected to furnish a basis for
the recall, withdrawal or suspension of any product registration,
produce license, manufacturing license, export license or other
license, approval or consent of any governmental or regulatory
authority (whether foreign or U.S.) with respect to the Company and its
Subsidiaries or any of the Company Products, which recall, withdrawal
or suspension could reasonably be expected to have a Material Adverse
Effect on the Company.
(iii) Except as which would not reasonably be
expected to have a Material Adverse Effect on the Company, there are no
claims existing and, to the knowledge of the Company, there is no basis
for any claim against the Company and its Subsidiaries for injury to
persons, animals or property as a result of the sale, distribution or
manufacture of any product or performance of any service by the
Company, including, but not limited to, claims arising out of the
defective or unsafe nature of its products or services.
(q) TAKEOVER STATUTES; RIGHTS PLANS. No "fair price,"
"moratorium," "control share acquisition," "interested shareholder," "business
combination" or other similar anti-takeover statute or regulation (including,
without limitation, Sections 607.0901 and 607.0902 of the FBCA, which have been
rendered inapplicable) (each a "Takeover Statute") or restrictive provision of
any applicable anti-takeover provision in the articles of incorporation of the
Company or bylaws of the Company is applicable to the Company, the Company
Common Stock, the Offer, the Merger, this Agreement, the Shareholders Agreement,
or any of the transactions contemplated by this Agreement. The Company does not
have any stockholder rights plans or similar anti-takeover device in effect.
(r) ENVIRONMENTAL MATTERS. Except as could not reasonably be
expected to have a Material Adverse Effect on the Company: (i) the Company and
each Subsidiary is in compliance and to the knowledge of the Company has been in
compliance with all Environmental Laws; (ii) no property that is currently owned
or operated or has been owned or operated by the Company or any current or
former Subsidiary contains any Hazardous Substance or other condition which
could
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reasonably be expected to require investigation or remediation or lead to any
liability of the Company or its Subsidiaries under any Environmental Law; (iii)
to the Company's knowledge, neither the Company nor any of its Subsidiaries are
subject to liability for any offsite disposal or release of any Hazardous
Substance under any Environmental Law; (iv) there are no pending, or to the
knowledge of the Company, threatened claims against the Company or any of its
Subsidiaries alleging a violation of Environmental Law; (v) neither the Company
nor any of its Subsidiaries has received written notice alleging any claims,
orders or notices alleging responsibility, liability or non-compliance under any
Environmental Law; and (vi) to the Company's knowledge, there are no other past
or present circumstances involving the Company or any of its Subsidiaries that
are likely to result in any claims, liabilities, costs, penalties or property
restrictions in connection with any Environmental Law. As used herein,
"Environmental Law" means any law, regulation, rule, order, decree, or common
law relating to the protection of the environment "Hazardous Substance" means
any substance that is listed, classified or regulated in any concentration under
any Environmental Law including petroleum products, asbestos and polychlorinated
biphenyls. Notwithstanding anything to the contrary contained in this Agreement,
this Section 3.1(r) shall be the sole and exclusive representation and warranty
of the Company or any of its Subsidiaries with regard to environmental matters.
(s) PROPERTIES. Section 3.1(s) of the Company Disclosure
Schedule contains a true and complete list, as of the date hereof, of all real
properties owned or leased by the Company or any of its Subsidiaries. Each of
the Company and its Subsidiaries has good and marketable title to all
properties, assets and rights of any kind whatsoever whether real, personal or
mixed, and whether tangible or intangible owned by it (collectively, the
"Company Assets"), in each case free and clear of all liens and other
encumbrances except those which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Company. There
are no pending or, to the knowledge of the Company, threatened condemnation
proceedings against or affecting any Company Asset, and none of the Company
Assets is subject to any commitment or other arrangement for its sale to a third
party outside the ordinary course of business, which either individually or in
the aggregate could not reasonably be expected to have a Material Adverse Effect
on the Company.
(t) CUSTOMERS AND SUPPLIERS. Since August 31, 1999, there has
been no termination, cancellation or curtailment of the business relationship of
the Company with (i) any customer or supplier or group of affiliated customers
or suppliers or (ii) any joint venture or alliance partners, in each case which
could reasonably be expected to result in a Material Adverse Effect on the
Company, and the Company has not received notice or any indication of any such
termination, cancellation or curtailment and the Company has no knowledge of any
facts or circumstances in existence that could reasonably be expected to result
in any such termination, cancellation or curtailment.
(u) DISTRIBUTORS. Rexall Showcase International, Inc.
distributes its products through approximately 120,000 active (as defined in the
Company SEC Reports) independent distributors. Except as the same could not
reasonably be expected to have a Material Adverse Effect on the Company, the
Company and its Subsidiaries are in compliance with its agreements with the
distributors and all laws applicable to their businesses related to the
distributors and their distribution
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practices, and there is no pending, or, to Company's knowledge, threatened,
grievance by or with respect to the distributors that, if adversely decided,
could reasonably be expected to have a Material Adverse Effect on the Company.
The Company has previously provided a list (the "Top 20 List") to Parent which
accurately sets forth the names of the twenty (20) distributors who received the
highest commissions and overrides paid by Rexall Showcase International, Inc.
for the calendar year ended 1999 and the amounts paid to such Persons. There are
no material disputes existing between the Company or any of its Subsidiaries on
the one hand, and any distributor who is listed on the Top 20 List on the other
hand which, if not resolved to the satisfaction of the Company, could reasonably
be expected to have a Material Adverse Effect on the Company.
(v) REGULATORY COMPLIANCE. The Company and its Subsidiaries
have received approval of all registrations, applications, licenses, requests
for exemptions, permits and other regulatory authorizations necessary or
desirable to the conduct of the business of the Company and its Subsidiaries as
they are now conducted whether foreign or U.S., including, without limitation,
with the United States Food and Drug Administration ("FDA"), the Federal Trade
Commission ("FTC"), the Consumer Product Safety Commission ("CPSC") and the
United States Department of Agriculture ("USDA"), as applicable, except for such
registrations, applications, licenses, requests for exemptions, permits and
other regulatory authorizations of which the failure to so obtain could not
reasonably be expected to have a Material Adverse Effect on the Company. The
Company and its Subsidiaries are in compliance in all respects with all such
registrations, applications, licenses, requests for exemptions, permits and
other regulatory authorizations whether foreign or U.S., including, without
limitation, all applicable FDA, FTC, CPSC, USDA, federal, state and local rules
and regulations, except where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect on the Company. The Company has not
received any written notice and has no reason to believe that any party granting
any such registration, application, license, request for exemption, permit or
other authorization is considering limiting, suspending or revoking the same.
3.2 REPRESENTATIONS AND WARRANTIES OF PARENT. Except as disclosed in
the Parent's Annual Report for the year ended December 31, 1999 and publicly
available prior to the date hereof, Parent represents and warrants to the
Company as follows:
(a) ORGANIZATION, STANDING AND POWER. Parent has been duly
organized and is validly existing under the laws of its jurisdiction of
organization. Parent is duly qualified or otherwise authorized to do business in
each jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary, except where the
failure so to qualify or be so authorized when taken together with all such
other failures, could not reasonably be expected to have a Material Adverse
Effect on Parent or materially impair or delay the ability of the Parent or
Merger Sub to consummate the transactions contemplated hereby. Parent has the
requisite corporate power and corporate authority, in all material respects, to
own, lease and operate its properties and to carry on its businesses as they are
now being conducted. Parent is not in violation of any provisions of its
Organizational Documents in any material respect.
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(b) AUTHORITY; NO CONFLICTS.
(i) Parent has all requisite corporate power and
corporate authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action
on the part of Parent and no other corporate proceedings are necessary
to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by Parent and, assuming due execution by the Company,
constitutes a valid and binding agreement of Parent, enforceable
against it in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium
and similar laws relating to or affecting creditors generally, or by
general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law). The Supervisory Board
of Parent has, at a meeting duly called and held, approved the
transactions contemplated by this Agreement.
(ii) The execution and delivery of this Agreement do
not or will not, as the case may be, and the consummation of the
transactions contemplated hereby will not, result in any Violation or
result in any adverse change in the rights or obligations of the Parent
pursuant to: (A) any provision of the Organizational Documents of
Parent or (B) except as could not reasonably be expected to have a
Material Adverse Effect on Parent or prevent, impair or materially
delay the consummation of any of the transactions contemplated hereby
and subject to obtaining or making the consents, approvals, orders,
authorizations, registrations, declarations and filings referred to in
paragraph (iii) below, the terms, provisions or conditions of any loan
or credit agreement, note, mortgage, bond, indenture, lease,
compensation or benefit plan or grant or award made pursuant thereto,
or other agreement, obligation, instrument, contract, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Parent, or its properties
or assets.
(iii) No consent, registration, permit, approval,
order or authorization of, or registration, declaration or filing with,
any Governmental Entity or foreign securities exchange is required by
or with respect to Parent in connection with the execution and delivery
of this Agreement by Parent or the consummation by Parent of the
transactions contemplated hereby, except for (A) the consents,
approvals, orders, authorizations, registrations, declarations and
filings required under or in relation to clause (x) of Section
3.1(c)(iii) as applicable; (B) any filings required to be made or
consents that have to be obtained or arrangements that have to be made
in order to ensure that the United States government or any agency
thereof will not challenge the consummation of the transactions
contemplated hereby on national security grounds; and (C) such
consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to make or obtain could
not reasonably be expected to have a Material Adverse Effect on Parent
or prevent the consummation of the transactions contemplated hereby.
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(c) INFORMATION SUPPLIED.
(i) None of the information supplied or to be
supplied by Parent or Merger Sub for inclusion or incorporation by
reference in (A) the Offer Documents or (B) the information supplied or
to be supplied by Parent or Merger Sub for inclusion or incorporation
by reference in the Proxy Statement, if any, the Schedule 14D-9 and (C)
any other documents to be filed with the SEC or any other Governmental
Entity or foreign securities exchange in connection with the
transactions contemplated hereby, including any amendment or supplement
to such documents, will, at the respective times such documents are
filed, and, with respect to the Proxy Statement, if any, and the Offer
Documents, when first published, sent or given to shareholders of the
Company, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the
circumstances under which they are made, not false or misleading or, in
the case of the Proxy Statement, if any, or any amendment thereof or
supplement thereto, at the time of the Company Shareholders Meeting, if
any, and at the Effective Time, contain any untrue statement of a
material fact, or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they are made, not false or
misleading or necessary to correct any statement in any earlier
communication with respect to the Offer or the solicitation of proxies
for the Company Shareholders Meeting, if any, which shall have become
false or misleading. The Offer Documents will comply as to form in all
material respects with the requirements of the Exchange Act and
Securities Act and the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this
Section 3.2(c), no representation or warranty is made by Parent or
Merger Sub with respect to statements made or incorporated by reference
in the Proxy Statement, if any, or the Offer Documents based on
information supplied by the Company for inclusion or incorporation by
reference therein.
(d) VOTE REQUIRED. No vote of the holders of any capital stock
of Parent is necessary to approve this Agreement and the transactions
contemplated hereby.
(e) BROKERS OR FINDERS. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other similar commission or fee in connection with any of
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Parent on Merger Sub, except J. Henry Schroder & Co. Limited and
Salomon Smith Barney Inc. and their affiliates.
(f) OWNERSHIP OF COMPANY CAPITAL STOCK. Except as is
contemplated in connection herewith, as of the date of this Agreement, neither
Parent nor any of its Subsidiaries, "affiliates" or "associates" (as such terms
are defined in the FBCA) (i) beneficially owns, directly or indirectly or (ii)
is party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in case of either clause (i) or
(ii), shares of capital stock of the Company.
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(g) LITIGATION. As of the date of this Agreement, there is no
litigation, arbitration, claim, suit, action, investigation or proceeding
pending or, to the knowledge of Parent, threatened against or affecting Parent
or any of its Subsidiaries or any of their respective properties or assets,
which could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent or could reasonably be expected to prevent the
consummation of the transactions, contemplated by this Agreement, nor is there
any judgment, award, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against Parent or any of its Subsidiaries which
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent.
(h) FINANCING. Parent will have the funds necessary to
consummate the Offer and the Merger on the terms contemplated by this Agreement
and will provide such funds to Merger Sub at or prior to the consummation of the
Offer or the Merger, as applicable.
3.3 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. Parent
and Merger Sub represent and warrant to the Company as follows:
(a) ORGANIZATION AND CORPORATE POWER. Merger Sub is an
indirect wholly owned Subsidiary of Parent and a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Florida.
(b) CORPORATE AUTHORIZATION. Merger Sub has all requisite
corporate power and corporate authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance by Merger Sub of this Agreement and the consummation by Merger Sub
of the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of Merger Sub and no other corporate
proceedings are necessary to authorize this Agreement or to consummate the
transactions as contemplated hereby. This Agreement has been duly executed and
delivered by Merger Sub and, assuming due execution by the Company, constitutes
a valid and binding agreement of Merger Sub, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors generally, or by general equity principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). The Board of Directors of Merger Sub has unanimously approved
the transactions contemplated by this Agreement.
(c) NON-CONTRAVENTION.
(i) The execution and delivery of this Agreement do
not or will not, as the case may be, and the consummation of the
transactions contemplated hereby will not, result in any Violation or
result in any adverse changes in the rights or obligations of the
Merger Sub pursuant to: (A) any provisions of the Organizational
Documents of Merger Sub or (B) except as could not reasonably be
expected to have a Material Adverse Effect on Parent or prevent, impair
or materially delay the consummation of the transactions contemplated
hereby and subject to obtaining or making the consents, approvals,
orders, authorizations, registrations, declarations and filings
referred to in paragraph (ii) below, the
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terms, provisions or conditions of any loan or credit agreement, note,
mortgage, bond, indenture, lease, compensation or benefit plan or any
grant or award made pursuant thereto or other agreement, obligation,
instrument, contract, permit, concession, franchise, license,
judgment, order, writ, injunction, award, decree, statute, law,
ordinance, rule or regulation applicable to Merger Sub or any of its
properties or assets.
(ii) No consent, registration, permit, approval,
order or authorization of, or registration, declaration, notice, report
or filing with, any Governmental Entity or foreign securities exchange
is required by or with respect to Merger Sub in connection with the
execution and delivery of this Agreement by Merger Sub or the
consummation by Merger Sub of the transactions contemplated hereby,
except for (A) the consents, approvals, orders, authorizations,
registrations, declarations and filings required under or in relation
to clause (x) of Section 3.1 (c)(iii) as applicable; (B) any filings
required to be made or consents that have to be obtained or
arrangements that have to be made in order to ensure that the United
States government or any agency thereof will not challenge the
consummation of the transactions contemplated hereby on national
security grounds; and (C) such consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of
which to make or obtain could not reasonably be expected to have a
Material Adverse Effect on Parent or to prevent, impair or materially
delay the consummation of the transactions contemplated hereby.
(d) NO BUSINESS ACTIVITIES. Merger Sub is not and has never
been a party to any material agreements and has not conducted any activities
other than in connection with the organization of Merger Sub, the commencement
of the Offer, the negotiation and execution of this Agreement and the
Shareholders Agreement and the consummation of the transactions contemplated
hereby. Merger Sub has no Subsidiaries.
ARTICLE IV.
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 COVENANTS OF THE COMPANY. During the period from the date of this
Agreement and continuing until the Effective Time (except as expressly
contemplated or permitted by this Agreement, set forth in Section 4.1 of the
Company Disclosure Schedule or to the extent that Parent shall otherwise consent
in writing):
(a) ORDINARY COURSE. The Company and its Subsidiaries shall
carry on their respective businesses in the usual, regular and ordinary course
in all respects, consistent with past practice and shall use their respective
reasonable best efforts to preserve intact their present business organizations
and preserve their existing relationships with customers, suppliers, employees,
Governmental Entities and others having business dealings with them, and shall
not enter into any material joint venture or other similar arrangement;
provided, however, that no action by the Company or its Subsidiaries with
respect to matters specifically addressed by any other provision of this Section
4.1 shall be deemed a breach of this Section 4.1(a) unless such action would
constitute a breach of one or more of such other provisions.
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(b) DIVIDENDS; CHANGES IN SHARE CAPITAL. The Company shall
not, and shall not propose to, (i) declare or pay any dividends on or make
other distributions in respect of any of its capital stock; (ii) split,
subdivide, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in
lieu of or in substitution for, shares of its capital stock; (iii)
repurchase, redeem or otherwise acquire any shares of its capital stock or
any securities convertible into or exercisable for any shares of its capital
stock except as otherwise permitted with respect to the payment of the option
exercise price or tax withholding under certain option agreements in effect
on the date of this Agreement under the Company Equity Plans; or (iv) effect
any reorganization or recapitalization.
(c) ISSUANCE OF SECURITIES. The Company shall not and shall
cause its Subsidiaries not to issue, pledge, dispose of or encumber, deliver or
sell, or authorize or propose the issuance, disposition, encumbrance, pledge,
delivery or sale of, any shares of its capital stock of any class, any Company
Voting Debt or any securities convertible into or exercisable for, or any
rights, warrants or options to acquire, any such shares or Company Voting Debt,
or enter into any agreement with respect to any of the foregoing, other than the
issuance of Company Common Stock upon the exercise of stock options or rights to
purchase Company Common Stock outstanding on the date of this Agreement in
accordance with the terms of the Company Equity Plans as in effect on the date
of this Agreement.
(d) ORGANIZATIONAL DOCUMENTS. Except to the extent required to
comply with their respective obligations hereunder or required by law, the
Company and its Subsidiaries shall not amend or propose to amend their
respective Organizational Documents.
(e) INDEBTEDNESS. The Company shall not (i) incur any
indebtedness for borrowed money or guarantee any such indebtedness or issue or
sell any debt securities or warrants or rights to acquire any debt securities of
the Company or guarantee any debt securities of other Persons other than
indebtedness (including short term borrowings) of the Company or its
Subsidiaries to the Company or its Subsidiaries and other than in the ordinary
course of business which shall include, without limitation, borrowings in the
ordinary course under its existing credit agreements; (ii) make any loans,
advances or capital contributions to, or investments in, any other Person, other
than by the Company or its Subsidiaries to or in the Company or its
Subsidiaries; or (iii) pay, discharge, modify or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than in the case of clauses (ii) and (iii), loans, advances,
capital contributions, investments, payments, discharges or satisfactions
incurred or committed to in the ordinary course of business consistent with past
practice.
(f) COMPENSATION. The Company shall not, and shall not permit
its Subsidiaries to (i) increase the compensation payable or to become payable
to any of its executive officers or employees or (ii) take any action with
respect to the grant of any severance or termination pay, or stay, bonus or
other incentive arrangement (other than as required by applicable law or the
terms of any collective bargaining agreement or as required pursuant to benefit
plans and policies in effect on the date of this Agreement); except any such
increases or grants made in the ordinary course of business consistent with past
practice, pursuant to agreements, plans or policies existing on the date hereof
or as otherwise provided under this Agreement; provided, however that in no
event shall the
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Company grant, or permit to be granted, any options or other awards or rights to
purchase under any Company Equity Plan or otherwise after the date of this
Agreement.
(g) TAX ELECTIONS. The Company shall not, and shall not permit
its Subsidiaries to, make any Tax election or change any method of accounting
for Tax purposes except as required by applicable law or GAAP.
(h) EMPLOYMENT. Except as contemplated by this Agreement, the
Company shall not, and shall not permit its Subsidiaries to, release or
otherwise terminate the employment of any management employee or hire any new
management employees, except in the ordinary course of business.
(i) BENEFIT PLANS AND AGREEMENTS.
(i) The Company shall not, and shall not permit its
Subsidiaries to, establish, adopt or enter into any new employee
benefit plans or agreements (including pension, profit sharing, bonus,
incentive compensation, director and officer compensation, severance,
medical, disability, life or other insurance plans, and employment
agreements) or amend or modify any existing Company Benefit Plans, or
extend coverage of the Company Benefit Plans, except as required by
applicable law, the terms of any collective bargaining agreement.
(ii) Subject to Section 5.11, simultaneous with the
execution of this Agreement, the Company shall freeze all Company
Equity Plans as of the date of this Agreement, such that, as a result
thereof, no officer, employee or any other Person or entity shall be
entitled to purchase any additional Company Common Stock under any
Company Equity Plan (other than pursuant to currently outstanding stock
options and stock purchase periods) and no stock options or other
awards shall be granted under any Company Equity Plan after the date of
this Agreement.
(j) OTHER ACTIONS.
(i) The Company shall not, and shall not permit its
Subsidiaries to, take any action that could reasonably be expected to
result in any of the Offer Conditions not being satisfied.
(ii) The Company shall not, and shall not permit its
Subsidiaries to, (A) transfer, lease, license, guarantee, sell,
mortgage, pledge, dispose of or encumber any assets except in the
ordinary course of business consistent with past practice; (B)
authorize capital expenditures in any manner not reflected in the
capital budget of the Company as currently in effect or make any
acquisition of, or investment in, any business or stock of any other
person or entity other than a current Subsidiary; (C) settle or
compromise any material claims or litigation or, except in the ordinary
course of business consistent with past practice, modify, amend or
terminate any of the Company Material Contracts or waive, release or
assign any material rights or claims; (D) permit any material insurance
policy naming it as
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a beneficiary or a loss payable payee to be canceled or terminated
without the prior written approval of Parent, except in the ordinary
course of business consistent with past practice; or (E) terminate the
employment of any employee who is covered by a change in control,
employment, termination or similar agreement, except for Cause (as
defined in such agreements) or permit circumstances to exist that
would allow such employee to terminate employment and be entitled to
enhanced or special severance or other payments thereunder.
4.2 COVENANTS OF PARENT AND MERGER SUB. During the period from the date
of this Agreement and continuing until the Effective Time (except as expressly
contemplated or permitted by this Agreement or to the extent that the Company
shall otherwise consent in writing) Parent shall not, and shall not permit any
of its Subsidiaries to, take any action that could reasonably be expected to
result in (a) any of the representations and warranties of Parent and Merger Sub
set forth in this Agreement (i) to the extent qualified by Material Adverse
Effect becoming untrue or inaccurate and (ii) to the extent not qualified by
Material Adverse Effect becoming untrue or inaccurate, except that this clause
(ii) shall be deemed satisfied so long as such representations and warranties
being untrue or inaccurate, taken together, do not have a Material Adverse
Effect on Parent, or (b) any of the Offer Conditions not being satisfied.
4.3 ADVICE OF CHANGES; GOVERNMENT FILINGS. Each party shall (a) confer
on a regular and frequent basis with the other; (b) report (to the extent
permitted by law, regulation and any applicable confidentiality agreement) to
the other on operational matters; and (c) promptly advise the other orally and
in writing of (i) any representation or warranty made by it in this Agreement
(A) to the extent qualified by Material Adverse Effect becoming untrue or
inaccurate and (B) to the extent not qualified by Material Adverse Effect
becoming untrue or inaccurate, except that this clause (B) shall be deemed
satisfied so long as such representations or warranties being untrue or
inaccurate, taken together, do not have a Material Adverse Effect on the Company
or Parent, as the case may be, or (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement required to
be complied with or satisfied by it under this Agreement; provided, however,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement. The Company shall file all reports and
amendments thereto required to be filed by it with the SEC (and all other
Governmental Entities) between the date of this Agreement and the Effective Time
and shall (to the extent permitted by law or regulation) deliver to Parent
copies of all such reports promptly after the same are filed. Subject to
applicable laws relating to the exchange of information, each of the Company and
Parent shall have the right to review in advance, and to the extent practicable
each will consult with the other, with respect to all the information relating
to the other party and each of their respective Subsidiaries, which appears in
any filings, announcements or publications made with, or written materials
submitted to, any third party or any Governmental Entity in connection with the
transactions contemplated by this Agreement. In exercising the foregoing right,
each of the parties hereto agrees to act reasonably and as promptly as
practicable. Each party agrees that, to the extent practicable, it will consult
with the other party with respect to the obtaining of all permits, consents,
approvals and authorizations of all third parties and Governmental Entities
necessary or advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other party apprised of the status of
matters relating to completion of the transactions contemplated hereby.
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ARTICLE V.
ADDITIONAL AGREEMENTS
5.1 APPROVAL BY THE COMPANY'S SHAREHOLDERS.
(a) If required by the FBCA or the Company's Organizational
Documents in order to consummate the Merger, the Company shall, at Parent's
option and direction and as soon as practicable either (i) duly call, give
notice of, convene and hold a meeting of its shareholders (the "Company
Shareholders Meeting") or (ii) submit the Merger to its shareholders for
approval through shareholder action by written consent in lieu of a meeting for
the purpose of obtaining the Required Company Votes, and, the Company shall,
through the Company Board, recommend to its shareholders that they vote in favor
of the adoption of this Agreement and the Merger; provided, however, that the
Company Board may amend, modify or withdraw its recommendation if the Company
Board determines, following consultation with the Company's outside legal
counsel, that such action is required in order to comply with applicable law and
so long as the Company Board submits the Merger to the Company's shareholders
for approval at a meeting or by written consent with no recommendation and in
accordance with FBCA Section 607.1103(2)(a). Parent and Merger Sub shall vote or
cause to be voted all the shares of Company Common Stock owned of record by
Parent, Merger Sub or any other Subsidiary of Parent in favor of the approval of
the Merger and adoption of this Agreement.
(b) Notwithstanding the preceding paragraph or any other
provision of this Agreement, in the event Parent, Merger Sub or any other
Subsidiary of Parent shall beneficially own, in the aggregate, at least 80% of
the outstanding shares of the Company Common Stock, the Company shall not be
required to call the Company Shareholders Meeting or to file or mail the Proxy
Statement, and the parties hereto shall, at the request of Parent and subject to
Article VI, take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after the acceptance for payment of and
payment for shares of the Company Common Stock by Merger Sub pursuant to the
Offer without a meeting of shareholders of the Company in accordance with the
FBCA.
(c) If required by applicable law, as soon as practicable
following Parent's request, the Company and Parent shall prepare and file with
the SEC the Proxy Statement. Each of the Company and Parent shall use reasonable
best efforts to cause the Proxy Statement to be mailed to the Company's
shareholders as promptly as practicable and to solicit proxies in favor of the
adoption of this Agreement and the approval of the Merger; provided, however, in
the event the Company Board withdraws its recommendation for the adoption of
this Agreement and the approval of the Merger, the Company shall solicit proxies
regarding this Agreement and this Merger in a neutral fashion; provided that
such obligation to solicit proxies in a neutral fashion shall not prohibit the
Company Board from communicating the basis for its determination not to make a
recommendation to the extent required by FBCA Section 607.1103(2)(a).
(d) Unless required by the rules of the National Association
of Securities Dealers, subsequent to Merger Sub's acceptance of the Company
Common Stock pursuant to the Offer and
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prior to the Effective Time, the Company shall not take any action to cause the
Company Common Stock to be removed from quotation on the Nasdaq National Market
System and de-registered under the Exchange Act.
5.2 ACCESS TO INFORMATION. Consistent with its legal obligations, from
the date hereof until the earlier of the Effective Time or the termination of
this Agreement, upon reasonable notice, the Company shall afford to the
officers, employees, accountants, counsel, financial advisors and other
representatives of Parent ("Parent Representatives") reasonable access during
normal business hours to all of its and its Subsidiaries' properties, books,
contracts, commitments and records (including security position listings or
other information concerning beneficial and record owners of the Company's
securities) and its officers, management employees and representatives and,
during such period, the Company shall furnish promptly to Parent, all
information concerning its business, properties and personnel as the other party
may reasonably request. Such information shall be held in confidence to the
extent required by, and in accordance with, the provisions of the letter (the
"Confidentiality Agreement") dated as of March 22, 2000, between the Company and
Parent, which Confidentiality Agreement shall remain in full force and effect
subject to the terms hereof.
5.3 APPROVALS AND CONSENTS; COOPERATION. Each of the Company and Parent
shall cooperate with each other and use (and shall cause their respective
Subsidiaries to use) its reasonable best efforts to take or cause to be taken
all actions, and do or cause to be done all things, necessary, proper or
advisable on their part under this Agreement and applicable laws to consummate
and make effective the Offer and the Merger and the other transactions
contemplated by this Agreement as soon as practicable, including (a) preparing
and filing as promptly as practicable all documentation to effect all necessary
applications, notices, petitions, filings and other documents and to obtain as
promptly as practicable all consents, waivers, licenses, orders, registrations,
approvals, permits and authorizations necessary or advisable to be obtained from
any third party and any Governmental Entity in order to consummate the Offer,
the Merger and the other transactions contemplated by this Agreement and (b)
taking all reasonable steps as may be necessary to obtain all such consents,
waivers, licenses, registrations, permits, authorizations, orders and approvals.
Without limiting the generality of the foregoing, each of the Company and Parent
agrees to make all necessary filings in connection with the Required Regulatory
Approvals as promptly as practicable after the date of this Agreement, and in
any event no later than nine (9) Business Days after the date hereof, and to use
its reasonable best efforts to furnish or cause to be furnished, as promptly as
practicable, all information and documents requested with respect to such
Required Regulatory Approvals and shall otherwise cooperate with the applicable
Governmental Entity in order to obtain any Required Regulatory Approvals in as
expeditious a manner as possible. Each of the Company and Parent shall use its
reasonable best efforts to resolve such objections, if any, as any Governmental
Entity may assert with respect to this Agreement and the transactions
contemplated hereby in connection with the Required Regulatory Approvals. In the
event that a suit is instituted by a Person or Governmental Entity challenging
this Agreement and the transactions contemplated hereby as violative of
applicable antitrust or competition laws, each of the Company and Parent shall
use its reasonable best efforts to resist or resolve such suit. The Company and
Parent each shall, upon request by the other, furnish the other with all
information concerning itself, its Subsidiaries, directors, officers and
shareholders and such other matters as may reasonably be necessary or advisable
in connection with the Offer Documents, Schedule 14D-9, Proxy Statement or any
other
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statement, filing, notice or application made by or on behalf of the Company,
Parent or any of their respective Subsidiaries to any third party and any
Governmental Entity in connection with the Offer, the Merger or the other
transactions contemplated by this Agreement.
5.4 ACQUISITION PROPOSALS.
(a) The Company agrees that neither the Company, its
Subsidiaries, nor any of the respective officers and directors of the Company or
its Subsidiaries, shall and the Company shall direct and use its best efforts to
cause its employees, agents and representatives (including, without limitation,
any investment banker, attorney or accountant retained by the Company or any of
its Subsidiaries) not to, take or cause, directly or indirectly, any of the
following actions with any party other than Parent, Merger Sub or their
respective designees: (a) directly or indirectly solicit, encourage, initiate,
participate in or otherwise facilitate (including by way of furnishing
information) any negotiations, inquiries or discussions with respect to any
offer, indication or proposal to acquire all or more than 15% of the Company's
businesses, assets or capital shares whether by merger, consolidation, other
business combination, purchase of assets, reorganization, tender or exchange
offer or otherwise (each of the foregoing, an "Acquisition Proposal") or (b)
disclose, in connection with an Acquisition Proposal, any information or provide
access to its properties, books or records. The Company will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing. The
Company will take the necessary steps to promptly inform the individuals or
entities referred to in the first sentence of Section 5.4 hereof of the
obligations undertaken in this Section 5.4. The Company also will promptly
request any Person which may have heretofore executed a confidentiality
agreement in connection with its consideration of acquiring the Company and/or
any of its Subsidiaries to return or destroy all confidential information
heretofore furnished to such person by or on behalf of the Company. If the
Company receives an Acquisition Proposal, or the Company learns that someone
intends to solicit tenders of Company Common Stock or otherwise proposes to
acquire the Company or a significant portion of its equity securities or its and
its Subsidiaries' assets if the Company's shareholders do not approve the
Merger, the Company will promptly notify Parent of that fact and provide Parent
promptly, from time to time, with all information and documents in the
possession of the Company and its legal or financial advisors regarding the
Acquisition Proposal, solicitation of tenders or other proposed transaction.
(b) Notwithstanding anything to the contrary contained in
Section 5.4(a) or elsewhere in this Agreement, prior to the consummation of the
Offer, the Company may participate in discussions or negotiations with, and
furnish non-public information, and afford access to the properties, books,
records, officers, employees and representatives of the Company to any Person,
if such Person has delivered to the Company, prior to the consummation of the
Offer, and in writing, an Acquisition Proposal which the Company Board
reasonably determines in good faith (after consultation with its independent
financial advisor) constitutes a Superior Proposal (as defined in Section
5.4(c)).
(c) A "Superior Proposal" is an Acquisition Proposal (i) which
would result in the Company's shareholders receiving consideration per share of
Company Common Stock (valuing non-cash consideration at its fair market value as
determined in good faith by the Company Board
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after consultation with its independent financial advisor) which is superior,
from a financial point of view after consultation with its independent financial
advisor, to the Price Per Share; (ii) which is not subject to a financing
contingency; (iii) (A) for which financing, to the extent required, has at least
the same degree of certainty as the Parent's financing (at the time the Company
Board is making such determination), or (B) to the extent financing is not
required, is made by a Person which the Company's Board reasonably determines in
good faith (after consultation with its independent financial advisor) has the
financial resources necessary to carry out the transaction and (iv) has been
publicly disclosed.
5.5 EMPLOYEE BENEFITS. Parent shall or shall cause the Surviving
Corporation to comply with the provisions of the letter of even date herewith
from Parent to Company relating to the employee benefits matters (the "Benefits
Letter").
5.6 FEES AND EXPENSES. Whether or not the transactions contemplated
hereby are consummated, all Expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such Expenses, except (a) if the Merger is consummated, the Surviving
Corporation shall pay, or cause to be paid, any and all property or transfer
taxes imposed on the Company or its Subsidiaries; (b) the Expenses incurred in
connection with the printing, filing and mailing to shareholders of the Proxy
Statement, if any, and the solicitation of shareholder approvals shall be shared
equally by the Company and Parent; and (c) as provided in Section 7.2. As used
in this Agreement, "Expenses" includes all expenses (including, without
limitation, (i) all fees and expenses of counsel, accountants, investment
bankers, experts and consultants to a party hereto and its affiliates and (ii)
the fees, costs and expenses relating to obtaining financing for the
transactions contemplated hereby, including commitment fees and the like)
incurred by a party or on its behalf in connection with or related to the
authorization, preparation, negotiation, execution and performance of this
Agreement and the transactions contemplated hereby, including the preparation,
printing, filing and mailing of the Offer Documents and the Proxy Statement, if
any, and the solicitation of shareholder approvals and all other matters related
to the transactions contemplated hereby.
5.7 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. Parent shall
cause to be maintained in effect (a) for a period of six (6) years the
provisions regarding indemnification of current or former officers and directors
of the Company (each an "Indemnified Party") contained in the Organizational
Documents of the Company and its Subsidiaries in effect following the Effective
Time, provided that in the event any claim or claims are asserted or made within
such six (6) year period all rights to indemnification in respect of any claim
or claims shall continue until final disposition of any and all such claims and
(b) for a period of six (6) years, the current policies of directors' and
officers' liability insurance and fiduciary liability insurance maintained by
the Company (provided that Parent or the Surviving Corporation may substitute
therefor policies of at least the same coverage and amounts containing terms and
conditions which are, in the aggregate, no less advantageous to the insured and
provided that such substitution shall not result in any gaps or lapses in
coverage with respect to matters occurring prior to the Effective Time) with
respect to claims arising from facts or events that occurred on or before the
Effective Time. Parent shall not be obligated to pay annual premiums to the
extent such premiums exceed $450,000 (the "Maximum Premium"). If such insurance
coverage cannot be obtained at all, or can only be obtained at an
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annual premium in excess of the Maximum Premium, Parent shall maintain the most
advantageous policies of directors' and officers' insurance obtainable for an
annual premium equal to the Maximum Premium. This covenant is intended to be for
the benefit of, and may be enforced by, each of the Indemnified Parties and
their respective heirs and legal representatives.
Notwithstanding anything contained herein to the contrary, the Company
Board shall be permitted to amend the Company's Bylaws so that Section 8.1
thereof shall read in its entirety as set forth in Schedule 5.7 attached hereto.
Parent and Merger Sub agree that, for a period of no less than six (6) years,
the bylaws of the Surviving Corporation shall include the same indemnification
provisions as those set forth in the Company's bylaws in effect on the date
hereof (including the amendment set forth in Schedule 5.7) and none of the
Company, Parent and the Surviving Corporation shall take any action (including
amendment of any bylaw provision of the Company or the Surviving Corporation)
which adversely affects the rights of any Indemnified Person (as such term is
defined in the Company's Bylaws (including the amendment set forth in Schedule
5.7)) who was an officer or director of the Company on the date hereof. This
paragraph shall be enforceable by any such Indemnified Person.
5.8 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect, the
Company and Parent shall use all reasonable best efforts to develop a joint
communications plan and each party shall use all reasonable best efforts (a) to
ensure that all press releases and other public statements with respect to the
transactions contemplated hereby shall be consistent with such joint
communications plan and (b) unless otherwise required by applicable law or by
obligations pursuant to any listing agreement with or rules of any securities
exchange, to consult with each other before issuing any press release or
otherwise making any public statement with respect to this Agreement or the
transactions contemplated hereby.
5.9 TAKEOVER STATUTES. If any Takeover Statute shall become applicable
to the transactions contemplated hereby, the Company and the members of the
Company Board shall grant such approvals and take such actions as are necessary
so that the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate or
minimize the effects of such Takeover Statute on the transactions contemplated
hereby.
5.10 THIRD PARTY STANDSTILL AGREEMENTS; TORTIOUS INTERFERENCE. During
the period from the date of this Agreement through the Effective Time, the
Company shall not terminate, amend, modify or waive any provision of any
confidentiality or standstill or similar agreement to which the Company or any
of its Subsidiaries is a party (other than involving Parent). Subject to the
foregoing, during such period, the Company agrees to enforce, to the fullest
extent permitted under applicable law, the provisions of any such agreements,
including seeking to obtain injunctions to prevent any breaches of such
agreements and to enforce specifically the terms and provisions thereof and any
court having jurisdiction.
5.11 COMPANY OPTION PLANS. Upon the Effective Time, each outstanding
option (a "Company Stock Option") to purchase Company Common Stock, whether or
not fully exercisable, shall be canceled and, in exchange therefore, each holder
thereof shall, upon delivery of a
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cancellation agreement in form and substance satisfactory to Parent, receive a
cash payment at the Effective Time (or, if later, on the fifth business day
after delivery of such cancellation agreement), in an amount equal to the
product of (x) the excess, if any, of the Merger Consideration per share over
the exercise price per share of the Company Common Stock subject to such Company
Stock Options and (y) the number of shares of Company Common Stock subject to
such Company Stock Options. All amounts payable pursuant to this Section 5.11
shall be subject to any required withholding of taxes and shall be paid without
interest. In furtherance of the foregoing, the Company has, as of the date of
this Agreement, amended each of the Company Stock Option Plans to provide that
at the Effective Time, each Company Stock Option shall thereupon represent the
right, upon exercise, to receive the Merger Consideration, in cash (without
interest) and, that in lieu of exercise, each holder of the Company Stock Option
may receive the cash payment described in this Section 5.11 upon delivery of the
cancellation agreement.
ARTICLE VI.
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
obligations of the Company, Parent and Merger Sub to effect the Merger are
subject to the satisfaction or waiver (subject to Section 1.4(c)) on or prior
to the Effective Time of the following conditions:
(a) SHAREHOLDER APPROVAL. The Company shall have obtained all
approvals of holders of shares of capital stock of the Company necessary to
approve this Agreement and all the transactions contemplated hereby (including
the Merger) to the extent required by law.
(b) NO INJUNCTION OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order issued by
a court or other Governmental Entity of competent jurisdiction shall be in
effect and have the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.
(c) REQUIRED REGULATORY APPROVALS. All authorizations,
consents, orders and approvals of, and declarations and filings with, and all
expirations of waiting periods imposed by, any Governmental Entity which, if not
obtained in connection with the consummation of the transactions contemplated
hereby, could reasonably be expected to have a Material Adverse Effect on the
Company or prevents the Company, Parent or Merger Sub from consummating the
transactions contemplated hereby (collectively, "Required Regulatory
Approvals"), shall have been obtained, have been declared or filed or have
occurred, as the case may be, and all such Required Regulatory Approvals shall
be in full force and effect.
(d) COMPLETION OF THE OFFER. Merger Sub shall have (i)
commenced the Offer pursuant to Section 1.1 hereof and (ii) subject to the
satisfaction or waiver of all conditions to the Offer, purchased, pursuant to
the terms and conditions of such Offer, all shares of Company Common Stock duly
tendered and not withdrawn; provided, however, that neither Parent nor Merger
Sub shall be entitled to rely on the condition in clause (ii) above if either of
them shall have failed to purchase shares of Company Common Stock pursuant to
the Offer in breach of their obligations under this Agreement.
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ARTICLE VII.
TERMINATION AND AMENDMENT
7.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, by action taken or authorized by the Board of Directors of
the terminating party or parties, whether before or after approval of this
Agreement and the matters contemplated herein, including the Merger, by the
shareholders of the Company:
(a) By mutual written consent of Parent and the Company, by
action of their respective Boards of Directors;
(b) By either the Company or Parent if the Offer shall not
have been consummated by the date which is four (4) months from the date of this
Agreement (the "Outside Date"); provided that the right to terminate this
Agreement under this Section 7.1 (b) shall not be available to any party whose
failure to fulfill any obligation or condition under this Agreement has been the
cause of, or resulted in, the failure of the Offer to be consummated on or
before such date; notwithstanding the foregoing, if the sole reason the Offer
shall not have been consummated by the Outside Date is the failure to have
obtained all Required Regulatory Approvals prior to the date which is four (4)
months from the date of this Agreement, the Outside Date shall, at the request
of either Parent or the Company, be extended for a period of sixty (60) days;
(c) By either the Company or Parent if any court or other
Governmental Entity shall have issued an order, decree or ruling or taken any
other action (which order, decree, ruling or other action the parties shall have
used their reasonable best efforts to resist, resolve or lift, as applicable,
subject to the provisions of Section 5.3) permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, and such
order, decree, ruling or other action shall have become final and nonappealable;
(d) By Parent if (i) the Company Board (or any committee
thereof) shall have withdrawn or adversely modified (including by amendment of
the Schedule 14D-9) its approval or recommendation of the Offer, the Merger or
this Agreement or the Company Board, upon request by Parent following receipt by
the Company of an Acquisition Proposal, shall fail to reaffirm such approval or
recommendation within ten (10) Business Days after such request or shall have
resolved to do any of the foregoing; (ii) the Company Board shall have
recommended to the shareholders of the Company that they approve an Acquisition
Proposal other than transactions contemplated by this Agreement; or (iii) a
tender offer or exchange offer is commenced that, if successful, would result in
any Person becoming a "beneficial owner" (as such term is defined under
Regulation 13D under the Exchange Act) of 15% or more of the outstanding shares
of Company Common Stock (other than by Parent or an affiliate of Parent) and the
Company Board recommends that the shareholders of the Company tender their
shares in such tender or exchange offer;
(e) By Parent, prior to the purchase by Merger Sub of shares
of Company Common Stock pursuant to the Offer, upon a material breach of any
material covenant or agreement on the part of the Company set forth in this
Agreement, or if the Offer Condition contained in
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paragraph (c)(i) or (ii) of Annex A is not capable of being satisfied or cured
by the earlier of (x) the Outside Date or (y) within thirty (30) days after any
executive officer of the Company becomes aware of the breach of any
representation or warranty resulting in the failure to satisfy such Offer
Condition;
(f) By the Company, upon a material breach of any material
covenant or agreement on the part of Parent or Merger Sub set forth in this
Agreement, or upon the failure of any representation or warranty of Parent or
Merger Sub set forth in this Agreement (i) to the extent such representation or
warranty is qualified by Material Adverse Effect, to be true and correct and
(ii) to the extent such representation or warranty is not qualified by Material
Adverse Effect, to be true and correct, except that, in the case of this clause
(ii), no failure shall be deemed to have occurred so long as such failure, taken
together with all other such failures, does not have a Material Adverse Effect
on Parent in the case of each of clause (i) and (ii) as of the date of this
Agreement and (except to the extent such representation or warranty speaks as of
an earlier date) as of the consummation of the Offer as though made on and as of
such date, and except that, in the case of each of clause (i) and (ii), no
failure shall be deemed to have occurred so long as such failure is capable of
being satisfied or cured by the earlier of (x) the Outside Date or (y) within
thirty (30) days after any executive officer of Parent becomes aware of the
breach of any representation or warranty resulting in such failure;
(g) By the Company, if Merger Sub fails to (i) commence the
Offer or keep the Offer open as required in Section 1.1 hereof or (ii) purchase
validly tendered shares of the Company Common Stock in violation of the terms of
the Offer and this Agreement;
(h) By Parent, if any Person other than Parent, Merger Sub, or
any of their affiliates or any group of which any of them is a member, shall
have entered into a definitive agreement or an agreement in principle with the
Company or any of its Subsidiaries with respect to an Acquisition Proposal or
the Company Board (or any committee thereof) shall have adopted a resolution
approving any of the foregoing;
(i) By the Company, prior to the purchase by Merger Sub of
Shares of Company Common Stock pursuant to the Offer, if (i) the Company Board
determines to accept a Superior Proposal pursuant to Section 5.4(b); (ii) the
Company notifies Parent in writing that it intends to enter into such agreement,
attaching the final version of such agreement to such notice; and (iii)
Purchaser does not make within 72 hours after receipt of the Company's written
notice of its intention to enter into a binding agreement for a Superior
Proposal, any offer the Company Board reasonably and in good faith determines
(after consultation with its independent financial advisor and outside legal
counsel) is at least as favorable to the shareholders of the Company (other than
the shareholders who are parties to the Shareholder Agreement) as the Superior
Proposal and during such period the Company reasonably considers and discusses
in good faith all proposals submitted by Parent and, without limiting the
foregoing, meets with, and causes its financial advisors and legal advisors to
meet with, Parent and its advisors from time to time as required by Parent to
consider and discuss in good faith Parent's proposals. The Company agrees to
notify Parent immediately if its intention to enter into a binding agreement
referred to in its notice to Parent shall change at any time after giving
notice; or
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(j) By Parent, if the holders of shares of Company Common
Stock which are a party to the Shareholder Agreement either (i) fail to tender
into the Offer (and not withdraw) a majority of the outstanding shares of
Company Common Stock or (ii) in any material respect, fail to vote, fail to act
by consent or interfere with or frustrate the exercise of the rights conferred
upon the holders of proxies identified and set forth in Section 6(a) of the
Shareholder Agreement.
7.2 EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by either
the Company or Parent as provided in Section 7.1, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of Parent
or the Company or their respective officers or directors except that (a) Section
5.6, Section 5.7 (but only if the Parent or any affiliate thereof owns any
Company Common Stock), this Section 7.2 and Section 8.5(a) shall survive any
termination of this Agreement and (b) notwithstanding anything to the contrary
contained in this Agreement, neither Parent or Company shall be relieved or
released from any liabilities or damages arising out of its breach of any
provision of this Agreement which shall include the obligation to pay all
expenses incurred by the non-breaching party in connection with this Agreement.
(b) In the event that this Agreement is terminated pursuant to
Section 7.1(d), Section 7.1(e) (due to a material breach of any material
covenant or agreement on the part of the Company contained in Article I hereof,
or in Sections 5.1, 5.2, 5.3, 5.4, 5.8, 5.9, 5.10 or 7.1(i) hereof), Section
7.1(h), Section 7.1(i), or Section 7.1(j), then the Company shall pay Parent in
cash (A) U.S. $65,000,000 plus (B) up to U.S. $14,000,000 of Parent's Expenses
incurred in connection with the Offer and Merger. The amounts set forth in this
Section 7.2(b) shall be payable by wire transfer of immediately available funds
(A) prior to such termination by the Company pursuant to Section 7.1(i) or (B)
on the date of such termination by Parent pursuant to Section 7.1(d), Section
7.1(e), Section 7.1(h) or Section 7.1(j). The Company acknowledges that the
agreements contained in this Section 7.2(b) are an integral part of the
transaction contemplated in this Agreement, and that, without these agreements,
Parent and Merger Sub would not enter into this Agreement. In the event the
Company shall fail to pay any amount payable pursuant to this Section 7.2(b)
when due, the Expenses of Parent and Merger Sub shall be deemed to include (i)
the costs and expenses actually incurred or accrued by Parent and Merger Sub
(including, without limitations, fees and expenses of counsel) in connection
with the collection under the enforcement of this Section 7.2(b), together with
(ii) interest on such unpaid amounts, commencing on the date that such amounts
became due, at a rate equal to the prime rate of Citibank, N.A. on the date that
such amounts became due plus 2.00% per annum.
7.3 AMENDMENT. Subject to Section 1.4(c), this Agreement may be amended
by the parties hereto, by action taken or authorized by their respective Boards
of Directors, at any time before or after approval of the matters presented in
connection with the Merger by the shareholders of the Company, but, after any
such approval, no amendment shall be made which by law or in accordance with the
rules of Nasdaq requires further approval by such shareholders without such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
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7.4 EXTENSION; WAIVER. Subject to Section 1.4(c), at any time prior to
the Effective Time, the parties hereto, by action taken or authorized by their
respective Boards of Directors, may, to the extent legally allowed, (a) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and (c)
waive compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party.
No delay on the part of any party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party hereto of any right, power or privilege hereunder operate
as a waiver of any other right, power or privilege hereunder, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege hereunder. Unless otherwise provided, the rights and remedies
herein provided are cumulative and are not exclusive of any rights or remedies
which the parties hereto may otherwise have at law or in equity. The failure of
any party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
ARTICLE VIII.
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 8.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
8.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed duly given (a) on the date of delivery if delivered
personally; (b) on the first Business Day following the date of dispatch if
delivered by a nationally recognized next-day courier service; or (c) if sent by
facsimile transmission, with a copy mailed on the same day in the manner
provided in (a) or (b) above, when transmitted and receipt is confirmed by
telephone. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the party
to receive such notice:
(a) if to Parent or Merger Sub, to:
Koninklijke Numico N.V.
Rokkeveenseweg 49
2712 PJ Zoetermeer
The Netherlands
Facsimile: 011-31-79-353-9671
Attention: Julitte van der Ven, General Counsel
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with a copy to:
Vedder Price Kaufman & Kammholz
222 North LaSalle Street, Suite 2400
Chicago, Illinois 60601
Facsimile: (312) 609-5005
Attention: Guy E. Snyder
William J. Bettman
(b) if to the Company, to,
Rexall Sundown, Inc.
6111 Broken Sound Parkway, NW
Boca Raton, Florida 33487
Facsimile: (561) 999-4729
Attention: Richard Werber, Vice President
and General Counsel
with a copy to
Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Facsimile: (305) 579-0717
Attention: Paul Berkowitz
Ira Rosner
8.3 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents, glossary of defined terms and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden or proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the content requires otherwise.
8.4 COUNTERPARTS. This Agreement may be executed in counterparts, all
of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that all parties need
not sign the same counterpart.
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8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
(a) This Agreement (including the Company Disclosure Schedule)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, other than the Confidentiality Agreement, which
Confidentiality Agreement shall survive the execution and delivery of this
Agreement or any termination hereof. Notwithstanding the foregoing, the entering
into of this Agreement by the Company shall constitute the written consent of
the Company for Parent and or its affiliates to take any of the actions
proscribed by Sections 7(i), (ii), (iii), (iv) and (v) of the Confidentiality
Agreement.
(b) Except as otherwise expressly set forth herein, this
Agreement shall be binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied, is intended to or
shall confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
8.6 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL.
(a) This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without regard to the laws
that might be applicable under conflicts of laws principles; provided, that the
matters affecting the validity of the corporate action taken by the Company,
Parent or Merger Sub relating to the Merger shall be governed by the laws of the
State of Florida.
(b) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the exclusive
jurisdiction of any Delaware State court, or Federal court of the United States
of America, sitting in Delaware, and any appellate court from any thereof, in
any action or proceeding arising out of or relating to this Agreement or the
agreements delivered in connection herewith or the transactions contemplated
hereby or thereby or for recognition or enforcement of any judgment relating
thereto, and each of the parties hereby irrevocably and unconditionally (i)
agrees not to commence any such action or proceeding except in such courts; (ii)
agrees that any claim in respect of any such action or proceeding may be heard
and determined in such Delaware State court or, to the extent permitted by law,
in such Federal court; (iii) waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any such action or proceeding in any such Delaware State or
Federal court; and (iv) waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such Delaware State or Federal court. Each of the parties hereto agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 8.2. Nothing in
this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
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(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE
AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE EITHER OF SUCH WAIVERS; (ii) IT MAKES SUCH WAIVERS VOLUNTARILY; AND
(iii) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.6(c).
8.7 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible. Any provision of this Agreement held invalid or
unenforceable only in part, degree or certain jurisdictions will remain in full
force and effect to the extent not held invalid or unenforceable. To the extent
permitted by applicable law, each party waives any provision of law which
renders any provision of this Agreement invalid, illegal or unenforceable in any
respect.
8.8 ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto, in
whole or in part (whether by operation of law or otherwise), without the prior
written consent of the other parties, and any attempt to make any such
assignment without such consent shall be null and void. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective permitted successors and
assigns.
8.9 ENFORCEMENT. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the parties
shall be entitled to specific performance of the terms hereof, this being in
addition to any other remedy to which they are entitled at law or in equity.
8.10 DEFINITIONS. As used in this Agreement unless the context requires
otherwise:
(a) "affiliate" means any person directly or indirectly
controlling, controlled by or under common control with such other person at the
time at which the determination of affiliation is being made. The term "control"
(including, with correlative meanings, the term "controlled by"
44
<PAGE>
or "under common control with"), as applied to any person, means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of such person, whether through the ownership of voting
securities or other ownership interest, by contract or otherwise.
(b) "Board" means the Board of Directors of any specified
Person (and with respect to Parent means its Supervisory Board) and any properly
serving and acting committees thereof.
(c) "Business Day" means any day on which banks are not
required or authorized to close in the City of New York.
(d) "Code" means the Internal Revenue Code of 1986, as amended
or replaced and as in effect from time to time.
(e) "Company Equity Plans" means (i) the Company's Amended and
Restated 1993 Employee Stock Incentive Plan, the Company's Amended and Restated
1993 Non-Employee Director Stock Option Plan, the Company's Amended and Restated
1994 Non-Employee Director Stock Option Plan, and the Company's 1996 Rexall
Showcase International Distributor Stock Option Plan (collectively, the "Company
Stock Options Plans") and (ii) the Company's Amended and Restated 1993 Employee
Stock Purchase Plan and the Company's 1996 Rexall Showcase International
Distributor Stock Purchase Plan (the "Company Stock Purchase Plans").
(f) "Company Material Contracts" means (a) all contracts
listed as an exhibit to the Company SEC Reports; (b) any other agreement within
the meaning set forth in item 601(b)(10) of Regulation S-K of Title 17, Part 229
of the Code of Federal Regulations; and (c) such agreements listed on Sections
3.1(k)(i) and 3.1(k)(iii) of the Company Disclosure Schedule).
(g) "Intellectual Property" shall mean patents, copyrights,
trademarks (registered and unregistered), service marks, brand names, trade
names, and registrations in any jurisdiction of, and applications in any
jurisdiction to register the foregoing, technology, know-how, software, and
tangible or intangible proprietary information or materials that are used in the
business of the Company and its Subsidiaries as currently conducted and any
other trade secrets related thereto.
(h) "Material Adverse Effect" means, with respect to any
Person, any adverse change, circumstance, development, event or effect that,
individually or in the aggregate with all other adverse changes, circumstances,
developments, events and effects, is or could reasonably be expected to be
materially adverse to the business, operations, properties, assets, liabilities,
condition (financial or otherwise), results of operations or prospects of such
entity and its Subsidiaries taken as a whole, or on the ability of such Person
to perform its obligations under this Agreement or on the ability of such Person
to consummate the Merger and the other transactions contemplated hereby without
material delay other than any change or effect attributable to the economy in
general.
(i) "Organizational Documents" means, with respect to any
entity, the certificate of incorporation, the articles of incorporation, bylaws
or other similar governing documents of such entity.
45
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(j) "Person" means an individual, corporation, partnership,
limited liability company association, trust, unincorporated organization,
entity or group (as defined in Section 13(d)(3) the Exchange Act).
(k) "Subsidiary" when used with respect to any Person means
any corporation or other organization, whether incorporated or unincorporated,
(i) of which such Person or any other Subsidiary of such Person is a general
partner (excluding partnerships, the general partnership interests of which held
by such Person or any of its Subsidiaries of such Person do not have a majority
of the voting and economic interests in such partnership) or (ii) at least a
majority of the securities or other interests of which having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Person or by
any one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries.
(l) (i) "Tax" (including, with correlative meaning, the terms
"Taxes" and "Taxable") means all federal, state, local and foreign income,
profits, franchise, gross receipts, environmental, customs duty, capital stock,
severance, stamp, payroll, sales, employment, unemployment disability, use,
property, withholding, excise, production, value added, occupancy and other
taxes, duties or assessments of any nature whatsoever, together with all
interest, penalties, fines and additions to tax imposed with respect to such
amounts and any interest in respect of such penalties and additions to tax, and
(ii) "Tax Return" means all returns and reports (including elections, claims,
declarations, disclosures, schedules, estimates, computations and information
returns) required to be supplied to a Tax authority in any jurisdiction relating
to Taxes.
(m) "the other party" means, with respect to the Company,
Parent and means, with respect to Parent, the Company.
8.11 PERFORMANCE BY MERGER SUB. Subject to the terms hereof, Parent
hereby agrees to cause Merger Sub to, and to take all reasonable steps to enable
it to, comply with its obligations hereunder and under the Offer and to cause
Merger Sub to consummate the Merger as contemplated herein and whenever this
Agreement requires Merger Sub to take any action, such requirement shall be
deemed to include an undertaking of Parent to cause Merger Sub to take such
action.
8.12 DISCLOSURE SCHEDULES. Notwithstanding anything to the contrary set
forth in the Company's Disclosure Schedule, any matter disclosed in any
subsection of the Company's Disclosure Schedule shall be deemed disclosed only
for the purposes of the specific subsections of this Agreement to which such
subsection relates.
***
46
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IN WITNESS WHEREOF, Parent, the Company and Merger Sub have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of April 30, 2000.
KONINKLIJKE NUMICO N.V.
By: /s/ Julitte van der Ven
---------------------------------
Name: Julitte van der Ven
Title: Attorney-in-Fact
NUTRICIA INVESTMENT CORP.
By: /s/ Julitte van der Ven
------------------------------------
Name: Julitte van der Ven
Title: President
REXALL SUNDOWN, INC.
By: /s/ Damon DeSantis
---------------------------------
Name: Damon DeSantis
Title: President and CEO
<PAGE>
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, and subject to the
terms and conditions of the Agreement, Merger Sub shall not be obligated to
accept for payment any shares of Company Common Stock until all Required
Regulatory Approvals shall have been obtained, made or satisfied including until
the expiration of any waiting periods applicable under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") and Merger Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC (including Rule 14e-1(c) promulgated under the
Exchange Act) pay for, and may delay the acceptance for payment of or payment
for, any shares of Company Common Stock tendered in the Offer and (subject to
the terms and conditions of the Agreement, including Section 1.1(b)) may amend,
extend or terminate the Offer if, (i) immediately prior to the expiration of the
Offer (as extended in accordance with the Agreement) the Minimum Condition shall
not have been satisfied or (ii) prior to the time of acceptance of any shares of
Company Common Stock pursuant to the Offer any of the following shall occur:
(a) there shall be threatened or pending any action,
litigation or proceeding (hereinafter, an "Action") by any Governmental Entity
or other Person: (i) challenging the acquisition by Parent or Merger Sub of
shares of Company Common Stock or seeking to restrain or prohibit the
consummation of the Offer or the Merger; (ii) seeking to prohibit or impose any
material limitation (including any hold separate obligation) on Parent's, Merger
Sub's or any of their respective affiliates' ownership or operation of all or
any material portion of the business or assets of the Company and its
Subsidiaries taken as a whole or Parent and its Subsidiaries taken as a whole;
or (iii) seeking to impose material limitations on the ability of Parent or
Merger Sub effectively to acquire or hold, or to exercise full rights of
ownership of, the shares of Company Common Stock including the right to vote the
shares of Company Common Stock purchased by them on an equal basis with all
other shares of Company Common Stock on all matters properly presented to the
shareholders of the Company; or
(b) any statute, rule, regulation, order or injunction shall
be enacted, promulgated, entered, enforced or deemed to or become applicable to
the Agreement, the Offer, the Merger or the Shareholder Agreement, or any other
action shall have been taken, by any court or other Governmental Entity, that
could reasonably be expected to result in any of the effects of, or have any of
the consequences sought to be obtained or achieved in, any Action referred to in
clauses (i) through (iii) of paragraph (a) above; or
(c) (i) the representations and warranties of the Company
contained in Section 3.1(b) of the Agreement shall not be true and correct in
all material respects as of the date of the Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
consummation of the Offer as though made on and as of such date; (ii) the
representations and warranties of the Company set forth in the Agreement (other
than those set forth in Section 3.1(b) of the Agreement), (x) to the extent
qualified by Material Adverse Effect shall not be true and correct and (y) to
the extent not qualified by Material Adverse Effect shall not be true and
correct, except that this clause (y) shall be deemed satisfied so long as any
failures of such
<PAGE>
representations and warranties to be true and correct, taken together, do not
have a Material Adverse Effect on the Company, in the case of each of clause (x)
and (y) as of the date of the Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the
consummation of the Offer as though made on and as of such date; (iii) the
Company shall have breached or failed to comply in any material respect with any
of its material obligations, covenants or agreements under the Agreement; or
(iv) any change or event shall have occurred that has, or could reasonably be
expected to have, a Material Adverse Effect on the Company; or
(d) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the New York Stock
Exchange or the American Stock Exchange; (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, the European Union or the United Kingdom; (iii) any material limitation
(whether or not mandatory) by any Governmental Entity on the extension of credit
by banks or other lending institutions; (iv) a suspension of, or limitation on,
the currency exchange markets or the imposition of, or material changes in, any
currency or exchange control laws in the United States or abroad; (v) a
commencement of a war or armed hostilities or other national or international
calamity directly or indirectly involving the United States or the Netherlands
which could reasonably be expected to have a Material Adverse Effect on the
Parent or Company or prevent (or materially delay) the consummation of the
Offer; or (vi) in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or a worsening thereof; or
(e) (i) if the holders of shares of Company Common Stock which
are the subject of the Shareholder Agreement shall have either (A) failed to
tender into the Offer (and not withdrawn) a majority of the oustanding shares of
Company Common Stock or (B) in any material respect, failed to vote, failed to
act by consent or have interfered with or have frustrated the exercise of the
rights confered upon the holders of proxies identified and set forth in Section
6(a) of the Shareholder Agreement, or (ii) any of the representations and
warranties of any such party set forth in the Shareholder Agreement shall not be
true in any material respect, in each case, when made or at any time prior to
the consummation of the Offer as if made at and as of such time, or (iii) the
Shareholder Agreement shall have been invalidated or terminated with respect to
any shares of Company Common Stock subject thereto; or
(f) the Board of Directors of the Company (or any special
committee thereof) shall have withdrawn or materially modified in any manner
adverse to Parent or Merger Sub its approval or recommendation of the Offer, the
Merger or this Agreement; or
(g) the Company shall have entered into or shall have publicly
announced its intention to enter into, an agreement or agreement in principle
with respect to any Acquisition Proposal; or
(h) the Agreement or the Shareholder Agreement shall have been
terminated in accordance with its terms.
The conditions set forth in clauses (a) through (h) are for the sole
benefit of Parent and Merger Sub and may be asserted by Parent and Merger Sub
regardless of the circumstances giving
A-2
<PAGE>
rise to such condition and may be waived by Parent and Merger Sub in whole or in
part at any time and from time to time, by express and specific action to that
effect, in their sole discretion. The failure by Parent or Merger Sub at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right, the waiver of any such right with respect to particular facts and
other circumstances shall not be deemed a waiver with respect to any other facts
and circumstances, and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time.
The capitalized terms used in this Annex A shall have the meanings set
forth in the Agreement to which it is annexed.
A-3
<PAGE>
SCHEDULE 5.7
8.1 INDEMNIFICATION OF OFFICERS AND DIRECTORS
(a) The Corporation (and any successor to the Corporation by merger
or otherwise) shall indemnify each person (including the heirs, personal
representatives, executors, administrators and estate of the person) who was
or is a party, or is threatened to be made a party, or was or is a witness,
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative and any appeal therefrom
(collectively, a "Proceeding"), against all liability (including judgments,
settlements, penalties and fines) and reasonable costs, charges and expenses
(including attorneys' fees) asserted against him or incurred by him by reason
of the fact that the person is or was a director or officer of the
Corporation (each an "Indemnified Person").
(b) Notwithstanding the foregoing, except with respect to the
indemnification specified in the third sentence of subsection (d) of this
Section, the Corporation shall not indemnify an Indemnified Person in
connection with a Proceeding (or part thereof) initiated by such Indemnified
Person.
(c) Reasonable costs, charges and expenses (including attorneys'
fees) incurred by an Indemnified Person in defending a Proceeding may and, in
connection with a transaction involving a Change in Control of the
Corporation or a potential Change in Control of the Corporation shall, be
paid by the Corporation in advance of the final disposition of the
Proceeding, upon receipt of an undertaking reasonably satisfactory to the
Board (the "Undertaking") by the Indemnified Person to repay all amounts so
advanced if it is ultimately determined that such person is not entitled to
be indemnified by the Corporation as authorized in this Section. A person to
whom costs, charges and expenses are advanced pursuant to this Section shall
not be obligated to repay pursuant to the Undertaking until the final
determination of (A) the pending Proceeding in a court of competent
jurisdiction concerning the right of that person to be indemnified or (B) the
obligation of the person to repay pursuant to the Undertaking.
For purposes hereof, a "Change in Control" shall mean a merger,
sale of all or substantially all of the assets, or acquisition of more than
40% of the voting stock of the Corporation, by a tender offer, stock purchase
or otherwise.
(d) Any indemnification or advance under this Section shall be made
as promptly as practicable after delivery of the written request of the
Indemnified Person. The right to indemnification or advances as granted by
this Section shall be enforceable by an Indemnified Person in any court of
competent jurisdiction if the Corporation denies the request under this
Section in whole or in part, or if no disposition of the request is made as
promptly as practicable after delivery of the request. The requesting
person's reasonable costs and expenses incurred in connection with
successfully establishing his right to indemnification shall also be
indemnified by the Corporation.
<PAGE>
(e) The indemnification provided by this Section shall not be
deemed exclusive of any other rights to which an Indemnified Person may now
or thereafter be entitled under any by-law, statute, agreement, vote of
shareholders or disinterested directors or recommendation of counsel or
otherwise. All rights to indemnification and advances under this Section
shall be deemed to be a contract between the Corporation and each Indemnified
Person who is an Indemnified Person at any time while this Section is in
effect. Any repeal or modification of this Section shall not in any way
diminish the rights to indemnification of such indemnified Person or the
obligations of the Corporation arising hereunder for claims relating to
matters occurring prior to the repeal or modification.
(f) If this Section or any portion is invalidated or held to be
unenforceable on any ground by a court of competent jurisdiction, the
Corporation shall nevertheless indemnify each Indemnified Person to the
fullest extent permitted by all applicable portions of this Section that have
not been invalidated or adjudicated unenforceable, and as permitted by
applicable law.
<PAGE>
SHAREHOLDER AGREEMENT dated as of April 30, 2000, among
KONINKLIJKE NUMICO N.V. ("Parent"), a company incorporated under the
laws of the Netherlands, NUTRICIA INVESTMENT CORP., a Florida
corporation and an indirect wholly owned subsidiary of Parent ("Merger
Sub"), REXALL SUNDOWN, INC., a Florida corporation (the "Company"), and
the persons listed on Exhibit A hereto (each a "Seller" and/or
"Shareholder").
WHEREAS, Parent, Merger Sub and the Company propose to enter into an
Agreement and Plan of Merger dated as of the date hereof (as the same may be
amended or supplemented, the "Merger Agreement") providing for (i) the making of
a cash tender offer (as such offer may be amended from time to time as permitted
under the Merger Agreement, the "Offer") by Merger Sub for all the outstanding
shares of common stock, par value $.01 per share, of the Company ("Company
Common Stock"') and (ii) the merger of Merger Sub with and into the Company (the
"Merger");
WHEREAS, each Seller and Shareholder is the record or beneficial owner
of the number of shares of Company Common Stock set forth opposite such Seller's
and Shareholder's name on Exhibit A hereto; such shares of Company Common Stock,
as such shares may be adjusted by stock dividend, stock split, recapitalization,
combination or exchange of shares, merger, consolidation, reorganization or
other change or transaction of or by the Company, together with shares of
Company Common Stock that may be acquired after the date hereof by such Seller
or Shareholder, including shares of Company Common Stock issuable upon the
exercise of options or warrants to purchase Company Common Stock (as the same
may be adjusted as aforesaid), being collectively referred to herein as the
"Shares";
WHEREAS, the Sellers and Shareholders hold in the aggregate 32,269,053
Shares which represent 50.44% of the votes of all outstanding shares of the
Company's Common Stock; and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Merger Sub have requested that the Sellers and
Shareholders enter into this Agreement.
NOW, THEREFORE, to induce Parent and Merger Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the promises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Grant of Stock Option/Agreement to Tender.
(a) The Sellers and the Shareholders, severally and not
jointly, hereby grant to Merger Sub pursuant to the terms hereof, an irrevocable
option (the "Option") to purchase the number of Shares specified in Exhibit A in
the third column and any additional Shares acquired by such Seller or
Shareholder in any capacity (whether by exercise of options, warrants or rights,
the conversion or exchange of convertible or exchangeable securities or by means
of a purchase, dividend, distribution or otherwise) at a purchase price of
$24.00 Share (the "Purchase Price"); provided, however, that in the event that
the consideration per share of Company Common Stock payable pursuant to the
Offer, the Merger or any alternative transaction between the Company and Parent
shall be increased above the Purchase Price, such increased consideration (a
"Higher Purchase Price"), then with respect to Shares purchased pursuant to the
Option from the Exempt Sellers (as
<PAGE>
defined in Section 4(e) hereof) , the Purchase Price shall be increased to such
Higher Purchase Price; and provided, further, that in the event that Merger Sub
exercises this Option and subsequently, the Company consummates a transaction
constituting an Acquisition Proposal (as defined in the Merger Agreement)
involving a consideration per share which exceeds the Purchase Price (a "Third
Party Higher Purchase Price") and the Parent or Merger Sub sells or disposes
such Shares within one year after the termination of the Merger Agreement, the
Parent shall promptly pay to the Exempt Sellers and amount equal to the product
of the number of shares purchased from such Exempt Sellers pursuant to the
Option multiplied by the amount by which the Third Party Higher Purchase Price
exceeds the Purchase Price. For purposes of this Section 1(a), non-cash
consideration shall be valued at its fair market value pursuant to Section
4(f)(iii)
(b) Option Exercise Period. The Option may be exercised by
Merger Sub, in whole or in part, at any time or from time to time and as to
each, any or all Sellers and Shareholders as determined by Merger Sub, during
the period commencing on the earlier of (i) 5:00 p.m. on the second Business Day
after the Offer commences, or (ii) 5:00 p.m. on May 10, 2000, and ending on the
date which is the 30th Business Day following the termination of this Agreement;
provided, however, that the Option may not be exercised by Merger Sub following
the termination of the Merger Agreement pursuant to Section 7.1(a); by the
Company pursuant to Sections 7.1(b), 7.1(f) or 7.1(g) of the Merger Agreement;
or a termination of the Merger Agreement by Parent or Merger Sub pursuant to
Section 7.1(b) provided that the Company would also have been entitled to
terminate the Merger Agreement pursuant to Section 7.1(b)
(c) In the event Merger Sub wishes to exercise the Option
for all or some of the Shares, Merger Sub shall send a written notice (the
"Exercise Notice") to the Sellers and Shareholders specifying the total number
of Shares it wishes to purchase pursuant to such exercise and the place, the
date (not less than one nor more than 20 Business Days from the date of the
Exercise Notice) and the time for the closing of such purchase, provided that
such date and time may be earlier than one day after the Exercise Notice if
reasonably practicable. Each closing of a purchase of Shares pursuant to this
Section 1(b) (a "Closing") shall take place at the place, on the date and at the
time designated by Merger Sub in its Exercise Notice. Parent or Merger Sub shall
not be under any obligation to deliver any Exercise Notice and may allow the
Option to terminate without purchasing any Shares hereunder.
(d) At a Closing, (i) the Sellers or Shareholders shall
deliver to Merger Sub (in accordance with Merger Sub's instructions) a
certificate or certificates (the "Certificates") representing all of the Shares
specified in the Exercise Notice, duly endorsed or accompanied by stock powers
duly executed in blank, with all necessary stock transfer stamps affixed, and
(ii) Merger Sub shall deliver to each Seller or Shareholder by wire transfer in
immediately available funds to an account designated by such Seller or
Shareholder, in an amount equal to (A) the number of such Shares being purchased
at such Closing from such person multiplied by (B) the Purchase Price.
(e) [Intentionally Omitted]
(f) The Closing shall be subject to the satisfaction of each
of the following conditions:
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<PAGE>
(i) no temporary restraining order, preliminary or permanent
injunction or other order issued by a court or other Governmental Entity (as
defined in the Merger Agreement) of competent jurisdiction shall be in effect
and have the effect of making the Option illegal or otherwise prohibiting
consummation of the Option;
(ii) any waiting period applicable to the consummation of the
purchase and sale of the Shares pursuant to the exercise of the Option under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder (the "HSR Act") shall have expired or
been terminated; and
(iii) all actions by or in respect of, and any filing with,
any governmental body, agency, official, or authority required to permit the
consummation of the purchase and sale of the Shares pursuant to the exercise of
the Option shall have been obtained or made and shall be in full force and
effect.
(g) Each of the Sellers shall tender validly (or cause the
record owner of such Shares to tender validly), pursuant to and in accordance
with the Offer, all of the respective Shares indicated on Exhibit A to be
tendered by such person not later than the close of business on the third
Business Day after the Offer commences, and each of the Shareholders hereby
agrees to tender validly (or cause the record owner of such shares to tender
validly), thereafter pursuant to and in accordance with the Offer not later than
the close of business on the third Business Day after the Offer commences, any
of such Shareholder's Shares not tendered by a Seller. Each Seller and
Shareholder agrees not to withdraw such Seller's and Shareholder's Shares
without the written consent of Parent. Each Seller or Shareholder shall deliver
to the depositary (the "Depositary") designated in the Offer (i) a letter of
transmittal with respect to such Shares tendered by it complying with the terms
of the Offer together with instructions directing the Depositary to make payment
for such Shares directly to the Shareholder, or to or for the benefit of one or
more Sellers or Shareholders as designated by such Seller or Shareholder in such
letter (but if such Shares are not accepted for payment or are withdrawn, are to
be returned pursuant to the Offer, and are not subject to Section 1(i) of the
Agreement to return such Shares to such Seller or Shareholder whereupon they
shall continue to be held by such Seller or Shareholder subject to the terms and
conditions of this Agreement), (ii) the Certificates and (iii) all other
documents or instruments required to be delivered pursuant to the terms of the
Offer (the "Offer Documents"). No tender pursuant to this Section l(g) will
excuse any of the obligations of the Sellers or Shareholders hereunder.
Notwithstanding the provisions of this Section 1(g), in the event any Shares are
withdrawn from the Offer for any reason or are not purchased pursuant to the
Offer, such Shares shall remain subject to the terms of this Agreement. Each
Seller and Shareholder hereby agrees to permit Parent and Merger Sub to publish
and disclose in the Offer Documents and, if approval of the shareholders of the
Company is required under applicable law, in the Proxy Statement, including all
documents and schedules filed with the Securities Exchange Commission ("SEC"),
its identity and ownership of Company Common Stock and the nature of its
commitments, arrangements and understandings under this Agreement.
(h) To the extent that any Shares listed on Exhibit A have
been pledged by a Seller or Shareholder as security for such Seller's or
Shareholder's obligations under any credit or loan agreement (a "Third Party
Loan Agreement") or to the extent that a certificate or certificates
representing such Seller's or Shareholder's Shares indicated on Exhibit A are
not currently in the possession of such Seller or Shareholder, such Seller or
Shareholder agrees to (i) promptly execute
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and deliver all instruments and take all other actions that may be necessary to
comply with the provisions of this Section 1; (ii) take all actions that may be
necessary to ensure that such Seller or Shareholder does not default under the
terms of any Third Party Loan Agreement; and (iii) immediately notify Parent and
Merger Sub of any notice of default or claim by the lender under any Third Party
Loan Agreement.
(i) In the event any Closing occurs on the date of the
termination of the Offer, the Depositary shall delivery to Merger Sub the
certificates representing the Shares subject to the exercise of the Option and
Merger Sub shall make appropriate payment in accordance with the letter of
transmittal delivered by the Seller or Shareholder.
(j) The Company agrees to register immediately on the
Company's stock records the transfer to Merger Sub of the Shares sold by any
Seller or Shareholder upon the completion of the Offer or at the Closing.
2. Representations and Warranties of the Sellers and Shareholders. Each
Seller and Shareholder hereby, severally and not jointly, represents and
warrants to Parent and Merger Sub as follows as to such Seller or Shareholder:
(a) Authority. Such Seller or Shareholder has all requisite
power and authority to execute, and deliver and perform this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Seller or
Shareholder. This Agreement has been duly and validly executed and delivered by
the Seller or Shareholder and, assuming due authorization, execution and
delivery by Parent and Merger Sub, constitutes a valid and binding obligation of
the Seller or Shareholder enforceable against the Seller or Shareholder in
accordance with its terms (except insofar as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, or by principles governing the
availability of equitable remedies). Except for the expiration or termination of
the waiting period under the HSR Act, and informational filings with the SEC,
neither the execution, delivery or performance of this Agreement by the Seller
or Shareholder nor the consummation by the Seller or Shareholder of the
transactions contemplated hereby will require any filing with, or permit,
authorization, consent or approval of, any United States Federal, state or local
government or any court, tribunal, administrative agency or commission or other
domestic governmental or regulatory authority or agency (a "Governmental
Entity").
(b) Conflicting Instruments; No Transfer. Except as provided
in the written agreements set forth on Schedule 2 hereto, neither the execution,
delivery or performance of this Agreement by the Seller or Shareholder nor the
consummation by the Seller or Shareholder of the transactions contemplated
hereby will result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default under, be in conflict with, or
give rise to any right of termination, amendment, cancellation or acceleration
under, or result in the creation of any pledge, claim, lien, charge, encumbrance
or security interest of any kind or nature whatsoever (a "Lien") upon any of the
properties or assets of the Seller or Shareholder under, any of the terms,
conditions or provisions of any contract, agreement, commitment, understanding
or other instrument, or any judgment, injunction, order, decree, law, regulation
or arrangement to which the Shareholder is a party or by which the Seller or
Shareholder or any of the Seller's or Shareholder's properties or
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assets, including the Seller's or Shareholder's Shares, may be bound, except for
any breach, violation, conflict, default, conflict or Lien which, individually
or in the aggregate, would not prevent, impair, affect or delay the Seller's or
Shareholder's ability to sell, or to deliver his, her or its proxy for, the
Shares according to the terms of this Agreement and to approve the Merger
Agreement and the transactions contemplated thereby.
(c) The Shares. Except as provided in the written agreements
set forth on Schedule 2 hereto, the Seller's or Shareholder's Shares indicated
on Exhibit A are owned of record or beneficially (both as to voting and
dispositive power) by such person and at all times during the term hereof will
be, held of record or beneficially (both as to voting and dispositive power) by
such person and such person has good and marketable title to such Shares and
will deliver such Shares, free and clear of any Liens, proxies, voting trusts or
agreements, understandings or arrangements, except for any such Liens or proxies
arising hereunder. Any and all proxies, voting trusts or similar agreements,
understandings or arrangements between or among parties hereto other than Parent
or Merger Sub are hereby terminated. The Sellers or Shareholders own of record
or beneficially no shares of Company Common Stock other than such Shares.
(d) Brokers. Other than set forth in the Merger Agreement,
no broker, investment banker, financial advisor or other persons is or will be
entitled to any broker's finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement.
(e) Merger Agreement. The Seller or Shareholder understands
and acknowledges that Parent is entering into, and causing Merger Sub to enter
into, the Merger Agreement in reliance upon the Seller's or Shareholder's
execution and delivery of this Agreement.
(f) The Seller or Shareholder is not in default under any
Third Party Loan Agreement.
(g) The Seller or Shareholder is not a party to any
contract, agreement, commitment, understanding or other instrument with respect
to any of the Shares other than those agreements listed on Schedules 2 and 4
hereto.
3. Representations and Warranties of Parent and Merger Sub. Parent and
Merger Sub hereby jointly and severally represent and warrant to the Sellers and
Shareholders as follows:
(a) Authority. Parent and Merger Sub have the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by Parent and Merger Sub and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of Parent and Merger Sub. This
Agreement has been duly and validly executed and delivered by Parent and Merger
Sub and constitutes a legal, valid and binding obligation of Parent and Merger
Sub enforceable in accordance with its terms (except insofar as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally, or by principles
governing the availability of equitable remedies).
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(b) Securities Act. The Shares will be acquired in
compliance with, and Merger Sub will not offer to sell or otherwise dispose of
any Shares so acquired by it in violation of the registration requirements of,
the Securities Act of 1933, as amended.
(c) Financing. Parent will have the funds necessary to
consummate the Offer and the Merger pursuant to the terms contemplated by the
Merger Agreement and will provide such funds to Merger Sub at or prior to the
consummation of the Offer and the Merger, as applicable.
4. Covenants of the Sellers and Shareholders. Each Seller and
Shareholder, severally and not jointly, agrees as follows:
(a) Until the Option is no longer exercisable, the Seller or
Shareholder shall not, except as contemplated by the terms of this Agreement,
(i) offer to sell, sell, transfer, pledge, hypothecate, grant a security
interest in, encumber, assign or otherwise dispose of, or enter into any
contract, option or other arrangement (including any profit sharing arrangement)
or understanding with respect to the sale, transfer, pledge, hypothecation,
grant of a security interest in, encumbrance, assignment or other disposition
of, the Shares (including any options or warrants to purchase Company Common
Stock) to any person other than Merger Sub or Merger Sub's designee, except the
agreements as set forth on Schedule 4 hereto, (ii) enter into any voting
arrangement, whether by proxy, voting agreement, voting trust, power-of-attorney
or otherwise, with respect to the Shares or (iii) take any other action that
would in any way restrict, limit or interfere with the performance of his, her
or its obligations hereunder or the transactions contemplated hereby.
(b) Until the Merger is consummated or the Merger Agreement
is terminated, the Seller or Shareholder shall not, nor shall the Seller or
Shareholder permit any investment banker, financial advisor, attorney,
accountant or other representative or agent of the Seller or Shareholder to,
directly or indirectly (i) solicit, initiate or encourage (including by way of
furnishing nonpublic information), or take any other action designed or
reasonably likely to facilitate, any inquiries or the making of any proposal
which constitutes any Acquisition Proposal (as defined in the Merger Agreement)
or (ii) participate in any discussions or negotiations regarding any Acquisition
Proposal. Without limiting the foregoing, it is understood that any violation of
the restrictions set forth in the preceding sentence by an investment banker,
financial advisor, attorney, accountant or other representative or agent of the
Seller or Shareholder shall be deemed to be a violation of this Section 4(b) by
the Seller or Shareholder. Actions taken by a Seller in his or her capacity as
an officer or director of the Company will not be a violation of this Agreement,
provided such actions are permitted by the Merger Agreement.
(c) Each Seller and Shareholder agrees to notify promptly
and to provide all details to Parent if such Seller or Shareholder, or to such
Seller's or Shareholder's knowledge, the Company shall be approached or
solicited directly or indirectly by any person with respect to an Acquisition
Proposal, to the extent the Company has not provided such details to the Parent.
(d) At any meeting of shareholders of the Company called to
vote upon the Merger and the Merger Agreement or at any adjournment thereof or
in any other circumstances upon which a vote, consent or other approval
(including by written consent) with respect to the Merger and the Merger
Agreement is sought, each Seller and Shareholder shall, including by initiating
a solicitation of written consents if requested by Parent, vote (or cause to be
voted) such Sellers and
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Shareholder's Shares in favor of the Merger, the adoption by the Company of the
Merger Agreement and the approval of the other transactions contemplated by the
Merger Agreement. At any meeting of shareholders of the Company or at any
adjournment thereof or in any other circumstances upon which the Seller's and
Shareholder's vote, consent or other approval is sought, such Seller and
Shareholder shall vote (or cause to be voted) such Seller's and Shareholder's
Shares against (i) any merger agreement or merger (other than the Merger
Agreement and the Merger), consolidation, combination, sale of substantial
assets, reorganization, recapitalization, dissolution, liquidation or winding up
of or by the Company or any other Acquisition Proposal (collectively,
"Alternative Transactions") or (ii) any amendment of the Company's Articles of
Incorporation or By-laws or other proposal or transaction involving the Company
or any of its subsidiaries, which amendment or other proposal or transaction
would in any manner impede, frustrate, prevent or nullify the Merger, the Merger
Agreement or any of the other transactions contemplated by the Merger Agreement
(collectively, "Frustrating Transactions").
(e) If Parent shall for any reason have increased the price
per Share payable in the Offer over the Purchase Price (and Parent accepts
Shares for payment pursuant to the Offer), then, immediately following Parent's
payment for the Shares pursuant to the Offer, each Seller or Shareholder shall
pay to Parent on demand an amount in cash equal to the product of (x) the number
of such Seller's or Shareholder's Shares and Shares subject to options
identified on Exhibit A hereto and (y) the excess of (A) the per share cash
consideration received by the Seller or Shareholder as a result of the Offer, as
amended, over (B) the Purchase Price. This Section 4(e) shall not apply to
Christian Nast, Nickolas Palin, Geary Cotton, Patricia Cotton, Richard Goudis,
Richard Werber, Gerry Holly, Stephen Frabitore, and David Schofield (the "Exempt
Sellers").
(f) (i) In the event that the Merger Agreement shall have
been terminated and Merger Sub would be entitled to purchase each Seller's or
Shareholder's Shares pursuant to Section 1(b), Merger Sub may elect, by notice
given in the manner set forth in Section 1(c), in lieu of purchasing such
Seller's or Shareholder's Shares, to receive from such Seller or Shareholder,
and each Seller and Shareholder hereby agrees to pay to Merger Sub on demand, an
amount equal to eighty percent (80%) of all profit (determined in accordance
with Section 4(f)(ii)) of such Seller or Shareholder from the consummation of:
(a) any Acquisition Proposal (as defined in the Merger Agreement) with a person
that makes an Acquisition Proposal during the period commencing on the date
hereof and terminating on the termination of the Merger Agreement (a "Prior
Person") that is consummated within one year of such termination; or (b) any
Acquisition Proposal that is consummated pursuant to a definitive agreement
entered into within 6 months after the termination of the Merger Agreement with
a person other than a Prior Person. This Section 4(f)(i) shall not apply to the
Exempt Sellers.
(ii) For the purposes of this Section 4(f), the profit
of any Seller or Shareholder from any Acquisition Proposal shall equal (A) the
aggregate consideration received by such Seller or Shareholder pursuant to such
Acquisition Proposal as to all Shares and Shares subject to options identified
on Exhibit A hereto, valuing any non-cash consideration at its fair market value
on the date of such consummation, plus (B) the value of all Shares and Shares
subject to options of such Seller or Shareholder disposed of after the
termination of the Merger Agreement and prior to the date of such consummation
(which shall be the aggregate consideration received by such Seller or
Shareholder in connection with the disposition of such Shares and Shares subject
to options (valuing any non-cash consideration at its fair market value on the
date of disposition), less (C) the
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product of (x) the number of Shares and the Shares subject to options identified
on Exhibit A hereto as to each Seller or Shareholder and (y) the Purchase Price.
(iii) For the purposes of this Section 4(f), the fair
market value of any non-cash consideration consisting of:
(A) securities listed on a national securities
exchange or traded on the NASDAQ National
Market shall be equal to the average closing
price per share of such security as reported
on such exchange or NASDAQ National Market
for the five trading days before and the
five trading days after the date of
determination; and
(B) consideration which is other than securities
of the form specified in clause (A) of this
Section 4(f)(iii) shall be determined by
Parent in good faith after consulting with a
nationally recognized independent investment
banking firm.
(iv) Any payment of profit under this Section 4(f)
shall be paid by wire transfer of same day funds to an account designated by
Parent on (i) the first Business Day after Seller's or Shareholder's receipt of
any cash consideration, and (ii) the third Business Day after the delivery of
notice by Parent to Seller or Shareholder of the value of any non-cash
consideration identified pursuant to Section 4(f)(iii). If all or a portion of
the consideration received for the Shares by the Seller or Shareholder is in the
form of non-cash consideration, the Seller or Shareholder shall pay to Parent
the profit on such portion by either, at Parent's election, (A) transferring to
Parent the Parent's pro rata share of such non-cash consideration or (B) selling
such non-cash consideration (which sale shall be effected as soon as practicable
and the allocable portion of the proceeds of which shall be paid to Parent
immediately following the settlement of such sale).
(v) Notwithstanding anything to the contrary
contained herein, this Section 4(f) shall not be construed to require any Seller
or Shareholder to make a payment to Merger Sub of an amount which would result
in such Seller or Shareholder retaining in respect of (x) each Share set forth
on Exhibit A and disposed of other than to Parent or Merger Sub less than the
sum of (i) $24.00 plus (ii) 20% of all consideration received in respect of such
Share in excess of $24.00 and (y) each Share subject to Option set forth in
Exhibit A and disposed of other than to Parent or Merger Sub less than the sum
of (i) $24.00 minus the exercise price of the option to which such Share is
subject (the "Difference") plus (ii) 20% of all consideration received in
respect of such Share subject to option in excess of the Difference, in each
case such consideration received other than cash to be valued at fair market
value in a manner described in this Section 4(f).
(g) Prior to the close of business on the third Business Day
after the Offer commences, each Seller and Shareholder with any Shares or
options to acquire Shares which are subject to the written agreements identified
on Schedule 2 hereto shall supply written evidence reasonably satisfactory to
Merger Sub that the parties to such agreements have made suitable arrangements
for the tender, sale and purchase of the Shares pursuant to the Offer and in
accordance with this Agreement.
5. Additional Agreements Sellers and Shareholders.
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<PAGE>
(a) Each Seller listed on Exhibit A with an asterisk next to
his, her or its name (each, a "Designated Seller") owns validly issued and
outstanding options to acquire a number of shares of Company Common Stock as set
forth opposite his name on Exhibit A attached hereto. Each Designated Seller
hereby agrees with Parent that, if so requested by Parent at any time and from
time to time when Parent reasonably believes the number of outstanding Shares
owned of record by the Sellers and Shareholders in the aggregate is less than a
majority of the total issued and outstanding shares of Company Common Stock on a
fully diluted basis, each such Designated Seller will immediately upon receipt
of such notice exercise such number of options as are sufficient, after giving
effect to the exercises, to ensure that the number of outstanding Shares owned
of record by the Sellers and Shareholders in the aggregate continue at all times
to represent a majority of the total issued and outstanding shares of Company
Common Stock on a fully diluted basis. At the request of a Designated Seller,
the Parent will loan to such Designated Seller the exercise price of such
options. Such loans shall be on terms and conditions acceptable to the Parent,
which shall include but not be limited to a note, a loan agreement and a pledge
of the shares being purchased upon such exercise to secure all amounts due in
connection with such loan upon reasonable commercial terms for a comparable loan
transaction. Any shares of Company Common Stock received by the Designated
Seller upon any such exercise shall automatically at such time become "Shares"
for all purposes hereunder. The Company agrees to take immediately all actions
required (i) to issue to the Designated Seller the certificates representing the
Shares issuable upon exercise of the options, and (ii) following the exercise of
the options, to allow the Designated Seller to complete the Closing in
accordance with this Agreement.
(b) Each Seller and Shareholder listed on Exhibit A with a
"NC" next to his, her or its name (each a "Key Shareholder") covenants that he,
she or it shall not, for a period of five (5) years from and after the date of
consummation of the Merger, except on behalf of the Company, directly or
indirectly, within the United States of America and those countries in which the
Company maintains, owns facilities or conducts multi-level marketing activities
which the parties hereto acknowledge to be the geographic area in which the
Company conducts business, (i) provide or perform services which are in
competition with the Company's Business, either on his, her or its own behalf or
on behalf of any other person, whether as an employee, officer, director,
shareholder, partner, proprietor, agent, consultant, independent contractor,
lender or otherwise or (ii) have a financial interest in or be in any way
connected with or affiliated with any person which is in competition with the
Company's Business. Nothing contained herein shall preclude a Key Shareholder
from having a passive investment in less than one percent (1 %) of the
outstanding capital stock of any publicly traded company. Each Key Shareholder
acknowledges that he, she or it is a shareholder of the Company and has been (or
in the case of any Key Shareholder which is an entity, the parties controlling
such entity have been) in a position of responsibility with the Company. The Key
Shareholders hereby acknowledge and agree that (i) the covenants in this Section
5(b) are a material inducement to Parent to enter into the Merger Agreement;
(ii) the Company's Business is of a limited and unusual nature and the scope of
the Company's Business is sufficiently broad so that these restrictions shall
apply throughout the United States and any other country in which the Company
maintains, owns facilities, or conducts multi-level marketing activities; and
(iii) the territory is reasonable under the circumstances.
(c) For the purposes of Section 5(b), "Company's Business"
means the development, manufacture, or retail or wholesale distribution of
vitamin and mineral supplements,
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other nutritional supplements and consumer health products, including vitamins
in both multivitamin and single-entity formulas, minerals, herbals, weight
management products, homeopathic remedies, sports nutrition products and
personal care products, as conducted by the Company in the United States and any
other country in which the Company maintains, owns or facilities, or conducts
multi-level marketing activities, on and after the date of Merger.
(d) Not later than 5 Business Days after the Offer
commences, each Shareholder or Seller whose shares are not held of record will
either (i) cause the record holder to be bound by the terms of this Agreement or
(ii) shall become the record holder of such shares. The Company agrees to take
immediately all such actions as may be required to register on its stock
transfer records any transfers of Shares by a Seller or Shareholder in
accordance with this Section 5(d).
6. Grant of Irrevocable Proxy; Appointment of Proxy.
(a) Each Seller and Shareholder hereby irrevocably grants
to, and appoints, William E. Watts, Greg Horn and Julitte van der Ven and any
other individual who shall hereafter be designated by Parent, and each of them
(a "Proxy Holder"), such Seller's or Shareholder's proxy and attorney-in-fact
(with full power of substitution), for and in the name, place and stead of such
Seller or Shareholder, to vote such Seller's and Shareholder's Shares, or grant
a consent or approval in respect of such Shares, at any meeting of shareholders
of the Company or at any adjournment thereof or in any other circumstances upon
which their vote, consent or other approval is sought, in favor of the Merger,
the adoption by the Company of the Merger Agreement and the approval of the
other transactions contemplated by the Merger Agreement and against any
Alternative Transaction or Frustrating Transaction. Unless this Agreement is
properly terminated, the Company agrees to recognize and give effect immediately
to any vote, consent or approval exercised or expressed by a Proxy Holder.
(b) Each Seller and Shareholder represents that any proxies
heretofore given in respect of such Seller's or Shareholder's Shares are not
irrevocable, and that any such proxies are hereby revoked.
(c) Each Seller and Shareholder hereby affirms that the
irrevocable proxy set forth in this Section 6 is given in connection with the
execution of the Merger Agreement, and that such irrevocable proxy is given to
secure the performance of the duties of such Shareholder under this Agreement.
Such Shareholder hereby further affirms that the irrevocable proxy is coupled
with an interest and may under no circumstances be revoked, subject to Section
9. Such Seller or Shareholder hereby ratifies and confirms all that such
irrevocable proxy may lawfully do or cause to be done by virtue hereof. Such
irrevocable proxy is executed and intended to be irrevocable in accordance with
the provisions of Section 607.0722 of the Florida Business Corporation Act. Such
irrevocable proxy shall be valid until the later to occur of (i) eleven (11)
months from the date hereof or (ii) the termination of this Agreement pursuant
to Section 9.
7. Further Assurances. Each Seller or Shareholder will, from time to
time prior to the Closing and without further consideration, execute and
deliver, or cause to be executed and delivered, such additional or further
transfers, assignments, endorsements, consents and other instruments as Parent
or Merger Sub may request for the purpose of effectively carrying out the
transactions contemplated by this Agreement and to vest the power to vote such
Shareholder's Shares
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<PAGE>
as contemplated by Section 6. Parent and Merger Sub jointly and severally agree
to use commercially reasonable efforts to take, or cause to be taken, all
actions necessary to comply promptly with all legal requirements that may be
imposed with respect to the transactions contemplated by this Agreement
(including legal requirements of the HSR Act).
8. Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties without the
prior written consent of the other parties, except that Merger Sub may assign,
in its sole discretion, any or all of its rights, interests and obligations
hereunder to Parent or to any direct or indirect wholly owned subsidiary of
Parent. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns. Each Seller and Shareholder agrees that this Agreement
and the obligations of such Seller or Shareholder hereunder shall attach to such
Seller's or Shareholder's Shares and shall be binding upon any person or entity
to which legal or beneficial ownership of such Shares shall pass, whether by
operation of law or otherwise, including without limitation such Seller's or
Shareholder's heirs, guardians, administrators or successors.
9. Termination. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate upon the earliest of (a) the date upon which
the Merger Agreement is terminated pursuant to Article VII thereof and (b) the
effective time of the Merger. Notwithstanding the foregoing, Sections 1(a), 1(b)
(to the extent set forth therein), 1(c)- (f) and 1(h) - (j), 2, 3(a) - (b),
4(a), 4(c) (for as long as the Option is exercisable), 4 (e), 4(f) (to the
extent set forth therein), 7, 8, 9, 10 (for as long as the Option is
exercisable) and 11-18 shall survive any termination of this Agreement.
10. Stop Transfer. The Company agrees with, and covenants to, Parent
and Merger Sub that the Company shall not register the transfer of any
certificate representing any Shareholder's Shares unless such transfer is made
in accordance with the terms of this Agreement. The Company and each Shareholder
and Seller agree that upon Parent's request all stock certificates representing
Shares subject to this Agreement shall be immediately and conspicuously marked
with a legend to reflect the restrictions set forth in this Agreement.
11. General Provisions.
(a) Expenses. Except as expressly set forth herein, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses.
(b) Amendments. This Agreement may not be amended, modified
or supplemented except by an instrument in writing signed by each of the parties
hereto.
(c) Notice. All notices and other communications hereunder
shall be in writing and shall be deemed duly given (a) on the date of delivery
if delivered personally; (b) on the first Business Day following the date of
dispatch if delivered by a nationally recognized next-day courier service; or
(c) if sent by facsimile transmission, with a copy mailed on the same day in the
manner provided in (a) or (b) above, when transmitted and receipt is confirmed
by telephone. All notices
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<PAGE>
and other communications hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the party
to receive such notice.
(i) if to Parent or Merger Sub to
Koninklijke Numico N.V.
Rokkeveenseweg 49
2712 PJ Zoetermeer
The Netherlands
Facsimile: 011-31-79-353-9671
Attention: Julitte van der Ven, General
Counsel
with a copy to:
Guy E. Snyder
William J. Bettman
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, IL 60601
Facsimile: 312-609-5005
and
(ii) if to a Seller or Shareholder, to the
address set forth under the name of such
Seller or Shareholder on Exhibit A hereto
with a copy to:
Charles E. Muller II
Muller & Lipson, P.A.
9350 South Dixie Highway
Suite 1550
Miami, FL 33156
Facsimile: 305-670-6769
and
Richard Werber
Rexall Sundown, Inc.
6111 Broken Sound Parkway, N.W.
Boca Raton, FL 33487
Facsimile: 561-999-4729
(iii) if to the Company, to,
Rexall Sundown, Inc.
6111 Broken Sound Parkway, NW
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<PAGE>
Boca Raton, Florida 33487
Facsimile: (561) 999-4729
Attention: Richard Werber, Vice President
and General Counsel
with a copy to:
Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Facsimile: (305) 579-0717
Attention: Paul Berkowitz
Ira Rosner
(d) All representations, warranties, covenants, agreements
and conditions of this Agreement applicable to the Sellers and Shareholders are
several and not joint.
(e) Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".
(f) Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
(g) Entire Agreement; No Third-Party Beneficiaries. This
Agreement and the Merger Agreement (including the documents and instruments
referred to herein and therein) (i) constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and (ii) are not intended
to confer upon any person other than the parties hereto any rights or remedies
hereunder.
(h) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
the laws that might be applicable under the conflicts of laws principles
thereof; provided, however, that the matters affecting the validity of the
corporate action taken by the Company relating to the transfer of the Shares and
all of the provisions of this Agreement relating to the voting of the Shares
shall be governed by and construed in accordance with the laws of the State of
Florida.
(i) Waiver of Appraisal Rights. To the extent applicable,
each Seller and Shareholder hereby waives any rights of appraisal or rights to
dissent from the Merger that such Seller or Shareholder may have on the terms
set forth in the Merger Agreement.
(j) Publicity. Except as otherwise required by law (including
Rule 14d-9 promulgated under the Securities Exchange Act of 1934), court process
or the rules of the NASDAQ
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<PAGE>
National Market (with respect to the Company), a national or foreign securities
exchange or as contemplated or provided in the Merger Agreement, for so long as
this Agreement is in effect, none of the Company, each of Sellers and
Shareholders or Parent shall, nor shall Parent or the Company permit any of its
subsidiaries to, issue or cause the publication of any press release or other
public announcement with respect to the transactions contemplated by this
Agreement or the Merger Agreement without the consent of the other parties.
12. Shareholder Capacity. No person executing this Agreement who is or
becomes during the term hereof a director or officer of the Company makes any
agreement or understanding herein in his or her capacity as such director or
officer. Each Seller and Shareholder signs solely in his or her capacity as the
record and beneficial owner of, or the trustee of a trust whose beneficiaries
are the beneficial owners of, such Seller's and Shareholder's Shares and nothing
herein shall limit or affect any actions taken by a Seller or Shareholder in its
capacity as an officer or director of the Company to the extent specifically
permitted by the Merger Agreement.
13. Jurisdiction; Consent to Service of Process.
(a) Each of the parties to this Agreement hereby irrevocably
and unconditionally submits, for himself, herself or itself and its property, to
the jurisdiction and venue of any Delaware State court, or any Federal court of
the United States of American sitting in the District of Delaware and any
appellate court from any such court, in any suit, action or proceeding arising
out of or relating to this Agreement, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all clams in respect of any such
suit, action or proceeding may be heard and determined in such Delaware State
court, or, to the extent permitted by law, by removal or otherwise, in such
Federal court. It shall be a condition precedent to each party's right to bring
any such suit, action or proceeding that such suit, action or proceeding, in the
first instance, be brought in such Delaware State court or, to the extent
permitted by law, by removal or otherwise, in such Federal court. If such
Delaware State court, or such Federal court refuses to accept jurisdiction with
respect thereto, such suit, action or proceeding may be brought in any other
court with jurisdiction. No party to this Agreement may move to (i) transfer any
such suit, action or proceeding from such Delaware State court (other than to
remove to such Federal court), or from such Federal court sitting in any such
suit, action or proceeding brought in such Delaware State court, or any Federal
court with a suit, action or proceeding in another jurisdiction or district or
(iii) dismiss any such suit, action or proceeding brought in such Delaware State
court, or any Federal court sitting in the District of Delaware for the purpose
of bringing the same in another jurisdiction. Each party agrees that a final
judgment in any such suit, action or proceeding shall be conclusive and may be
enforced in any other jurisdiction by suit on the judgment or in any other
manner provided by law. Each party irrevocably consents to service of process by
registered or certified mail.
(b) Each party to this Agreement hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any Delaware State court, or any Federal court sitting in the District of
Delaware. Each party hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such suit,
action or proceeding in any such court and further waives the right to object,
with respect to such suit, action or proceeding, that such court does not have
jurisdiction over such party.
-14-
<PAGE>
14. Performance by Merger Sub. Parent covenants and agrees for the
benefit of the Sellers and Shareholders that it shall cause Merger Sub to
perform in full each obligation of Merger Sub set forth
in this Agreement.
15. Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with its specific terms or were otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any court of the United States located in the
State of Delaware or any Delaware State court, this being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto waives any right to trial by jury with respect to any
claim or proceeding related to or arising out of this Agreement or any of the
transactions contemplated hereby.
16. Remedies Cumulative. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
17. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby may be consummated as originally
contemplated to the fullest extent possible.
18. Survival. All representations and warranties contained herein shall
survive for one (1) year after the termination hereof.
19. Approval by the Board of Directors of the Company. Notwithstanding
anything in this Agreement, all the rights and obligations of the parties set
forth in this Agreement are subject to the approval of this Agreement by the
Board of Directors of the Company. Such approval shall include the approval of
this Agreement for purposes of Sections 607.0901 and 607.0902 of the Florida
Business Corporation Act.
20. Charitable Gifts. Notwithstanding any other provision of this
Agreement, Carl DeSantis is permitted at any time to transfer record ownership
of an aggregate of up to 300,000 outstanding Shares to non-profit institutions
designated by Carl DeSantis provided that, immediately prior to such transfer,
Carl DeSantis exercises sufficient options on shares of Company Common Stock to
become the record owner of such additional outstanding Shares so as to maintain
the voting interest in the Company's outstanding Common Stock currently held by
Carl DeSantis (the "Newly Issued Shares"). Carl DeSantis and the Company shall
provide such information and documents as may be reasonably requested by Merger
Sub regarding the transfer of the Shares, the exercise of the
-15-
<PAGE>
options, and the issuance and absence of Liens against the Newly Issued Shares.
All such Newly Issued Shares shall be subject to this Agreement in all respects.
If Carl DeSantis needs to borrow the funds necessary to exercise the options and
pledge additional shares to secure such loan, (the "Option Loan"), such pledge
will not violate the terms of the Agreement so long as simultaneously with such
pledge the Shares pledged are immediately tendered in accordance with the Offer.
The Option Loan shall be deemed a Third Party Loan.
[SIGNATURE PAGE TO FOLLOW]
-16-
<PAGE>
IN WITNESS WHEREOF, each of Parent and Merger Sub has caused this
Agreement to be signed by its officer thereunto duly authorized and each such
Shareholder has signed this Agreement, all
as of the dated first written above.
KONINKLIJKE NUMICO N.V.
By: /s/ Julitte van der Ven
-------------------------------
Name: Julitte van der Ven
-----------------------------
Title: Attorney-in-fact
----------------------------
NUTRICIA INVESTMENT CORP.
By: /s/ Julitte van der Ven
-------------------------------
Name: Julitte van der Ven
-----------------------------
Title: President
----------------------------
ENTITY SHAREHOLDERS:
CDD PARTNERS, LTD.
By: CDD Management, Inc. General
Partner
By: /s/ Carl DeSantis
-------------------------------
Carl DeSantis, President
TRIPLE D INVESTMENTS, L.L.C.
By: /s/ Damon DeSantis
-------------------------------
Damon DeSantis, as trustee
of the Sylvia DeSantis
Irrevocable Life Insurance
Trust, a member
By: /s/ Dean DeSantis
-------------------------------
Dean DeSantis, as trustee
of the Sylvia DeSantis
Irrevocable Life Insurance
Trust, a member
By: /s/ Deborah DeSantis
-------------------------------
Deborah DeSantis, as
trustee of the Sylvia
DeSantis Irrevocable Life
Insurance Trust, a member
-17-
<PAGE>
SYLVIA DESANTIS REVOCABLE TRUST
By: /s/ Sylvia DeSantis
-------------------------------
Sylvia DeSantis, Trustee
SYLVIA DESANTIS IRREVOCABLE LIFE
INSURANCE TRUST
By: /s/ Damon DeSantis
-------------------------------
Damon DeSantis, Trustee
By: /s/ Dean DeSantis
-------------------------------
Dean DeSantis, Trustee
By: /s/ Deborah DeSantis
-------------------------------
Deborah DeSantis, Trustee
INDIVIDUAL SHAREHOLDERS:
/s/ Carl DeSantis
----------------------------------
Carl DeSantis
/s/ Damon DeSantis
----------------------------------
Damon DeSantis
/s/ Cynthia DeSantis
----------------------------------
Cynthia DeSantis, as
Custodian
/s/ Dean DeSantis
----------------------------------
Dean DeSantis
/s/ Laura DeSantis
----------------------------------
Laura DeSantis
-18-
<PAGE>
/s/ Deborah DeSantis
----------------------------------
Deborah DeSantis
/s/ Geary Cotton
----------------------------------
Geary Cotton
/s/ Patricia Cotton
----------------------------------
Patricia Cotton
/s/ Stephen Frabitore
----------------------------------
Stephen Frabitore
/s/ Richard Goudis
----------------------------------
Richard Goudis
/s/ Gerry Holly
----------------------------------
Gerry Holly
/s/ Christian Nast
----------------------------------
Christian Nast
/s/ Nickolas Palin
----------------------------------
Nickolas Palin
/s/ David Schofield
----------------------------------
David Schofield
/s/ Richard Werber
----------------------------------
Richard Werber
-19-
<PAGE>
ACKNOWLEDGED AND AGREED
TO AS TO SECTION 10 AS OF THE
DATE FIRST WRITTEN ABOVE
REXALL SUNDOWN, INC.
By: /s/ Damon DeSantis
---------------------------------
Name: Damon DeSantis
-------------------------------
Title: CEO
------------------------------
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
NUMBER OF RECORD AND NUMBER OF SHARES SHARES TO BE
NAME AND ADDRESS OF SELLER BENEFICIAL SHARES UNDERLYING OPTIONS TENDERED*
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NC CARL DESANTIS* 165,000 897,500 7,703,889
3223 N. OCEAN BOULEVARD
GULFSTREAM, FLORIDA 33483
- -------------------------------------------------------------------------------------------------------------
NC DAMON DESANTIS* 240,599 902,000 9,667,658
12121 NW 11TH STREET
PLANTATION, FLORIDA 33323
- -------------------------------------------------------------------------------------------------------------
NC CYNTHIA DESANTIS 31,114 0 31,114
CUST
12121 NW 11TH STREET
PLANTATION, FLORIDA 33323
- -------------------------------------------------------------------------------------------------------------
NC DEAN DESANTIS* 89,550 465,000 7,571,609
7600 HYANNIS LANE
PARKLAND, FLORIDA 33067
- -------------------------------------------------------------------------------------------------------------
NC LAURA DESANTIS 19,546 0 19,546
7600 HYANNIS LANE
PARKLAND, FLORIDA 33067
- -------------------------------------------------------------------------------------------------------------
NC DEAN DESANTIS & DAMON 6,090 0 6,090
DESANTIS & DEBORAH DESANTIS
TTEES OF THE SYLVIA DESANTIS
IRREVOCABLE LIFE INSURANCE TRUST
- -------------------------------------------------------------------------------------------------------------
NC SYLVIA DESANTIS AS TTEE UNDER 337,750 0 337,750
THE SYLVIA DESANTIS REVOCABLE
TRUST DTD 10/30/9
- -------------------------------------------------------------------------------------------------------------
NC TRIPLE D INVESTMENTS, LLC 13,158,042 0 1,316,000
9350 S. DIXIE HIGHWAY
SUITE 1550
MIAMI, FLORIDA 33156
- -------------------------------------------------------------------------------------------------------------
NC DEBORAH DESANTIS* 128,425 226,500 4,075,773
7539 ISLA VERDE WAY
DELRAY BEACH, FLORIDA 33446
- -------------------------------------------------------------------------------------------------------------
CHRISTIAN A. NAST* 30,229 692,000 30,229
2917 S. OCEAN BOULEVARD
PH 1103
HIGHLAND BEACH, FLORIDA 33487
- -------------------------------------------------------------------------------------------------------------
NICKOLAS PALIN* 6,000 775,334 6,000
3600 OCEAN BOULEVARD #801
SOUTH PALM BEACH, FLORIDA 33480
- -------------------------------------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------------------------------------
NUMBER OF RECORD AND NUMBER OF SHARES SHARES TO BE
NAME AND ADDRESS OF SELLER BENEFICIAL SHARES UNDERLYING OPTIONS TENDERED*
- -------------------------------------------------------------------------------------------------------------
GEARY COTTON* 234,254 817,500 234,254
615 IDLEWYLD DRIVE
FORT LAUDERDALE, FLORIDA 33301
- -------------------------------------------------------------------------------------------------------------
PATRICIA COTTON 12,242 0 12,242
615 IDLEWYLD DRIVE
FORT LAUDERDALE, FLORIDA 33301
- -------------------------------------------------------------------------------------------------------------
RICHARD GOUDIS* 1,169 330,000 1,169
4777 NW 25TH WAY
BOCA RATON, FLORIDA 33434
- -------------------------------------------------------------------------------------------------------------
RICHARD WERBER* 150,962 662,650 150,962
3279 NW 62ND STREET
BOCA RATON, FLORIDA 33496
- -------------------------------------------------------------------------------------------------------------
GERRY HOLLY* 0 370,000 0
2115 S. OCEAN BOULEVARD
DELRAY BEACH, FLORIDA
- -------------------------------------------------------------------------------------------------------------
STEPHEN FRABITORE* 2,500 420,820 2,500
8210 FALLS LANE
PARKLAND, FLORIDA 33067
- -------------------------------------------------------------------------------------------------------------
DAVID SCHOFIELD* 2,268 312,500 2,268
10453 RIO LINDO
DELRAY BEACH, FLORIDA 33446
- -------------------------------------------------------------------------------------------------------------
NC CDD PARTNERS, LTD. 17,653,313 0 1,100,000
12770 COIT ROAD, #850
DALLAS, TEXAS 75251
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
TOTAL 32,269,053 6,871,804 32,269,053
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>
*REPRESENTS THE NUMBER OF CURRENTLY OUTSTANDING SHARES TO BE TENDERED INTO THE
OFFER BY SUCH SELLER. THIS NUMBER IS SUBJECT TO INCREASE UPON THE EXERCISE OF
ANY OPTIONS AS TO SHARES IN ACCORDANCE WITH THIS AGREEMENT.
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
NUMBER OF RECORD AND
NAME AND ADDRESS OF SHAREHOLDER BENEFICIAL SHARES*
- ----------------------------------------------------------------------------
<S> <C> <C>
NC CDD PARTNERS, LTD. 17,653,313
12770 COIT ROAD, #850
DALLAS, TEXAS 75251
- ----------------------------------------------------------------------------
NC TRIPLE D INVESTMENTS, LLC 13,158,042
9350 S. DIXIE HIGHWAY
SUITE 1550
MIAMI, FLORIDA 33156
- ----------------------------------------------------------------------------
</TABLE>
*REPRESENTS THE NUMBER OF CURRENTLY OUTSTANDING SHARES TO BE TENDERED INTO THE
OFFER IN ACCORDANCE WITH THIS AGREEMENT.
<PAGE>
SCHEDULE 2
1. Shares owned by CDD Partners, Ltd. are pledged pursuant to the following
agreements:
A. Bank of America, N.A., as successor to
Nationsbank, N.A.
(i) The Amended and Restated Loan Agreement
dated October 27 1999 between Bank of
America, N.A., CDD Partners, Ltd. and Carl
DeSantis
(ii) The Amended and Restated Promissory Notes
dated October 27, 1999 from each of CDD
Partners, Ltd. and Carl DeSantis to Bank of
America, N.A.
(iii) The Pledge Agreement dated June 18, 1999
between Nationsbank, N.A. and CDD Partners,
Ltd.
B. Colonial Bank
(i) Revolving Credit Agreement dated November
17, 1999 between Carl DeSantis, CDD
Partners, Ltd. and Colonial Bank
(ii) Revolving Promissory Note dated November
17, 1999 from Carl DeSantis to Colonial Bank
(iii) Pledge Agreement dated November 17, 1999
between CDD Partners, Ltd. and Colonial Bank
(iv) Pledge Agreement dated November 17, 1999
between Carl DeSantis and Colonial Bank
C. Raymond James Credit Corporation
(i) Loan Agreement dated February 24, 2000
between Raymond James Credit Corporation
and CDD Partners, Ltd.
(ii) Demand Promissory Note dated February 24,
2000 from CDD Partners, Ltd.
(iii) Pledge and Security Agreement dated February
24, 2000 between Raymond James Credit
Corporation and CDD Partners, Ltd.
2. Certain Shares of Rexall Sundown, Inc. Common Stock are held as security
for margin loans pursuant to customary broker margin account agreements at
Raymond James and other brokerage firms.
<PAGE>
SCHEDULE 4
Securities Loan Agreement between CDD Partners, Ltd. and Carl DeSantis
dated as of April 30, 2000.
Securities Loan Agreement between CDD Partners, Ltd. and Dean DeSantis
dated as of April 30, 2000.
Securities Loan Agreement between CDD Partners, Ltd. and Damon DeSantis
dated as of April 30, 2000.
Securities Loan Agreement between Triple D Investment, L.L.C. and Dean
DeSantis dated as of April 30, 2000.
Securities Loan Agreement between Triple D Investments, L.L. C. and
Damon DeSantis dated as of April 30, 2000.
Securities Loan Agreement between Triple D Investments, L.L.C. and
Deborah DeSantis dated as of April 30, 2000.
All such Securities Loan Agreements to be in the form attached hereto.
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT dated as of April 30, 2000 among Rexall Sundown, Inc., a Florida
corporation ("Company"), Royal Numico N.V., a company organized under the laws
of The Netherlands ("Parent") and Damon DeSantis ("Executive").
WHEREAS, Executive is employed by Company or by a subsidiary of Company, as
President and Chief Executive Officer;
WHEREAS, in connection with an Agreement and Plan of Merger dated as of
April 30, 2000 (the "Merger Agreement"), an indirect subsidiary of Parent will
merge with and into Company (the "Merger"); and
WHEREAS, Parent and Company wish to assure itself of the services of
Executive for the period provided in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereto
hereby agree as follows:
1. EMPLOYMENT. Company agrees, and Parent agrees to cause the Company to
agree, to employ Executive, and Executive agrees to serve in the position set
forth above for the period commencing on the date hereof and ending December 31,
2003 (the "Employment Period"); PROVIDED, HOWEVER, that on January 1, 2004 and
each January 1 thereafter, the Employment Period shall automatically be extended
for one additional year, unless not later than 90 days prior to the date of such
automatic extension, the Company or Executive shall have given notice to
discontinue such extensions.
2. DUTIES. Executive is engaged to perform such duties as are assigned
to him by the Company. Executive shall devote his full time and attention to
the performance of such duties, which shall remain similar in scope and
responsibility to the duties he is performing as of the date of this Agreement.
At no time during the Employment Period shall Executive take on additional
employment without permission in writing from Company.
3. COMPENSATION.
(a) BASE SALARY. For all services rendered by Executive during the
Employment Period, Company shall initially pay Executive the base salary in
effect on the date hereof, subject to increase as of each January 1 during the
Employment Period (but not decrease) based on annual performance reviews
conducted by the Board of Directors of the Company and/or the Chief Executive
Officer or such other officer designated by the Board; provided, however, that
on January 1, 2001, 2002 and 2003, the base salary then in effect shall be
increased by an amount which is not less than the greater of (i) 5% or (ii) the
percentage increase in the cost of living based upon the Revised Consumer Price
Index (1982-84=100) published by the Bureau of Labor Statistics of the United
States Department of Labor for Boca Raton, Florida utilizing March 2000 as the
base month.
(b) INCENTIVE COMPENSATION. Executive shall be eligible to
participate during the Employment Period in the management stock purchase and
stock option plans described in the Benefits Letter referred to in the Merger
Agreement and such other annual bonus or incentive plans, stock option plans,
stock purchase plans and any other long-term compensation plans, programs or
arrangements which may be adopted by the Company and applicable to Executive.
<PAGE>
(c) OTHER COMPENSATION. The Executive shall be entitled to receive
such benefits and participate in such benefit plans as are generally provided
from time to time by the Company to its employees, and Executive shall be
entitled to continue to receive such fringe benefits and such other senior
management benefits of the type provided to Executive on the date hereof, as
such benefits are generally provided from time to time by the Company to its
senior management employees; provided that nothing herein shall be construed to
obligate the Company to provide any specific benefits to its employees or senior
management employees generally. The Executive shall be entitled to such
vacation time on an annual basis in accordance with the policies as are from
time to time in force for Company employees.
(d) NON-COMPETE COVENANT; RETENTION PAYMENTS. In exchange for the
non-competition and non-solicitation covenants (the "Non-Compete Covenants") set
forth in Section 5 below and for Executive's agreement to continue his
employment under the terms of this Agreement, Company shall pay to Executive the
following amounts:
(i) $1,140,000, 30 days after the effective time of the Merger
contemplated by the Merger Agreement (the date of the Merger hereinafter
referred to as the "Effective Time") in consideration of the Non-Compete
Covenants set forth in Section 5 below;
(ii) $1,140,000, payable in three equal installments on
Executive's first regular payroll date following each of the first, second
and third anniversaries of the Effective Time, if Executive is still in the
Company's employ as of each such anniversary date. Should Executive's
employment be terminated due to death or disability (as described in
Section 5(a)) or involuntarily terminated by the Company without Cause or
terminated by resignation by Executive with Good Reason (as defined in
Section 5(b), Executive (or Executive's estate in the event of death) shall
be entitled to receive any unpaid anniversary date payments within 30 days
of such termination.
Should Executive resign without Good Reason or should his employment be
involuntarily terminated with Cause prior to any such anniversary date, he shall
not be eligible to receive any further amount on the subsequent anniversary
dates.
Payments under this Section 3(d) are separate and distinct from and in
addition to any other payments contemplated under this Agreement and shall not
be taken into account in determining benefits under any other provision of this
Agreement or any employee benefit plan.
(e) All compensation paid or provided to Executive under this
Agreement shall be subject to any applicable income, payroll or other tax
withholding requirements.
4. REIMBURSEMENT OF EXPENSES. During the Employment Period, Company
shall reimburse Executive for reasonable business expenses incurred in
connection with Executive's duties hereunder. Executive shall furnish Company
with periodic, itemized expense reports in accordance with Company policies.
2
<PAGE>
5. EMPLOYMENT COVENANTS.
(a) Executive agrees that from the date hereof through the later of
(i) the third anniversary of the Merger, or (ii) the period ending on the second
anniversary of Executive's termination of employment for any reason (the
"Non-Competition Period"), Executive shall not:
(A) engage in any way, directly or indirectly, in any Competing
Business (as defined below) in the Geographic Area (as defined below);
PROVIDED, HOWEVER, in no event shall this provision be construed to
prohibit Executive's employment with any business in which less than 5% of
its consolidated gross revenues for its most recent fiscal year relates to
a Competing Business if Executive's responsibilities at such business do
not directly relate to a Competing Business. "Competing Business" shall
mean any activity relating to the development, manufacture, or the retail
or wholesale sale or distribution (including but not limited to sale or
distribution through retail, specialty retail, Internet, e-commerce, mail
order, multi-level marketing, mass market, or any other channel of
distribution) of vitamin and mineral supplements, sports nutrition products
or herbs, or any other product which competes with products being offered
for sale or under development by the Company or any subsidiary thereof.
"Geographic Area" shall mean (1) the United States and (2) any other
country in which the Parent, Company or any affiliate thereof owns, leases
or franchises locations, hosts web sites or otherwise conducts business; or
(B) directly, or indirectly through any person or entity, (1)
induce or attempt to induce any employee of the Parent, Company or any
affiliate thereof (other than an employee who performs purely ministerial
functions) (a "Protected Employee") to leave the employ of the Parent,
Company or such Parent; (2) interfere in any way with the relationship
between the Parent Company or any subsidiary and any Protected Employee;
(3) hire any Protected Employee, or any person who was a Protected
Employee at any time during the Non-Competition Period; (4) induce or
attempt to induce any customer, distributor, supplier, licensee, or other
business relationship of the Parent, Company or any affiliate which exists
or existed at any time during the Non-Competition Period, to cease doing
business with the Parent Company or such affiliate, or to interfere in any
way with any such business relationship.
(b) During the Employment Period and thereafter, Executive shall not,
without the Parent's and Company's prior written permission or in connection
with his duties under this Agreement, use or disclose all or any part of the
following valuable, special and unique assets of Parent's or Company's business
to any person, corporation, association or other entity (but excluding
information that had become public knowledge without any action by, or
involvement of, Executive) for any reason whatsoever: the confidential
information and trade secrets of Parent, the Company or any affiliate thereof,
including, but not limited to, the financial and sales information,
manufacturing formulas and processes, business plans and projections, personnel
information and records, procedures, techniques, products, customers, sources of
leads and methods of obtaining new business or the methods generally of doing
and operating the respective businesses of the Parent, Company and affiliates,
trade secrets, product ideas, processes, techniques, formulas, know-how,
marketing plans and strategies.
(c) Executive acknowledges that the restrictions contained in this
Section 5 in view of the nature of the business in which Parent or Company is
engaged, are reasonable and necessary in order to protect the legitimate
interests of the Parent or Company and that any violation of such restrictions
would result in irreparable harm to the Parent or Company. In the event of
Executive's violation of any of these restrictions, the Parent or Company shall
be entitled to seek
3
<PAGE>
from any court of competent jurisdiction preliminary and permanent injunctive
relief without proving actual damage or immediate or irreparable harm. Nothing
contained herein shall prohibit the Parent or Company from pursuing any other
remedies legally available to the Parent or Company for such breach or
threatened breach, including the recovery of damages from Executive.
(d) If any of the provisions of this Section 5 should ever be
adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable law in any jurisdiction, then the affected
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic, product or service, or other limitations permitted by applicable
law.
(e) The provisions of this Section 5 shall survive the expiration or
termination of this Agreement.
6. TERMINATION ARRANGEMENTS.
(a) DEATH OR DISABILITY. In the event Executive's employment
hereunder is terminated by reason either of his death during the Employment
Period or by reason of his medically determined physical or mental disability
during the Employment Period which prevents Executive from reasonably
discharging his or her duties and responsibilities for a period of one hundred
twenty (120) days, no additional payments, beyond those earned or vested prior
to the date of such termination or payable under Section 3(d)(ii) above shall be
payable hereunder.
(b) TERMINATION WITHOUT CAUSE OR RESIGNATION WITH GOOD REASON. In the
event Executive's employment is involuntarily terminated by Company without
Cause or by Executive's resignation with Good Reason during the Employment
Period, Company shall (i) pay the Executive the payment described in Section
3(d)(ii), if any, (ii) continue to provide Executive the base salary described
in Section 3 hereof for a period of one year from the date of termination and
(iii) pay an annual bonus for the year in which the date of termination occurs
at the time bonuses for such year are paid to executives generally, determined
on the basis of performance factor one (or similar target performance level).
Executive will be deemed to have "Good Reason" to resign in the event (A) a
significant reduction in Executive's duties from those described in Section 2
above occurs, other than by reason of the Company becoming an affiliate of
Parent and ceasing to be a public corporation as a result of the transactions
contemplated by the Merger Agreement, or (B) a material breach by the Parent or
Company of its obligations under Section 3 or 4 of this Agreement occurs, and
such reduction or breach continues after written notice thereof and a reasonable
opportunity to cure of not less than 30 days has been provided by the Executive
to the Parent and Company.
(c) RESIGNATION. In the event Executive's employment is terminated
during the Employment Period by reason of Executive's resignation without Good
Reason, no additional payments, beyond those earned or vested prior to the date
of such resignation, shall be payable hereunder.
(d) TERMINATION FOR CAUSE. In the event Executive's employment is
involuntarily terminated for Cause during the Employment Period, no additional
payments, beyond those earned or vested prior to the date of such termination,
shall be payable hereunder.
4
<PAGE>
"Cause" shall mean any action by the Executive or any inaction by the
Employee which is reasonably believed by the Company to constitute:
(i) fraud, embezzlement, misappropriation, dishonesty or breach
of trust;
(ii) a felony of moral turpitude;
(iii) material breach or violation of any or all of the
covenants, agreements and obligations of the Executive set forth in this
Agreement, other than as the result of the Employee's death or disability;
(iv) a willful or knowing failure or refusal by the Executive to
perform any or all of Executive's material duties and responsibilities as
an officer of the Company, other than as the result of the Employee's death
or disability; or
(v) gross negligence by the Executive in the performance of any
or all of his material duties and responsibilities as an officer of the
Company, other than as the result of the Executive's death or disability;
provided, however, that if the basis for any termination of the Executive's
employment by the Company as set forth in a termination notice delivered by the
Company to the Executive is any or all of the definitions of Cause set forth in
clause (iii) or (iv) above, then, in such event, the Employee shall have thirty
(30) days from and after the date of her receipt of such Termination Notice to
cure the action or inaction specified therein to the reasonable satisfaction of
the Company.
7. NOTICES. Any notice to be given under this Agreement shall be deemed
received five (5) business days thereafter if sent in writing, properly
addressed, by certified mail, and one (1) business day thereafter if sent in
writing, properly addressed, by overnight express courier or by hand. Notices
to Executive shall be sent to Executive's residence. Notices to Parent and
Company shall be sent to Company's home office.
8. WAIVER OF BREACH. The failure by a party to enforce its rights
against the other party following a breach of any provision of the Agreement
shall not operate or be construed as a waiver of any other provision hereof or
any subsequent breach by such other party.
9. PREVAILING PARTY. If any litigation shall arise between the Parent
and/or Company and the Executive based, in whole or in part, upon this Agreement
or any or all of the provisions contained herein, the prevailing party in any
such litigation shall be entitled to recover from non-prevailing party, and
shall be awarded by a court of competent jurisdiction, any and all reasonable
fees and disbursements of trial and appellate counsel paid, incurred or suffered
by such prevailing party as the result of, arising from, or in connection with,
any such litigation shall be entitled to recover from the non-prevailing party,
and shall be awarded by a court of competent jurisdiction, any and all
reasonable fees and disbursements of trial and appellate counsel paid, incurred
or suffered by such prevailing party as the result of, arising from, or in
connection with, any such litigation.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without application of any
conflicts of laws principles. The Executive waives any plea of jurisdiction as
not being a resident of, or being located or conducting business in, Palm Beach
County, Florida and agrees that any litigation or action directly or indirectly
connected with this Agreement, shall, at the Parent's and/or Company's
5
<PAGE>
election, be subject to binding arbitration administered by the American
Arbitration Association in West Palm Beach, Florida.
11. ENTIRE AGREEMENT. Effective as of the date hereof, this Agreement
supersedes and replaces any and all prior employment agreements, both written
and oral, between the Executive and the Company and/or an affiliate thereof, and
neither the Company nor any subsidiary shall have any further liability under
any such agreements, other than for compensation earned but not paid as of the
date hereof. This Agreement contains the entire understanding between parties
and can only be amended or supplemented by a written agreement signed by the
parties. Notwithstanding the foregoing, this Agreement does not supersede the
Confidentiality and Secrecy Agreement between Executive and the Company and/or
an affiliate, which agreement shall remain in full force and effect. In the
event neither the closing of the Offer nor the Merger contemplated by the Merger
Agreement shall occur, then this Agreement shall be of no force or effect and
any employment agreement referred to in the first sentence of this Section 11 in
effect on the date hereof shall be deemed to have remained in full force and
effect notwithstanding the provisions of this Section 11.
12. BENEFITS; BINDING EFFECT. This Agreement shall be for the benefit of
and shall be binding upon, Parent, the Company and the Executive and their
respective heirs, personal representatives, legal representatives, successors
and assigns.
... SIGNATURE PAGE FOLLOWS
6
<PAGE>
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which shall together constitute a valid and binding agreement.
ROYAL NUMICO N.V.
By: /s/ Julitte van der Ven /s/ Damon DeSantis
------------------------- -------------------------
EXECUTIVE SIGNATURE
Its: Attorney-in-fact
------------------------ Damon DeSantis
-------------------------
PRINT NAME
REXALL SUNDOWN, INC. ADDRESS
By: Geary Cotton 12121 N.W. 11th St.
---------------------- -------------------------
Its: CFO Plantation, FL 33323
--------------------- -------------------------
7
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT dated as of April 30, 2000 among Rexall Sundown, Inc., a
Florida corporation ("Company"), Royal Numico N.V., a company organized under
the laws of The Netherlands ("Parent") and Geary Cotton ("Executive").
WHEREAS, Executive is employed by Company or by a subsidiary of
Company, as Chief Financial Officer;
WHEREAS, in connection with an Agreement and Plan of Merger dated as of
April 30, 2000 (the "Merger Agreement"), an indirect subsidiary of Parent will
merge with and into Company (the "Merger"); and
WHEREAS, Parent and Company wish to assure itself of the services of
Executive for the period provided in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereto hereby agree as follows:
1. EMPLOYMENT. Company agrees, and Parent agrees to cause the
Company to agree, to employ Executive, and Executive agrees to serve in the
position set forth above for the period commencing on the date hereof and ending
December 31, 2003 (the "Employment Period"); PROVIDED, HOWEVER, that on January
1, 2004 and each January 1 thereafter, the Employment Period shall automatically
be extended for one additional year, unless not later than 90 days prior to the
date of such automatic extension, the Company or Executive shall have given
notice to discontinue such extensions.
2. DUTIES. Executive is engaged to perform such duties as are
assigned to him by the Company. Executive shall devote his full time and
attention to the performance of such duties, which shall remain similar in scope
and responsibility to the duties he is performing as of the date of this
Agreement. At no time during the Employment Period shall Executive take on
additional employment without permission in writing from Company.
3. COMPENSATION.
(a) BASE SALARY. For all services rendered by Executive during
the Employment Period, Company shall initially pay Executive the base salary in
effect on the date hereof, subject to increase as of each January 1 during the
Employment Period (but not decrease) based on annual performance reviews
conducted by the Board of Directors of the Company and/or the Chief Executive
Officer or such other officer designated by the Board; provided, however, that
on January 1, 2001, 2002 and 2003, the base salary then in effect shall be
increased by an amount which is not less than the greater of (i) 5% or (ii) the
percentage increase in the cost of living based upon the Revised Consumer Price
Index (1982-84=100) published by the Bureau of Labor Statistics of the United
States Department of Labor for Boca Raton, Florida utilizing March 2000 as the
base month.
(b) INCENTIVE COMPENSATION. Executive shall be eligible to
participate during the Employment Period in the management stock purchase and
stock option plans described in the Benefits Letter referred to in the Merger
Agreement and such other annual bonus or incentive plans, stock option plans,
stock purchase plans and any other long-term compensation plans, programs or
arrangements which may be adopted by the Company and applicable to Executive.
<PAGE>
(c) OTHER COMPENSATION. The Executive shall be entitled to
receive such benefits and participate in such benefit plans as are generally
provided from time to time by the Company to its employees, and Executive shall
be entitled to continue to receive such fringe benefits and such other senior
management benefits of the type provided to Executive on the date hereof, as
such benefits are generally provided from time to time by the Company to its
senior management employees; provided that nothing herein shall be construed to
obligate the Company to provide any specific benefits to its employees or senior
management employees generally. The Executive shall be entitled to such vacation
time on an annual basis in accordance with the policies as are from time to time
in force for Company employees.
(d) NON-COMPETE COVENANT; RETENTION PAYMENTS. In exchange for
the non-competition and non-solicitation covenants (the "Non-Compete Covenants")
set forth in Section 5 below and for Executive's agreement to continue his
employment under the terms of this Agreement, Company shall pay to Executive the
following amounts:
(i) $821,250, 30 days after the effective time of the
Merger contemplated by the Merger Agreement (the date of the Merger
hereinafter referred to as the "Effective Time") in consideration of
the Non-Compete Covenants set forth in Section 5 below;
(ii) $821,250, payable in three equal installments on
Executive's first regular payroll date following each of the first,
second and third anniversaries of the Effective Time, if Executive is
still in the Company's employ as of each such anniversary date. Should
Executive's employment be terminated due to death or disability (as
described in Section 5(a)) or involuntarily terminated by the Company
without Cause or terminated by resignation by Executive with Good
Reason (as defined in Section 5(b), Executive (or Executive's estate in
the event of death) shall be entitled to receive any unpaid anniversary
date payments within 30 days of such termination.
Should Executive resign without Good Reason or should his employment be
involuntarily terminated with Cause prior to any such anniversary date, he shall
not be eligible to receive any further amount on the subsequent anniversary
dates.
Payments under this Section 3(d) are separate and distinct from and in
addition to any other payments contemplated under this Agreement and shall not
be taken into account in determining benefits under any other provision of this
Agreement or any employee benefit plan.
(e) All compensation paid or provided to Executive under this
Agreement shall be subject to any applicable income, payroll or other tax
withholding requirements.
4. REIMBURSEMENT OF EXPENSES. During the Employment Period, Company
shall reimburse Executive for reasonable business expenses incurred in
connection with Executive's duties hereunder. Executive shall furnish Company
with periodic, itemized expense reports in accordance with Company policies.
2
<PAGE>
5. EMPLOYMENT COVENANTS.
(a) Executive agrees that from the date hereof through the
later of (i) the third anniversary of the Merger, or (ii) the period ending on
the second anniversary of Executive's termination of employment for any reason
(the "Non-Competition Period"), Executive shall not:
(A) engage in any way, directly or indirectly, in any
Competing Business (as defined below) in the Geographic Area (as
defined below); PROVIDED, HOWEVER, in no event shall this provision be
construed to prohibit Executive's employment with any business in which
less than 5% of its consolidated gross revenues for its most recent
fiscal year relates to a Competing Business if Executive's
responsibilities at such business do not directly relate to a Competing
Business. "Competing Business" shall mean any activity relating to the
development, manufacture, or the retail or wholesale sale or
distribution (including but not limited to sale or distribution through
retail, specialty retail, Internet, e-commerce, mail order, multi-level
marketing, mass market, or any other channel of distribution) of
vitamin and mineral supplements, sports nutrition products or herbs, or
any other product which competes with products being offered for sale
or under development by the Company or any subsidiary thereof.
"Geographic Area" shall mean (1) the United States and (2) any other
country in which the Parent, Company or any affiliate thereof owns,
leases or franchises locations, hosts web sites or otherwise conducts
business; or
(B) directly, or indirectly through any person or
entity, (1) induce or attempt to induce any employee of the Parent,
Company or any affiliate thereof (other than an employee who performs
purely ministerial functions) (a "Protected Employee") to leave the
employ of the Parent, Company or such Parent; (2) interfere in any way
with the relationship between the Parent Company or any subsidiary and
any Protected Employee; (3) hire any Protected Employee, or any person
who was a Protected Employee at any time during the Non-Competition
Period; (4) induce or attempt to induce any customer, distributor,
supplier, licensee, or other business relationship of the Parent,
Company or any affiliate which exists or existed at any time during the
Non-Competition Period, to cease doing business with the Parent Company
or such affiliate, or to interfere in any way with any such business
relationship.
(b) During the Employment Period and thereafter, Executive
shall not, without the Parent's and Company's prior written permission or in
connection with his duties under this Agreement, use or disclose all or any part
of the following valuable, special and unique assets of Parent's or Company's
business to any person, corporation, association or other entity (but excluding
information that had become public knowledge without any action by, or
involvement of, Executive) for any reason whatsoever: the confidential
information and trade secrets of Parent, the Company or any affiliate thereof,
including, but not limited to, the financial and sales information,
manufacturing formulas and processes, business plans and projections, personnel
information and records, procedures, techniques, products, customers, sources of
leads and methods of obtaining new business or the methods generally of doing
and operating the respective businesses of the Parent, Company and affiliates,
trade secrets, product ideas, processes, techniques, formulas, know-how,
marketing plans and strategies.
(c) Executive acknowledges that the restrictions contained in
this Section 5 in view of the nature of the business in which Parent or Company
is engaged, are reasonable and necessary in order to protect the legitimate
interests of the Parent or Company and that any violation of such restrictions
would result in irreparable harm to the Parent or Company. In the event of
Executive's violation of any of these restrictions, the Parent or Company shall
be entitled to seek
3
<PAGE>
from any court of competent jurisdiction preliminary and permanent injunctive
relief without proving actual damage or immediate or irreparable harm. Nothing
contained herein shall prohibit the Parent or Company from pursuing any other
remedies legally available to the Parent or Company for such breach or
threatened breach, including the recovery of damages from Executive.
(d) If any of the provisions of this Section 5 should ever be
adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable law in any jurisdiction, then the affected
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic, product or service, or other limitations permitted by applicable
law.
(e) The provisions of this Section 5 shall survive the
expiration or termination of this Agreement.
6. TERMINATION ARRANGEMENTS.
(a) DEATH OR DISABILITY. In the event Executive's employment
hereunder is terminated by reason either of his death during the Employment
Period or by reason of his medically determined physical or mental disability
during the Employment Period which prevents Executive from reasonably
discharging his or her duties and responsibilities for a period of one hundred
twenty (120) days, no additional payments, beyond those earned or vested prior
to the date of such termination or payable under Section 3(d)(ii) above shall be
payable hereunder.
(b) TERMINATION WITHOUT CAUSE OR RESIGNATION WITH GOOD REASON.
In the event Executive's employment is involuntarily terminated by Company
without Cause or by Executive's resignation with Good Reason during the
Employment Period, Company shall (i) pay the Executive the payment described in
Section 3(d)(ii), if any, (ii) continue to provide Executive the base salary
described in Section 3 hereof for a period of one year from the date of
termination and (iii) pay an annual bonus for the year in which the date of
termination occurs at the time bonuses for such year are paid to executives
generally, determined on the basis of performance factor one (or similar target
performance level). Executive will be deemed to have "Good Reason" to resign in
the event (A) a significant reduction in Executive's duties from those described
in Section 2 above occurs, other than by reason of the Company becoming an
affiliate of Parent and ceasing to be a public corporation as a result of the
transactions contemplated by the Merger Agreement, or (B) a material breach by
the Parent or Company of its obligations under Section 3 or 4 of this Agreement
occurs, and such reduction or breach continues after written notice thereof and
a reasonable opportunity to cure of not less than 30 days has been provided by
the Executive to the Parent and Company.
(c) RESIGNATION. In the event Executive's employment is
terminated during the Employment Period by reason of Executive's resignation
without Good Reason, no additional payments, beyond those earned or vested prior
to the date of such resignation, shall be payable hereunder.
(d) TERMINATION FOR CAUSE. In the event Executive's employment
is involuntarily terminated for Cause during the Employment Period, no
additional payments, beyond those earned or vested prior to the date of such
termination, shall be payable hereunder.
4
<PAGE>
"Cause" shall mean any action by the Executive or any inaction by the
Employee which is reasonably believed by the Company to constitute:
(i) fraud, embezzlement, misappropriation,
dishonesty or breach of trust;
(ii) a felony of moral turpitude;
(iii) material breach or violation of any or all of
the covenants, agreements and obligations of the Executive set forth in
this Agreement, other than as the result of the Employee's death or
disability;
(iv) a willful or knowing failure or refusal by the
Executive to perform any or all of Executive's material duties and
responsibilities as an officer of the Company, other than as the result
of the Employee's death or disability; or
(v) gross negligence by the Executive in the
performance of any or all of his material duties and responsibilities
as an officer of the Company, other than as the result of the
Executive's death or disability;
provided, however, that if the basis for any termination of the Executive's
employment by the Company as set forth in a termination notice delivered by the
Company to the Executive is any or all of the definitions of Cause set forth in
clause (iii) or (iv) above, then, in such event, the Employee shall have thirty
(30) days from and after the date of her receipt of such Termination Notice to
cure the action or inaction specified therein to the reasonable satisfaction of
the Company.
7. NOTICES. Any notice to be given under this Agreement shall be deemed
received five (5) business days thereafter if sent in writing, properly
addressed, by certified mail, and one (1) business day thereafter if sent in
writing, properly addressed, by overnight express courier or by hand. Notices to
Executive shall be sent to Executive's residence. Notices to Parent and Company
shall be sent to Company's home office.
8. WAIVER OF BREACH. The failure by a party to enforce its rights
against the other party following a breach of any provision of the Agreement
shall not operate or be construed as a waiver of any other provision hereof or
any subsequent breach by such other party.
9. PREVAILING PARTY. If any litigation shall arise between the Parent
and/or Company and the Executive based, in whole or in part, upon this Agreement
or any or all of the provisions contained herein, the prevailing party in any
such litigation shall be entitled to recover from non-prevailing party, and
shall be awarded by a court of competent jurisdiction, any and all reasonable
fees and disbursements of trial and appellate counsel paid, incurred or suffered
by such prevailing party as the result of, arising from, or in connection with,
any such litigation shall be entitled to recover from the non-prevailing party,
and shall be awarded by a court of competent jurisdiction, any and all
reasonable fees and disbursements of trial and appellate counsel paid, incurred
or suffered by such prevailing party as the result of, arising from, or in
connection with, any such litigation.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without application of any
conflicts of laws principles. The Executive waives any plea of jurisdiction as
not being a resident of, or being located or conducting business in, Palm Beach
County, Florida and agrees that any litigation or action directly or indirectly
connected with this Agreement, shall, at the Parent's and/or Company's
5
<PAGE>
election, be subject to binding arbitration administered by the American
Arbitration Association in West Palm Beach, Florida.
11. ENTIRE AGREEMENT. Effective as of the date hereof, this Agreement
supersedes and replaces any and all prior employment agreements, both written
and oral, between the Executive and the Company and/or an affiliate thereof, and
neither the Company nor any subsidiary shall have any further liability under
any such agreements, other than for compensation earned but not paid as of the
date hereof. This Agreement contains the entire understanding between parties
and can only be amended or supplemented by a written agreement signed by the
parties. Notwithstanding the foregoing, this Agreement does not supersede the
Confidentiality and Secrecy Agreement between Executive and the Company and/or
an affiliate, which agreement shall remain in full force and effect. In the
event neither the closing of the Offer nor the Merger contemplated by the Merger
Agreement shall occur, then this Agreement shall be of no force or effect and
any employment agreement referred to in the first sentence of this Section 11 in
effect on the date hereof shall be deemed to have remained in full force and
effect notwithstanding the provisions of this Section 11.
12. BENEFITS; BINDING EFFECT. This Agreement shall be for the benefit
of and shall be binding upon, Parent, the Company and the Executive and their
respective heirs, personal representatives, legal representatives, successors
and assigns.
... SIGNATURE PAGE FOLLOWS
6
<PAGE>
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which shall together constitute a valid and binding agreement.
ROYAL NUMICO N.V.
By: /s/ Julitte van der Ven /s/ Geary Cotton
----------------------------------- ---------------------------------
EXECUTIVE SIGNATURE
Its: Attorney-in-fact Geary Cotton
---------------------------------- ---------------------------------
PRINT NAME
REXALL SUNDOWN, INC. ADDRESS
By: Damon DeSantis 615 Idlewyld Dr.
----------------------------------- ---------------------------------
Its: CEO Ft. Laud, FL 33301
---------------------------------- ---------------------------------
7
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT dated as of April 30, 2000 among Rexall Sundown, Inc., a
Florida corporation ("Company"), Royal Numico N.V., a company organized under
the laws of The Netherlands ("Parent") and Richard Goudis ("Executive").
WHEREAS, Executive is employed by Company or by a subsidiary of
Company, as Chief Operating Officer;
WHEREAS, in connection with an Agreement and Plan of Merger dated as of
April 30, 2000 (the "Merger Agreement"), an indirect subsidiary of Parent will
merge with and into Company (the "Merger"); and
WHEREAS, Parent and Company wish to assure itself of the services of
Executive for the period provided in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereto hereby agree as follows:
1. EMPLOYMENT. Company agrees, and Parent agrees to cause the Company
to agree, to employ Executive, and Executive agrees to serve in the position set
forth above for the period commencing on the date hereof and ending December 31,
2003 (the "Employment Period"); PROVIDED, HOWEVER, that on January 1, 2004 and
each January 1 thereafter, the Employment Period shall automatically be extended
for one additional year, unless not later than 90 days prior to the date of such
automatic extension, the Company or Executive shall have given notice to
discontinue such extensions.
2. DUTIES. Executive is engaged to perform such duties as are assigned
to him by the Company. Executive shall devote his full time and attention to the
performance of such duties, which shall remain similar in scope and
responsibility to the duties he is performing as of the date of this Agreement.
At no time during the Employment Period shall Executive take on additional
employment without permission in writing from Company.
3. COMPENSATION.
(a) BASE SALARY. For all services rendered by Executive
during the Employment Period, Company shall initially pay Executive the base
salary in effect on the date hereof, subject to increase as of each January 1
during the Employment Period (but not decrease) based on annual performance
reviews conducted by the Board of Directors of the Company and/or the Chief
Executive Officer or such other officer designated by the Board; provided,
however, that on January 1, 2001, 2002 and 2003, the base salary then in effect
shall be increased by an amount which is not less than the greater of (i) 5% or
(ii) the percentage increase in the cost of living based upon the Revised
Consumer Price Index (1982-84=100) published by the Bureau of Labor Statistics
of the United States Department of Labor for Boca Raton, Florida utilizing March
2000 as the base month.
(b) INCENTIVE COMPENSATION. Executive shall be eligible
to participate during the Employment Period in the management stock purchase and
stock option plans described in the Benefits Letter referred to in the Merger
Agreement and such other annual bonus or incentive plans, stock option plans,
stock purchase plans and any other long-term compensation plans, programs or
arrangements which may be adopted by the Company and applicable to Executive.
<PAGE>
(c) OTHER COMPENSATION. The Executive shall be entitled
to receive such benefits and participate in such benefit plans as are generally
provided from time to time by the Company to its employees, and Executive shall
be entitled to continue to receive such fringe benefits and such other senior
management benefits of the type provided to Executive on the date hereof, as
such benefits are generally provided from time to time by the Company to its
senior management employees; provided that nothing herein shall be construed to
obligate the Company to provide any specific benefits to its employees or senior
management employees generally. The Executive shall be entitled to such vacation
time on an annual basis in accordance with the policies as are from time to time
in force for Company employees.
(d) NON-COMPETE COVENANT; RETENTION PAYMENTS. In exchange
for the non-competition and non-solicitation covenants (the "Non-Compete
Covenants") set forth in Section 5 below and for Executive's agreement to
continue his employment under the terms of this Agreement, Company shall pay to
Executive the following amounts:
(i) $675,000, 30 days after the effective time
of the Merger contemplated by the Merger Agreement (the date of the
Merger hereinafter referred to as the "Effective Time") in
consideration of the Non-Compete Covenants set forth in Section 5
below;
(ii) $675,000, payable in three equal
installments on Executive's first regular payroll date following each
of the first, second and third anniversaries of the Effective Time, if
Executive is still in the Company's employ as of each such anniversary
date. Should Executive's employment be terminated due to death or
disability (as described in Section 5(a)) or involuntarily terminated
by the Company without Cause or terminated by resignation by Executive
with Good Reason (as defined in Section 5(b), Executive (or Executive's
estate in the event of death) shall be entitled to receive any unpaid
anniversary date payments within 30 days of such termination.
Should Executive resign without Good Reason or should his employment be
involuntarily terminated with Cause prior to any such anniversary date, he shall
not be eligible to receive any further amount on the subsequent anniversary
dates.
Payments under this Section 3(d) are separate and distinct from and in
addition to any other payments contemplated under this Agreement and shall not
be taken into account in determining benefits under any other provision of this
Agreement or any employee benefit plan.
(e) All compensation paid or provided to Executive under
this Agreement shall be subject to any applicable income, payroll or other tax
withholding requirements.
4. REIMBURSEMENT OF EXPENSES. During the Employment Period, Company
shall reimburse Executive for reasonable business expenses incurred in
connection with Executive's duties hereunder. Executive shall furnish Company
with periodic, itemized expense reports in accordance with Company policies.
2
<PAGE>
5. EMPLOYMENT COVENANTS.
(a) Executive agrees that from the date hereof through the later
of (i) the third anniversary of the Merger, or (ii) the period ending on the
second anniversary of Executive's termination of employment for any reason (the
"Non-Competition Period"), Executive shall not:
(A) engage in any way, directly or indirectly, in any
Competing Business (as defined below) in the Geographic Area (as
defined below); PROVIDED, HOWEVER, in no event shall this provision be
construed to prohibit Executive's employment with any business in which
less than 5% of its consolidated gross revenues for its most recent
fiscal year relates to a Competing Business if Executive's
responsibilities at such business do not directly relate to a Competing
Business. "Competing Business" shall mean any activity relating to the
development, manufacture, or the retail or wholesale sale or
distribution (including but not limited to sale or distribution through
retail, specialty retail, Internet, e-commerce, mail order, multi-level
marketing, mass market, or any other channel of distribution) of
vitamin and mineral supplements, sports nutrition products or herbs, or
any other product which competes with products being offered for sale
or under development by the Company or any subsidiary thereof.
"Geographic Area" shall mean (1) the United States and (2) any other
country in which the Parent, Company or any affiliate thereof owns,
leases or franchises locations, hosts web sites or otherwise conducts
business; or
(B) directly, or indirectly through any person or entity,
(1) induce or attempt to induce any employee of the Parent, Company or
any affiliate thereof (other than an employee who performs purely
ministerial functions) (a "Protected Employee") to leave the employ of
the Parent, Company or such Parent; (2) interfere in any way with the
relationship between the Parent Company or any subsidiary and any
Protected Employee; (3) hire any Protected Employee, or any person who
was a Protected Employee at any time during the Non-Competition Period;
(4) induce or attempt to induce any customer, distributor, supplier,
licensee, or other business relationship of the Parent, Company or any
affiliate which exists or existed at any time during the
Non-Competition Period, to cease doing business with the Parent Company
or such affiliate, or to interfere in any way with any such business
relationship.
(b) During the Employment Period and thereafter, Executive shall
not, without the Parent's and Company's prior written permission or in
connection with his duties under this Agreement, use or disclose all or any part
of the following valuable, special and unique assets of Parent's or Company's
business to any person, corporation, association or other entity (but excluding
information that had become public knowledge without any action by, or
involvement of, Executive) for any reason whatsoever: the confidential
information and trade secrets of Parent, the Company or any affiliate thereof,
including, but not limited to, the financial and sales information,
manufacturing formulas and processes, business plans and projections, personnel
information and records, procedures, techniques, products, customers, sources of
leads and methods of obtaining new business or the methods generally of doing
and operating the respective businesses of the Parent, Company and affiliates,
trade secrets, product ideas, processes, techniques, formulas, know-how,
marketing plans and strategies.
(c) Executive acknowledges that the restrictions contained in this
Section 5 in view of the nature of the business in which Parent or Company is
engaged, are reasonable and necessary in order to protect the legitimate
interests of the Parent or Company and that any violation of such restrictions
would result in irreparable harm to the Parent or Company. In the event of
Executive's violation of any of these restrictions, the Parent or Company shall
be entitled to seek
3
<PAGE>
from any court of competent jurisdiction preliminary and permanent injunctive
relief without proving actual damage or immediate or irreparable harm. Nothing
contained herein shall prohibit the Parent or Company from pursuing any other
remedies legally available to the Parent or Company for such breach or
threatened breach, including the recovery of damages from Executive.
(d) If any of the provisions of this Section 5 should ever be
adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable law in any jurisdiction, then the affected
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic, product or service, or other limitations permitted by applicable
law.
(e) The provisions of this Section 5 shall survive the expiration
or termination of this Agreement.
6. TERMINATION ARRANGEMENTS.
(a) DEATH OR DISABILITY. In the event Executive's employment
hereunder is terminated by reason either of his death during the Employment
Period or by reason of his medically determined physical or mental disability
during the Employment Period which prevents Executive from reasonably
discharging his or her duties and responsibilities for a period of one hundred
twenty (120) days, no additional payments, beyond those earned or vested prior
to the date of such termination or payable under Section 3(d)(ii) above shall be
payable hereunder.
(b) TERMINATION WITHOUT CAUSE OR RESIGNATION WITH GOOD REASON. In
the event Executive's employment is involuntarily terminated by Company without
Cause or by Executive's resignation with Good Reason during the Employment
Period, Company shall (i) pay the Executive the payment described in Section
3(d)(ii), if any, (ii) continue to provide Executive the base salary described
in Section 3 hereof for a period of one year from the date of termination and
(iii) pay an annual bonus for the year in which the date of termination occurs
at the time bonuses for such year are paid to executives generally, determined
on the basis of performance factor one (or similar target performance level).
Executive will be deemed to have "Good Reason" to resign in the event (A) a
significant reduction in Executive's duties from those described in Section 2
above occurs, other than by reason of the Company becoming an affiliate of
Parent and ceasing to be a public corporation as a result of the transactions
contemplated by the Merger Agreement, or (B) a material breach by the Parent or
Company of its obligations under Section 3 or 4 of this Agreement occurs, and
such reduction or breach continues after written notice thereof and a reasonable
opportunity to cure of not less than 30 days has been provided by the Executive
to the Parent and Company.
(c) RESIGNATION. In the event Executive's employment is terminated
during the Employment Period by reason of Executive's resignation without Good
Reason, no additional payments, beyond those earned or vested prior to the date
of such resignation, shall be payable hereunder.
(d) TERMINATION FOR CAUSE. In the event Executive's employment is
involuntarily terminated for Cause during the Employment Period, no additional
payments, beyond those earned or vested prior to the date of such termination,
shall be payable hereunder.
4
<PAGE>
"Cause" shall mean any action by the Executive or any inaction by the
Employee which is reasonably believed by the Company to constitute:
(i) fraud, embezzlement, misappropriation, dishonesty or
breach of trust;
(ii) a felony of moral turpitude;
(iii) material breach or violation of any or all of the
covenants, agreements and obligations of the Executive set forth in
this Agreement, other than as the result of the Employee's death or
disability;
(iv) a willful or knowing failure or refusal by the
Executive to perform any or all of Executive's material duties and
responsibilities as an officer of the Company, other than as the result
of the Employee's death or disability; or
(v) gross negligence by the Executive in the performance
of any or all of his material duties and responsibilities as an officer
of the Company, other than as the result of the Executive's death or
disability;
provided, however, that if the basis for any termination of the Executive's
employment by the Company as set forth in a termination notice delivered by the
Company to the Executive is any or all of the definitions of Cause set forth in
clause (iii) or (iv) above, then, in such event, the Employee shall have thirty
(30) days from and after the date of her receipt of such Termination Notice to
cure the action or inaction specified therein to the reasonable satisfaction of
the Company.
7. NOTICES. Any notice to be given under this Agreement shall be deemed
received five (5) business days thereafter if sent in writing, properly
addressed, by certified mail, and one (1) business day thereafter if sent in
writing, properly addressed, by overnight express courier or by hand. Notices to
Executive shall be sent to Executive's residence. Notices to Parent and Company
shall be sent to Company's home office.
8. WAIVER OF BREACH. The failure by a party to enforce its rights
against the other party following a breach of any provision of the Agreement
shall not operate or be construed as a waiver of any other provision hereof or
any subsequent breach by such other party.
9. PREVAILING PARTY. If any litigation shall arise between the Parent
and/or Company and the Executive based, in whole or in part, upon this Agreement
or any or all of the provisions contained herein, the prevailing party in any
such litigation shall be entitled to recover from non-prevailing party, and
shall be awarded by a court of competent jurisdiction, any and all reasonable
fees and disbursements of trial and appellate counsel paid, incurred or suffered
by such prevailing party as the result of, arising from, or in connection with,
any such litigation shall be entitled to recover from the non-prevailing party,
and shall be awarded by a court of competent jurisdiction, any and all
reasonable fees and disbursements of trial and appellate counsel paid, incurred
or suffered by such prevailing party as the result of, arising from, or in
connection with, any such litigation.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without application of any
conflicts of laws principles. The Executive waives any plea of jurisdiction as
not being a resident of, or being located or conducting business in, Palm Beach
County, Florida and agrees that any litigation or action directly or indirectly
connected with this Agreement, shall, at the Parent's and/or Company's
5
<PAGE>
election, be subject to binding arbitration administered by the American
Arbitration Association in West Palm Beach, Florida.
11. ENTIRE AGREEMENT. Effective as of the date hereof, this Agreement
supersedes and replaces any and all prior employment agreements, both written
and oral, between the Executive and the Company and/or an affiliate thereof, and
neither the Company nor any subsidiary shall have any further liability under
any such agreements, other than for compensation earned but not paid as of the
date hereof. This Agreement contains the entire understanding between parties
and can only be amended or supplemented by a written agreement signed by the
parties. Notwithstanding the foregoing, this Agreement does not supersede the
Confidentiality and Secrecy Agreement between Executive and the Company and/or
an affiliate, which agreement shall remain in full force and effect. In the
event neither the closing of the Offer nor the Merger contemplated by the Merger
Agreement shall occur, then this Agreement shall be of no force or effect and
any employment agreement referred to in the first sentence of this Section 11 in
effect on the date hereof shall be deemed to have remained in full force and
effect notwithstanding the provisions of this Section 11.
12. BENEFITS; BINDING EFFECT. This Agreement shall be for the benefit
of and shall be binding upon, Parent, the Company and the Executive and their
respective heirs, personal representatives, legal representatives, successors
and assigns.
... SIGNATURE PAGE FOLLOWS
6
<PAGE>
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which shall together constitute a valid and binding agreement.
ROYAL NUMICO N.V.
By: /s/ Julitte van der Ven /s/ Richard Goudis
---------------------------- ----------------------------
EXECUTIVE SIGNATURE
Its: Attorney-in-fact Richard Goudis
--------------------------- ----------------------------
PRINT NAME
REXALL SUNDOWN, INC. ADDRESS
By: /s/ Damon DeSantis 4777 NW 25th Way
---------------------------- ----------------------------
Its: CEO Boca Raton, FL 33434
--------------------------- ----------------------------
7
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT dated as of April 30, 2000 among Rexall Sundown, Inc., a Florida
corporation ("Company"), Royal Numico N.V., a company organized under the laws
of The Netherlands ("Parent") and Gerald Holly ("Executive").
WHEREAS, Executive is employed by Company or by a subsidiary of Company, as
Senior Executive Vice President - Technical Division;
WHEREAS, in connection with an Agreement and Plan of Merger dated as of
April 30, 2000 (the "Merger Agreement"), an indirect subsidiary of Parent will
merge with and into Company (the "Merger"); and
WHEREAS, Parent and Company wish to assure itself of the services of
Executive for the period provided in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereto
hereby agree as follows:
1. EMPLOYMENT. Company agrees, and Parent agrees to cause the Company to
agree, to employ Executive, and Executive agrees to serve in the position set
forth above for the period commencing on the date hereof and ending December 31,
2003 (the "Employment Period"); PROVIDED, HOWEVER, that on January 1, 2004 and
each January 1 thereafter, the Employment Period shall automatically be extended
for one additional year, unless not later than 90 days prior to the date of such
automatic extension, the Company or Executive shall have given notice to
discontinue such extensions.
2. DUTIES. Executive is engaged to perform such duties as are assigned
to him by the Company. Executive shall devote his full time and attention to
the performance of such duties, which shall remain similar in scope and
responsibility to the duties he is performing as of the date of this Agreement.
At no time during the Employment Period shall Executive take on additional
employment without permission in writing from Company.
3. COMPENSATION.
(a) BASE SALARY. For all services rendered by Executive during the
Employment Period, Company shall initially pay Executive the base salary in
effect on the date hereof, subject to increase as of each January 1 during the
Employment Period (but not decrease) based on annual performance reviews
conducted by the Board of Directors of the Company and/or the Chief Executive
Officer or such other officer designated by the Board; provided, however, that
on January 1, 2001, 2002 and 2003, the base salary then in effect shall be
increased by an amount which is not less than the greater of (i) 5% or (ii) the
percentage increase in the cost of living based upon the Revised Consumer Price
Index (1982-84=100) published by the Bureau of Labor Statistics of the United
States Department of Labor for Boca Raton, Florida utilizing March 2000 as the
base month.
(b) INCENTIVE COMPENSATION. Executive shall be eligible to
participate during the Employment Period in the management stock purchase and
stock option plans described in the Benefits Letter referred to in the Merger
Agreement and such other annual bonus or incentive plans, stock option plans,
stock purchase plans and any other long-term compensation plans, programs or
arrangements which may be adopted by the Company and applicable to Executive.
<PAGE>
(c) OTHER COMPENSATION. The Executive shall be entitled to receive
such benefits and participate in such benefit plans as are generally provided
from time to time by the Company to its employees, and Executive shall be
entitled to continue to receive such fringe benefits and such other senior
management benefits of the type provided to Executive on the date hereof, as
such benefits are generally provided from time to time by the Company to its
senior management employees; provided that nothing herein shall be construed to
obligate the Company to provide any specific benefits to its employees or senior
management employees generally. The Executive shall be entitled to such
vacation time on an annual basis in accordance with the policies as are from
time to time in force for Company employees.
(d) NON-COMPETE COVENANT; RETENTION PAYMENTS. In exchange for the
non-competition and non-solicitation covenants (the "Non-Compete Covenants") set
forth in Section 5 below and for Executive's agreement to continue his
employment under the terms of this Agreement, Company shall pay to Executive the
following amounts:
(i) $675,000, 30 days after the effective time of the Merger
contemplated by the Merger Agreement (the date of the Merger hereinafter
referred to as the "Effective Time") in consideration of the Non-Compete
Covenants set forth in Section 5 below;
(ii) $675,000, payable in three equal installments on
Executive's first regular payroll date following each of the first, second
and third anniversaries of the Effective Time, if Executive is still in the
Company's employ as of each such anniversary date. Should Executive's
employment be terminated due to death or disability (as described in
Section 5(a)) or involuntarily terminated by the Company without Cause or
terminated by resignation by Executive with Good Reason (as defined in
Section 5(b), Executive (or Executive's estate in the event of death) shall
be entitled to receive any unpaid anniversary date payments within 30 days
of such termination.
Should Executive resign without Good Reason or should his employment be
involuntarily terminated with Cause prior to any such anniversary date, he shall
not be eligible to receive any further amount on the subsequent anniversary
dates.
Payments under this Section 3(d) are separate and distinct from and in
addition to any other payments contemplated under this Agreement and shall not
be taken into account in determining benefits under any other provision of this
Agreement or any employee benefit plan.
(e) All compensation paid or provided to Executive under this
Agreement shall be subject to any applicable income, payroll or other tax
withholding requirements.
4. REIMBURSEMENT OF EXPENSES. During the Employment Period, Company
shall reimburse Executive for reasonable business expenses incurred in
connection with Executive's duties hereunder. Executive shall furnish Company
with periodic, itemized expense reports in accordance with Company policies.
2
<PAGE>
5. EMPLOYMENT COVENANTS.
(a) Executive agrees that from the date hereof through the later of
(i) the third anniversary of the Merger, or (ii) the period ending on the second
anniversary of Executive's termination of employment for any reason (the
"Non-Competition Period"), Executive shall not:
(A) engage in any way, directly or indirectly, in any Competing
Business (as defined below) in the Geographic Area (as defined below);
PROVIDED, HOWEVER, in no event shall this provision be construed to
prohibit Executive's employment with any business in which less than 5% of
its consolidated gross revenues for its most recent fiscal year relates to
a Competing Business if Executive's responsibilities at such business do
not directly relate to a Competing Business. "Competing Business" shall
mean any activity relating to the development, manufacture, or the retail
or wholesale sale or distribution (including but not limited to sale or
distribution through retail, specialty retail, Internet, e-commerce, mail
order, multi-level marketing, mass market, or any other channel of
distribution) of vitamin and mineral supplements, sports nutrition products
or herbs, or any other product which competes with products being offered
for sale or under development by the Company or any subsidiary thereof.
"Geographic Area" shall mean (1) the United States and (2) any other
country in which the Parent, Company or any affiliate thereof owns, leases
or franchises locations, hosts web sites or otherwise conducts business; or
(B) directly, or indirectly through any person or entity, (1)
induce or attempt to induce any employee of the Parent, Company or any
affiliate thereof (other than an employee who performs purely ministerial
functions) (a "Protected Employee") to leave the employ of the Parent,
Company or such Parent; (2) interfere in any way with the relationship
between the Parent Company or any subsidiary and any Protected Employee;
(3) hire any Protected Employee, or any person who was a Protected
Employee at any time during the Non-Competition Period; (4) induce or
attempt to induce any customer, distributor, supplier, licensee, or other
business relationship of the Parent, Company or any affiliate which exists
or existed at any time during the Non-Competition Period, to cease doing
business with the Parent Company or such affiliate, or to interfere in any
way with any such business relationship.
(b) During the Employment Period and thereafter, Executive shall not,
without the Parent's and Company's prior written permission or in connection
with his duties under this Agreement, use or disclose all or any part of the
following valuable, special and unique assets of Parent's or Company's business
to any person, corporation, association or other entity (but excluding
information that had become public knowledge without any action by, or
involvement of, Executive) for any reason whatsoever: the confidential
information and trade secrets of Parent, the Company or any affiliate thereof,
including, but not limited to, the financial and sales information,
manufacturing formulas and processes, business plans and projections, personnel
information and records, procedures, techniques, products, customers, sources of
leads and methods of obtaining new business or the methods generally of doing
and operating the respective businesses of the Parent, Company and affiliates,
trade secrets, product ideas, processes, techniques, formulas, know-how,
marketing plans and strategies.
(c) Executive acknowledges that the restrictions contained in this
Section 5 in view of the nature of the business in which Parent or Company is
engaged, are reasonable and necessary in order to protect the legitimate
interests of the Parent or Company and that any violation of such restrictions
would result in irreparable harm to the Parent or Company. In the event of
Executive's violation of any of these restrictions, the Parent or Company shall
be entitled to seek
3
<PAGE>
from any court of competent jurisdiction preliminary and permanent injunctive
relief without proving actual damage or immediate or irreparable harm. Nothing
contained herein shall prohibit the Parent or Company from pursuing any other
remedies legally available to the Parent or Company for such breach or
threatened breach, including the recovery of damages from Executive.
(d) If any of the provisions of this Section 5 should ever be
adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable law in any jurisdiction, then the affected
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic, product or service, or other limitations permitted by applicable
law.
(e) The provisions of this Section 5 shall survive the expiration or
termination of this Agreement.
6. TERMINATION ARRANGEMENTS.
(a) DEATH OR DISABILITY. In the event Executive's employment
hereunder is terminated by reason either of his death during the Employment
Period or by reason of his medically determined physical or mental disability
during the Employment Period which prevents Executive from reasonably
discharging his or her duties and responsibilities for a period of one hundred
twenty (120) days, no additional payments, beyond those earned or vested prior
to the date of such termination or payable under Section 3(d)(ii) above shall be
payable hereunder.
(b) TERMINATION WITHOUT CAUSE OR RESIGNATION WITH GOOD REASON. In the
event Executive's employment is involuntarily terminated by Company without
Cause or by Executive's resignation with Good Reason during the Employment
Period, Company shall (i) pay the Executive the payment described in Section
3(d)(ii), if any, (ii) continue to provide Executive the base salary described
in Section 3 hereof for a period of one year from the date of termination and
(iii) pay an annual bonus for the year in which the date of termination occurs
at the time bonuses for such year are paid to executives generally, determined
on the basis of performance factor one (or similar target performance level).
Executive will be deemed to have "Good Reason" to resign in the event (A) a
significant reduction in Executive's duties from those described in Section 2
above occurs, other than by reason of the Company becoming an affiliate of
Parent and ceasing to be a public corporation as a result of the transactions
contemplated by the Merger Agreement, or (B) a material breach by the Parent or
Company of its obligations under Section 3 or 4 of this Agreement occurs, and
such reduction or breach continues after written notice thereof and a reasonable
opportunity to cure of not less than 30 days has been provided by the Executive
to the Parent and Company.
(c) RESIGNATION. In the event Executive's employment is terminated
during the Employment Period by reason of Executive's resignation without Good
Reason, no additional payments, beyond those earned or vested prior to the date
of such resignation, shall be payable hereunder.
(d) TERMINATION FOR CAUSE. In the event Executive's employment is
involuntarily terminated for Cause during the Employment Period, no additional
payments, beyond those earned or vested prior to the date of such termination,
shall be payable hereunder.
4
<PAGE>
"Cause" shall mean any action by the Executive or any inaction by the
Employee which is reasonably believed by the Company to constitute:
(i) fraud, embezzlement, misappropriation, dishonesty or breach
of trust;
(ii) a felony of moral turpitude;
(iii) material breach or violation of any or all of the
covenants, agreements and obligations of the Executive set forth in this
Agreement, other than as the result of the Employee's death or disability;
(iv) a willful or knowing failure or refusal by the Executive to
perform any or all of Executive's material duties and responsibilities as
an officer of the Company, other than as the result of the Employee's death
or disability; or
(v) gross negligence by the Executive in the performance of any
or all of his material duties and responsibilities as an officer of the
Company, other than as the result of the Executive's death or disability;
provided, however, that if the basis for any termination of the Executive's
employment by the Company as set forth in a termination notice delivered by the
Company to the Executive is any or all of the definitions of Cause set forth in
clause (iii) or (iv) above, then, in such event, the Employee shall have thirty
(30) days from and after the date of her receipt of such Termination Notice to
cure the action or inaction specified therein to the reasonable satisfaction of
the Company.
7. NOTICES. Any notice to be given under this Agreement shall be deemed
received five (5) business days thereafter if sent in writing, properly
addressed, by certified mail, and one (1) business day thereafter if sent in
writing, properly addressed, by overnight express courier or by hand. Notices
to Executive shall be sent to Executive's residence. Notices to Parent and
Company shall be sent to Company's home office.
8. WAIVER OF BREACH. The failure by a party to enforce its rights
against the other party following a breach of any provision of the Agreement
shall not operate or be construed as a waiver of any other provision hereof or
any subsequent breach by such other party.
9. PREVAILING PARTY. If any litigation shall arise between the Parent
and/or Company and the Executive based, in whole or in part, upon this Agreement
or any or all of the provisions contained herein, the prevailing party in any
such litigation shall be entitled to recover from non-prevailing party, and
shall be awarded by a court of competent jurisdiction, any and all reasonable
fees and disbursements of trial and appellate counsel paid, incurred or suffered
by such prevailing party as the result of, arising from, or in connection with,
any such litigation shall be entitled to recover from the non-prevailing party,
and shall be awarded by a court of competent jurisdiction, any and all
reasonable fees and disbursements of trial and appellate counsel paid, incurred
or suffered by such prevailing party as the result of, arising from, or in
connection with, any such litigation.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without application of any
conflicts of laws principles. The Executive waives any plea of jurisdiction as
not being a resident of, or being located or conducting business in, Palm Beach
County, Florida and agrees that any litigation or action directly or indirectly
connected with this Agreement, shall, at the Parent's and/or Company's
5
<PAGE>
election, be subject to binding arbitration administered by the American
Arbitration Association in West Palm Beach, Florida.
11. ENTIRE AGREEMENT. Effective as of the date hereof, this Agreement
supersedes and replaces any and all prior employment agreements, both written
and oral, between the Executive and the Company and/or an affiliate thereof, and
neither the Company nor any subsidiary shall have any further liability under
any such agreements, other than for compensation earned but not paid as of the
date hereof. This Agreement contains the entire understanding between parties
and can only be amended or supplemented by a written agreement signed by the
parties. Notwithstanding the foregoing, this Agreement does not supersede the
Confidentiality and Secrecy Agreement between Executive and the Company and/or
an affiliate, which agreement shall remain in full force and effect. In the
event neither the closing of the Offer nor the Merger contemplated by the Merger
Agreement shall occur, then this Agreement shall be of no force or effect and
any employment agreement referred to in the first sentence of this Section 11 in
effect on the date hereof shall be deemed to have remained in full force and
effect notwithstanding the provisions of this Section 11.
12. BENEFITS; BINDING EFFECT. This Agreement shall be for the benefit of
and shall be binding upon, Parent, the Company and the Executive and their
respective heirs, personal representatives, legal representatives, successors
and assigns.
... SIGNATURE PAGE FOLLOWS
6
<PAGE>
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which shall together constitute a valid and binding agreement.
ROYAL NUMICO N.V.
By: /s/ Julitte van der Ven /s/ Gerald T. Holly
---------------------- -------------------------
EXECUTIVE SIGNATURE
Its: Attorney-in-fact
--------------------- Gerald T. Holly
-------------------------
PRINT NAME
REXALL SUNDOWN, INC. ADDRESS
By: /s/ Damon DeSantis 1010 South Ocean Blvd.
---------------------- -------------------------
Its: CEO Delray Beach, FL 33483
--------------------- -------------------------
7
<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT dated as of April 30, 2000 among Rexall Sundown, Inc., a Florida
corporation ("Company"), Royal Numico N.V., a company organized under the laws
of The Netherlands ("Parent") and Richard Werber ("Executive").
WHEREAS, Executive is employed by Company or by a subsidiary of Company, as
Vice President - Legal Affairs, General Counsel and Secretary;
WHEREAS, in connection with an Agreement and Plan of Merger dated as of
April 30, 2000 (the "Merger Agreement"), an indirect subsidiary of Parent will
merge with and into Company (the "Merger"); and
WHEREAS, Parent and Company wish to assure itself of the services of
Executive for the period provided in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereto
hereby agree as follows:
1. EMPLOYMENT. Company agrees, and Parent agrees to cause the Company to
agree, to employ Executive, and Executive agrees to serve in the position set
forth above for the period commencing on the date hereof and ending December 31,
2003 (the "Employment Period"); PROVIDED, HOWEVER, that on January 1, 2004 and
each January 1 thereafter, the Employment Period shall automatically be extended
for one additional year, unless not later than 90 days prior to the date of such
automatic extension, the Company or Executive shall have given notice to
discontinue such extensions.
2. DUTIES. Executive is engaged to perform such duties as are assigned
to him by the Company. Executive shall devote his full time and attention to
the performance of such duties, which shall remain similar in scope and
responsibility to the duties he is performing as of the date of this Agreement.
At no time during the Employment Period shall Executive take on additional
employment without permission in writing from Company.
3. COMPENSATION.
(a) BASE SALARY. For all services rendered by Executive during the
Employment Period, Company shall initially pay Executive the base salary in
effect on the date hereof, subject to increase as of each January 1 during the
Employment Period (but not decrease) based on annual performance reviews
conducted by the Board of Directors of the Company and/or the Chief Executive
Officer or such other officer designated by the Board; provided, however, that
on January 1, 2001, 2002 and 2003, the base salary then in effect shall be
increased by an amount which is not less than the greater of (i) 5% or (ii) the
percentage increase in the cost of living based upon the Revised Consumer Price
Index (1982-84=100) published by the Bureau of Labor Statistics of the United
States Department of Labor for Boca Raton, Florida utilizing March 2000 as the
base month.
(b) INCENTIVE COMPENSATION. Executive shall be eligible to
participate during the Employment Period in the management stock purchase and
stock option plans described in the Benefits Letter referred to in the Merger
Agreement and such other annual bonus or incentive plans, stock option plans,
stock purchase plans and any other long-term compensation plans, programs or
arrangements which may be adopted by the Company and applicable to Executive.
<PAGE>
(c) OTHER COMPENSATION. The Executive shall be entitled to receive
such benefits and participate in such benefit plans as are generally provided
from time to time by the Company to its employees, and Executive shall be
entitled to continue to receive such fringe benefits and such other senior
management benefits of the type provided to Executive on the date hereof, as
such benefits are generally provided from time to time by the Company to its
senior management employees; provided that nothing herein shall be construed to
obligate the Company to provide any specific benefits to its employees or senior
management employees generally. The Executive shall be entitled to such
vacation time on an annual basis in accordance with the policies as are from
time to time in force for Company employees.
(d) NON-COMPETE COVENANT; RETENTION PAYMENTS. In exchange for the
non-competition and non-solicitation covenants (the "Non-Compete Covenants") set
forth in Section 5 below and for Executive's agreement to continue his
employment under the terms of this Agreement, Company shall pay to Executive the
following amounts:
(i) $675,000, 30 days after the effective time of the Merger
contemplated by the Merger Agreement (the date of the Merger hereinafter
referred to as the "Effective Time") in consideration of the Non-Compete
Covenants set forth in Section 5 below;
(ii) $675,000, payable in three equal installments on
Executive's first regular payroll date following each of the first, second
and third anniversaries of the Effective Time, if Executive is still in the
Company's employ as of each such anniversary date. Should Executive's
employment be terminated due to death or disability (as described in
Section 5(a)) or involuntarily terminated by the Company without Cause or
terminated by resignation by Executive with Good Reason (as defined in
Section 5(b), Executive (or Executive's estate in the event of death) shall
be entitled to receive any unpaid anniversary date payments within 30 days
of such termination.
Should Executive resign without Good Reason or should his employment be
involuntarily terminated with Cause prior to any such anniversary date, he shall
not be eligible to receive any further amount on the subsequent anniversary
dates.
Payments under this Section 3(d) are separate and distinct from and in
addition to any other payments contemplated under this Agreement and shall not
be taken into account in determining benefits under any other provision of this
Agreement or any employee benefit plan.
(e) All compensation paid or provided to Executive under this
Agreement shall be subject to any applicable income, payroll or other tax
withholding requirements.
4. REIMBURSEMENT OF EXPENSES. During the Employment Period, Company
shall reimburse Executive for reasonable business expenses incurred in
connection with Executive's duties hereunder. Executive shall furnish Company
with periodic, itemized expense reports in accordance with Company policies.
2
<PAGE>
5. EMPLOYMENT COVENANTS.
(a) Executive agrees that from the date hereof through the later of
(i) the third anniversary of the Merger, or (ii) the period ending on the second
anniversary of Executive's termination of employment for any reason (the
"Non-Competition Period"), Executive shall not:
(A) engage in any way, directly or indirectly, in any Competing
Business (as defined below) in the Geographic Area (as defined below);
PROVIDED, HOWEVER, in no event shall this provision be construed to
prohibit Executive's employment with any business in which less than 5% of
its consolidated gross revenues for its most recent fiscal year relates to
a Competing Business if Executive's responsibilities at such business do
not directly relate to a Competing Business. "Competing Business" shall
mean any activity relating to the development, manufacture, or the retail
or wholesale sale or distribution (including but not limited to sale or
distribution through retail, specialty retail, Internet, e-commerce, mail
order, multi-level marketing, mass market, or any other channel of
distribution) of vitamin and mineral supplements, sports nutrition products
or herbs, or any other product which competes with products being offered
for sale or under development by the Company or any subsidiary thereof.
"Geographic Area" shall mean (1) the United States and (2) any other
country in which the Parent, Company or any affiliate thereof owns, leases
or franchises locations, hosts web sites or otherwise conducts business; or
(B) directly, or indirectly through any person or entity, (1)
induce or attempt to induce any employee of the Parent, Company or any
affiliate thereof (other than an employee who performs purely ministerial
functions) (a "Protected Employee") to leave the employ of the Parent,
Company or such Parent; (2) interfere in any way with the relationship
between the Parent Company or any subsidiary and any Protected Employee;
(3) hire any Protected Employee, or any person who was a Protected
Employee at any time during the Non-Competition Period; (4) induce or
attempt to induce any customer, distributor, supplier, licensee, or other
business relationship of the Parent, Company or any affiliate which exists
or existed at any time during the Non-Competition Period, to cease doing
business with the Parent Company or such affiliate, or to interfere in any
way with any such business relationship.
(b) During the Employment Period and thereafter, Executive shall not,
without the Parent's and Company's prior written permission or in connection
with his duties under this Agreement, use or disclose all or any part of the
following valuable, special and unique assets of Parent's or Company's business
to any person, corporation, association or other entity (but excluding
information that had become public knowledge without any action by, or
involvement of, Executive) for any reason whatsoever: the confidential
information and trade secrets of Parent, the Company or any affiliate thereof,
including, but not limited to, the financial and sales information,
manufacturing formulas and processes, business plans and projections, personnel
information and records, procedures, techniques, products, customers, sources of
leads and methods of obtaining new business or the methods generally of doing
and operating the respective businesses of the Parent, Company and affiliates,
trade secrets, product ideas, processes, techniques, formulas, know-how,
marketing plans and strategies.
(c) Executive acknowledges that the restrictions contained in this
Section 5 in view of the nature of the business in which Parent or Company is
engaged, are reasonable and necessary in order to protect the legitimate
interests of the Parent or Company and that any violation of such restrictions
would result in irreparable harm to the Parent or Company. In the event of
Executive's violation of any of these restrictions, the Parent or Company shall
be entitled to seek
3
<PAGE>
from any court of competent jurisdiction preliminary and permanent injunctive
relief without proving actual damage or immediate or irreparable harm. Nothing
contained herein shall prohibit the Parent or Company from pursuing any other
remedies legally available to the Parent or Company for such breach or
threatened breach, including the recovery of damages from Executive.
(d) If any of the provisions of this Section 5 should ever be
adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable law in any jurisdiction, then the affected
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic, product or service, or other limitations permitted by applicable
law.
(e) The provisions of this Section 5 shall survive the expiration or
termination of this Agreement.
6. TERMINATION ARRANGEMENTS.
(a) DEATH OR DISABILITY. In the event Executive's employment
hereunder is terminated by reason either of his death during the Employment
Period or by reason of his medically determined physical or mental disability
during the Employment Period which prevents Executive from reasonably
discharging his or her duties and responsibilities for a period of one hundred
twenty (120) days, no additional payments, beyond those earned or vested prior
to the date of such termination or payable under Section 3(d)(ii) above shall be
payable hereunder.
(b) TERMINATION WITHOUT CAUSE OR RESIGNATION WITH GOOD REASON. In the
event Executive's employment is involuntarily terminated by Company without
Cause or by Executive's resignation with Good Reason during the Employment
Period, Company shall (i) pay the Executive the payment described in Section
3(d)(ii), if any, (ii) continue to provide Executive the base salary described
in Section 3 hereof for a period of one year from the date of termination and
(iii) pay an annual bonus for the year in which the date of termination occurs
at the time bonuses for such year are paid to executives generally, determined
on the basis of performance factor one (or similar target performance level).
Executive will be deemed to have "Good Reason" to resign in the event (A) a
significant reduction in Executive's duties from those described in Section 2
above occurs, other than by reason of the Company becoming an affiliate of
Parent and ceasing to be a public corporation as a result of the transactions
contemplated by the Merger Agreement, or (B) a material breach by the Parent or
Company of its obligations under Section 3 or 4 of this Agreement occurs, and
such reduction or breach continues after written notice thereof and a reasonable
opportunity to cure of not less than 30 days has been provided by the Executive
to the Parent and Company.
(c) RESIGNATION. In the event Executive's employment is terminated
during the Employment Period by reason of Executive's resignation without Good
Reason, no additional payments, beyond those earned or vested prior to the date
of such resignation, shall be payable hereunder.
(d) TERMINATION FOR CAUSE. In the event Executive's employment is
involuntarily terminated for Cause during the Employment Period, no additional
payments, beyond those earned or vested prior to the date of such termination,
shall be payable hereunder.
4
<PAGE>
"Cause" shall mean any action by the Executive or any inaction by the
Employee which is reasonably believed by the Company to constitute:
(i) fraud, embezzlement, misappropriation, dishonesty or breach
of trust;
(ii) a felony of moral turpitude;
(iii) material breach or violation of any or all of the
covenants, agreements and obligations of the Executive set forth in this
Agreement, other than as the result of the Employee's death or disability;
(iv) a willful or knowing failure or refusal by the Executive to
perform any or all of Executive's material duties and responsibilities as
an officer of the Company, other than as the result of the Employee's death
or disability; or
(v) gross negligence by the Executive in the performance of any
or all of his material duties and responsibilities as an officer of the
Company, other than as the result of the Executive's death or disability;
provided, however, that if the basis for any termination of the Executive's
employment by the Company as set forth in a termination notice delivered by the
Company to the Executive is any or all of the definitions of Cause set forth in
clause (iii) or (iv) above, then, in such event, the Employee shall have thirty
(30) days from and after the date of her receipt of such Termination Notice to
cure the action or inaction specified therein to the reasonable satisfaction of
the Company.
7. NOTICES. Any notice to be given under this Agreement shall be deemed
received five (5) business days thereafter if sent in writing, properly
addressed, by certified mail, and one (1) business day thereafter if sent in
writing, properly addressed, by overnight express courier or by hand. Notices
to Executive shall be sent to Executive's residence. Notices to Parent and
Company shall be sent to Company's home office.
8. WAIVER OF BREACH. The failure by a party to enforce its rights
against the other party following a breach of any provision of the Agreement
shall not operate or be construed as a waiver of any other provision hereof or
any subsequent breach by such other party.
9. PREVAILING PARTY. If any litigation shall arise between the Parent
and/or Company and the Executive based, in whole or in part, upon this Agreement
or any or all of the provisions contained herein, the prevailing party in any
such litigation shall be entitled to recover from non-prevailing party, and
shall be awarded by a court of competent jurisdiction, any and all reasonable
fees and disbursements of trial and appellate counsel paid, incurred or suffered
by such prevailing party as the result of, arising from, or in connection with,
any such litigation shall be entitled to recover from the non-prevailing party,
and shall be awarded by a court of competent jurisdiction, any and all
reasonable fees and disbursements of trial and appellate counsel paid, incurred
or suffered by such prevailing party as the result of, arising from, or in
connection with, any such litigation.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, without application of any
conflicts of laws principles. The Executive waives any plea of jurisdiction as
not being a resident of, or being located or conducting business in, Palm Beach
County, Florida and agrees that any litigation or action directly or indirectly
connected with this Agreement, shall, at the Parent's and/or Company's
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<PAGE>
election, be subject to binding arbitration administered by the American
Arbitration Association in West Palm Beach, Florida.
11. ENTIRE AGREEMENT. Effective as of the date hereof, this Agreement
supersedes and replaces any and all prior employment agreements, both written
and oral, between the Executive and the Company and/or an affiliate thereof, and
neither the Company nor any subsidiary shall have any further liability under
any such agreements, other than for compensation earned but not paid as of the
date hereof. This Agreement contains the entire understanding between parties
and can only be amended or supplemented by a written agreement signed by the
parties. Notwithstanding the foregoing, this Agreement does not supersede the
Confidentiality and Secrecy Agreement between Executive and the Company and/or
an affiliate, which agreement shall remain in full force and effect. In the
event neither the closing of the Offer nor the Merger contemplated by the Merger
Agreement shall occur, then this Agreement shall be of no force or effect and
any employment agreement referred to in the first sentence of this Section 11 in
effect on the date hereof shall be deemed to have remained in full force and
effect notwithstanding the provisions of this Section 11.
12. BENEFITS; BINDING EFFECT. This Agreement shall be for the benefit of
and shall be binding upon, Parent, the Company and the Executive and their
respective heirs, personal representatives, legal representatives, successors
and assigns.
... SIGNATURE PAGE FOLLOWS
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13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which shall together constitute a valid and binding agreement.
ROYAL NUMICO N.V.
By: /s/ Julitte van der Ven /s/ Richard Werber
-------------------------- -------------------------
EXECUTIVE SIGNATURE
Its: Attorney-in-Fact Richard Werber
--------------------- -------------------------
PRINT NAME
REXALL SUNDOWN, INC. ADDRESS
By: /s/ Damon DeSantis 3279 NW 62nd St.
------------------------- -------------------------
Its: CEO Boca Raton, FL 33496
--------------------- -------------------------
7
<PAGE>
CONSULTING AGREEMENT
AGREEMENT dated as of April 30, 2000 among Rexall Sundown, Inc., a
Florida corporation ("Company"), Royal Numico N.V., a company organized under
the laws of The Netherlands ("Parent") and Carl DeSantis ("Executive").
WHEREAS, Executive is employed as a senior executive officer by
Company;
WHEREAS, in connection with an Agreement and Plan of Merger dated as of
April 30, 2000 (the "Merger Agreement"), a subsidiary of Parent will merge with
and into Company (the "Merger"); and
WHEREAS, Executive has indicated his desire to retire from full-time
active employment following the Merger; and
WHEREAS, upon the Merger, Parent will have invested significant amounts
in the acquisition of all of the stock of the Company, whereupon the Company has
become an indirect subsidiary of Parent; and
WHEREAS, Parent and the Company wish to retain the services of the
Executive and obtain certain confidentiality and non-competition covenants from
Executive, and the Executive wishes to perform services for Parent and the
Company and provide such commitments, on the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which consideration are mutually acknowledged by the parties, it
is hereby agreed as follows:
1. RECITALS. The recitals hereinbefore set forth constitute an integral
part of this Agreement, evidencing the intent of the parties in executing this
Agreement and describing the circumstances of its execution. Said recitals are
by express reference made a part of the covenants hereof, and this Agreement
shall be construed in the light thereof.
2. ENGAGEMENT OF EXECUTIVE. Company and Parent engage the Executive to
provide services, as specified in Section 4, below, to Company and Parent and
the Executive hereby agrees to provide these services, in accordance with the
terms and conditions set forth in this Agreement.
3. TERM. Subject to Section 10 below, this Agreement shall be effective
as of the date hereof ("Effective Date") and shall expire on the first
anniversary of the date of the Merger, unless earlier terminated by agreement of
the parties. Upon termination of this Agreement, neither party shall have any
further obligations hereunder, except that Parent or the Company shall be
obligated to pay to Executive any compensation earned or expenses to be
reimbursed under Sections 5 and 6, below, and Executive's obligations described
in Section 7 and Parent's and Company's remedies
<PAGE>
under Section 8 (for breaches under Section 7) shall continue notwithstanding
the expiration or earlier termination of this Agreement.
4. DUTIES OF EXECUTIVE. The Executive shall resign from employment and
all positions as an officer or director of the Company and its subsidiaries as
of the date reasonably requested by Parent, which date shall not be prior to the
closing of the Offer contemplated by the Merger Agreement. Thereafter, the
Executive shall, upon the reasonable request of Parent or the Company, assist
Parent and the Company in the post-Merger transition period, at such times and
in such manner as Executive and Parent or the Company shall mutually agree. The
Executive's on-location requirements will not exceed twelve (12) days per
calendar quarter without the Executive's consent.
5. COMPENSATION. The Executive shall receive:
(a) $81,250, payable in four installments of the first day of
the third, sixth, ninth and twelfth calendar months following the
calendar month in which the Merger occurs, as consideration for the
services described in Section 4 above; and
(b) a lump sum payment of $800,000, 30 days after the date of
the Merger, in consideration of the Non-Compete Covenants set forth in
Section 7 below.
All compensation paid or provided to Executive under this Agreement shall be
subject to any applicable income, payroll or other tax withholding requirements.
6. ASSISTANCE/EXPENSES. Parent agrees to provide or to cause to be
provided to Executive an office and such other assistance as Parent or the
Company determines to be required for Executive to discharge any
responsibilities assigned pursuant to Section 4. Parent shall pay or reimburse,
or cause the Company to pay or reimburse, the Executive for the reasonable and
appropriate out-of-pocket expenses incurred by him in connection with the
performance of services under this Agreement. Executive must provide proper
documentation to Parent or the Company for all such expenses.
7. NON-COMPETE COVENANTS.
(a) Executive agrees that from the date hereof through December 31,
2003 (the "Non-Competition Period"), Executive shall not:
(i) engage in any way, directly or indirectly, in any
Competing Business (as defined below) in the Geographic Area (as
defined below); PROVIDED, HOWEVER, in no event shall this provision be
construed to prohibit Executive's employment with any business in which
less than 5% of its consolidated gross revenues for its most recent
fiscal year relates to a Competing Business if Executive's
responsibilities at such business do not directly relate to a Competing
Business. "Competing Business" shall mean any activity relating to the
development, manufacture, or the retail or wholesale sale or
distribution (including but not limited to sale or
2
<PAGE>
distribution through retail, specialty retail, Internet, e-commerce,
mail order, multi-level marketing, mass market, or any other channel of
distribution) of vitamin and mineral supplements, sports nutrition
products or herbs, or any other product which competes with products
being offered for sale or under development by the Company or any
subsidiary thereof. "Geographic Area" shall mean (1) the United States
and (2) any other country in which the Parent, Company or any affiliate
thereof owns, leases or franchises locations, hosts web sites or
otherwise conducts business; or
(ii) directly, or indirectly through any person or entity, (1)
induce or attempt to induce any employee of the Parent, Company or any
affiliate thereof (other than an employee who performs purely
ministerial functions) (a "Protected Employee") to leave the employ of
the Parent, Company or such Parent; (2) interfere in any way with the
relationship between the Parent Company or any subsidiary and any
Protected Employee; (3) hire any Protected Employee, or any person who
was a Protected Employee at any time during the Non-Competition Period;
(4) induce or attempt to induce any customer, distributor, supplier,
license, or other business relationship of the Parent, Company or any
affiliate which exists or existed at any time during the
Non-Competition Period, to cease doing business with the Parent Company
or such affiliate, or to interfere in any way with any such business
relationship.
(b) During the Non-Competition Period and thereafter, Executive shall
not, without the Parent's and Company's prior written permission or in
connection with his duties under this Agreement, use or disclose all or any part
of the following valuable, special and unique assets of Parent's or Company's
business to any person, corporation, association or other entity (but excluding
information that had become public knowledge without any action by, or
involvement of, Executive) for any reason whatsoever: the confidential
information and trade secrets of Parent, the Company or any affiliate thereof,
including, but not limited to, the financial and sales information,
manufacturing formulas and processes, business plans and projections, personnel
information and records, procedures, techniques, products, customers, sources of
leads and methods of obtaining new business or the methods generally of doing
and operating the respective businesses of the Parent, Company and affiliates,
trade secrets, product ideas, processes, techniques, formulas, know-how,
marketing plans and strategies. The foregoing obligations of Executive shall be
in addition to his obligations under the Confidentiality and Secrecy Agreement
between the Company and Executive, which agreement shall remain in full force
and effect as if set forth in full in this Section 7(b).
8. REMEDIES.
(a) Executive acknowledges that the restrictions contained in this
Section 7 in view of the nature of the business in which Parent or Company is
engaged, are reasonable and necessary in order to protect the legitimate
interests of the Parent or Company and that any violation of such restrictions
would result in irreparable harm to the Parent or Company. In the event of
Executive's violation of any of these restrictions, the Parent or Company shall
be entitled to seek from any court of competent jurisdiction preliminary and
permanent injunctive relief without proving actual damage
3
<PAGE>
or immediate or irreparable harm. Nothing herein shall prohibit the Parent or
Company from pursuing any other remedies legally available to the Parent or
Company for such breach or threatened breach, including the recovery of damages
from Executive.
(b) If any of the provisions of Section 7 should ever be adjudicated to
exceed the time, geographic, product or service, or other limitations permitted
by applicable law in any jurisdiction, then the affected provisions shall be
deemed reformed in such jurisdiction to the maximum time, geographic, product or
service, or other limitations permitted by applicable law.
(c) The provisions of Section 7 and this Section 8 shall survive the
expiration or termination of this Agreement.
9. INDEPENDENT CONTRACTOR. The parties to this Agreement intend that
the Executive will perform under this Agreement as an independent contractor,
and not as an employee of Parent or the Company. Consequently, during the term
of this Agreement:
(a) The Executive shall be solely responsible for the payment of all
taxes in connection with the Executive's remuneration hereunder, and neither
Parent nor the Company shall withhold taxes from his remuneration, unless
required by law; and
(b) The Executive shall not accrue or receive any benefits under any
employee benefit plan maintained by Parent or the Company attributable to his
services hereunder; provided that nothing in this Agreement shall affect any
rights to benefits Executive (and Executive's spouse and dependents) might have
under any employee benefit plans of the Company by virtue of his prior service
as an employee of the Company or its subsidiaries.
10. ENTIRE UNDERSTANDING. This Agreement, together with the
Confidentiality and Secrecy Agreement between the Company and Executive,
constitute the entire understanding between the parties relating to Executive's
services hereunder and supersedes and cancels all prior written and oral
understandings and agreements with respect to such matters. Executive
acknowledges that effective as of the date of this Agreement, his employment
agreement ("Employment Agreement") with the Company shall terminate without any
liability on the part of the Company thereunder, including any liability
described in Article 5 thereof; provided, however, that nothing in this
Agreement shall relieve the Company from its obligations to Executive under the
existing Employment Agreement with respect to the compensation earned by
Executive during the period prior to the date of resignation pursuant to Section
4 above. In the event neither the closing of the Offer nor the Merger
contemplated by the Merger Agreement occur, then this Agreement shall be of no
force or effect and the Employment Agreement shall be deemed to have remained in
full force and effect notwithstanding the provisions of this Agreement. Any
amendment of this Agreement shall be effective only to the extent that it is in
writing, executed by Parent, the Company and Executive.
11. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of (a) Executive's executors, administrators, legal representatives,
heirs and legatees and (b) Parent and successors and assigns.
4
<PAGE>
12. WAIVER. The waiver by any party hereto of a breach of any provision
of this Agreement by any other party shall not operate or be construed as a
waiver of any subsequent breach.
13. GOVERNING LAW. This Agreement shall be governed by, and
interpreted, construed and enforced in accordance with, the laws of the State of
Florida.
14. HEADINGS. The headings of the sections of this Agreement are for
reference purposes only and do not define or limit, and shall not be used to
interpret or construe, the contents of this Agreement.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which shall together constitute a valid and binding agreement.
PARENT
By: /s/ Julitte van der Ven /s/ Carl DeSantis
--------------------------------- -----------------------------------
EXECUTIVE
Its: Attorney-in-Fact Carl DeSantis
--------------------------------- -----------------------------------
PRINT NAME
COMPANY ADDRESS
By: /s/ Damon DeSantis 3223 N. Ocean Dr.
--------------------------------- -----------------------------------
Its: CEO Gulf Stream, FL 33483
-------------------------------- -----------------------------------
5
<PAGE>
CONSULTING AGREEMENT
AGREEMENT dated as of April 30, 2000 among Rexall Sundown, Inc., a Florida
corporation ("Company"), Royal Numico N.V., a company organized under the laws
of The Netherlands ("Parent") and Nickolas Palin ("Executive").
WHEREAS, Executive is employed as a senior executive officer by Company;
WHEREAS, in connection with an Agreement and Plan of Merger dated as of
April 30, 2000 (the "Merger Agreement"), a subsidiary of Parent will merge with
and into Company (the "Merger"); and
WHEREAS, Executive has indicated his desire to retire from full-time active
employment following the Merger; and
WHEREAS, upon the Merger, Parent will have invested significant amounts in
the acquisition of all of the stock of the Company, whereupon the Company has
become an indirect subsidiary of Parent; and
WHEREAS, Parent and the Company wish to retain the services of the
Executive and obtain certain confidentiality and non-competition covenants from
Executive, and the Executive wishes to perform services for Parent and the
Company and provide such commitments, on the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which consideration are mutually acknowledged by the parties, it
is hereby agreed as follows:
1. RECITALS. The recitals hereinbefore set forth constitute an integral
part of this Agreement, evidencing the intent of the parties in executing this
Agreement and describing the circumstances of its execution. Said recitals are
by express reference made a part of the covenants hereof, and this Agreement
shall be construed in the light thereof.
2. ENGAGEMENT OF EXECUTIVE. Company and Parent engage the Executive to
provide services, as specified in Section 4, below, to Company and Parent and
the Executive hereby agrees to provide these services, in accordance with the
terms and conditions set forth in this Agreement.
3. TERM. Subject to Section 10 below, this Agreement shall be effective
as of the date hereof ("Effective Date") and shall expire on the first
anniversary of the date of the Merger, unless earlier terminated by agreement of
the parties. Upon termination of this Agreement, neither party shall have any
further obligations hereunder, except that Parent or the Company shall be
obligated to pay to Executive any compensation earned or expenses to be
reimbursed under Sections 5 and 6, below, and Executive's obligations described
in Section 7 and Parent's and Company's remedies
<PAGE>
under Section 8 (for breaches under Section 7) shall continue notwithstanding
the expiration or earlier termination of this Agreement.
4. DUTIES OF EXECUTIVE. The Executive shall resign from employment and
all positions as an officer or director of the Company and its subsidiaries as
of the date reasonably requested by Parent, which date shall not be prior to the
closing of the Offer contemplated by the Merger Agreement. Thereafter, the
Executive shall, upon the reasonable request of Parent or the Company, assist
Parent and the Company in the post-Merger transition period, at such times and
in such manner as Executive and Parent or the Company shall mutually agree. The
Executive's on-location requirements will not exceed twelve (12) days per
calendar quarter without the Executive's consent.
5. COMPENSATION. The Executive shall receive:
(a) $143,500, payable in four installments of the first day of
the third, sixth, ninth and twelfth calendar months following the
calendar month in which the Merger occurs, as consideration for the
services described in Section 4 above; and
(b) a lump sum payment of $1,250,000, 30 days after the date of
the Merger, in consideration of the Non-Compete Covenants set forth in
Section 7 below.
All compensation paid or provided to Executive under this Agreement shall be
subject to any applicable income, payroll or other tax withholding requirements.
6. ASSISTANCE/EXPENSES. Parent agrees to provide or to cause to be
provided to Executive an office and such other assistance as Parent or the
Company determines to be required for Executive to discharge any
responsibilities assigned pursuant to Section 4. Parent shall pay or reimburse,
or cause the Company to pay or reimburse, the Executive for the reasonable and
appropriate out-of-pocket expenses incurred by him in connection with the
performance of services under this Agreement. Executive must provide proper
documentation to Parent or the Company for all such expenses.
7. NON-COMPETE COVENANTS.
(a) Executive agrees that from the date hereof through December 31, 2003
(the "Non-Competition Period"), Executive shall not:
(i) engage in any way, directly or indirectly, in any Competing
Business (as defined below) in the Geographic Area (as defined below);
PROVIDED, HOWEVER, in no event shall this provision be construed to
prohibit Executive's employment with any business in which less than
5% of its consolidated gross revenues for its most recent fiscal year
relates to a Competing Business if Executive's responsibilities at
such business do not directly relate to a Competing Business.
"Competing Business" shall mean any activity relating to the
development, manufacture, or the retail or wholesale sale or
distribution (including but not limited to sale or
2
<PAGE>
distribution through retail, specialty retail, Internet, e-commerce, mail
order, multi-level marketing, mass market, or any other channel of
distribution) of vitamin and mineral supplements, sports nutrition products
or herbs, or any other product which competes with products being offered
for sale or under development by the Company or any subsidiary thereof.
"Geographic Area" shall mean (1) the United States and (2) any other
country in which the Parent, Company or any affiliate thereof owns, leases
or franchises locations, hosts web sites or otherwise conducts business; or
(ii) directly, or indirectly through any person or entity, (1)
induce or attempt to induce any employee of the Parent, Company or any
affiliate thereof (other than an employee who performs purely
ministerial functions) (a "Protected Employee") to leave the employ of
the Parent, Company or such Parent; (2) interfere in any way with the
relationship between the Parent Company or any subsidiary and any
Protected Employee; (3) hire any Protected Employee, or any person
who was a Protected Employee at any time during the Non-Competition
Period; (4) induce or attempt to induce any customer, distributor,
supplier, license, or other business relationship of the Parent,
Company or any affiliate which exists or existed at any time during
the Non-Competition Period, to cease doing business with the Parent
Company or such affiliate, or to interfere in any way with any such
business relationship.
(b) During the Non-Competition Period and thereafter, Executive shall not,
without the Parent's and Company's prior written permission or in connection
with his duties under this Agreement, use or disclose all or any part of the
following valuable, special and unique assets of Parent's or Company's business
to any person, corporation, association or other entity (but excluding
information that had become public knowledge without any action by, or
involvement of, Executive) for any reason whatsoever: the confidential
information and trade secrets of Parent, the Company or any affiliate thereof,
including, but not limited to, the financial and sales information,
manufacturing formulas and processes, business plans and projections, personnel
information and records, procedures, techniques, products, customers, sources of
leads and methods of obtaining new business or the methods generally of doing
and operating the respective businesses of the Parent, Company and affiliates,
trade secrets, product ideas, processes, techniques, formulas, know-how,
marketing plans and strategies. The foregoing obligations of Executive shall be
in addition to his obligations under the Confidentiality and Secrecy Agreement
between the Company and Executive, which agreement shall remain in full force
and effect as if set forth in full in this Section 7(b).
8. REMEDIES.
(a) Executive acknowledges that the restrictions contained in this
Section 7 in view of the nature of the business in which Parent or Company is
engaged, are reasonable and necessary in order to protect the legitimate
interests of the Parent or Company and that any violation of such restrictions
would result in irreparable harm to the Parent or Company. In the event of
Executive's violation of any of these restrictions, the Parent or Company shall
be entitled to seek from any court of competent jurisdiction preliminary and
permanent injunctive relief without proving actual damage
3
<PAGE>
or immediate or irreparable harm. Nothing herein shall prohibit the Parent or
Company from pursuing any other remedies legally available to the Parent or
Company for such breach or threatened breach, including the recovery of damages
from Executive.
(b) If any of the provisions of Section 7 should ever be adjudicated to
exceed the time, geographic, product or service, or other limitations permitted
by applicable law in any jurisdiction, then the affected provisions shall be
deemed reformed in such jurisdiction to the maximum time, geographic, product or
service, or other limitations permitted by applicable law.
(c) The provisions of Section 7 and this Section 8 shall survive the
expiration or termination of this Agreement.
9. INDEPENDENT CONTRACTOR. The parties to this Agreement intend that the
Executive will perform under this Agreement as an independent contractor, and
not as an employee of Parent or the Company. Consequently, during the term of
this Agreement:
(a) The Executive shall be solely responsible for the payment of all taxes
in connection with the Executive's remuneration hereunder, and neither Parent
nor the Company shall withhold taxes from his remuneration, unless required by
law; and
(b) The Executive shall not accrue or receive any benefits under any
employee benefit plan maintained by Parent or the Company attributable to his
services hereunder; provided that nothing in this Agreement shall affect any
rights to benefits Executive (and Executive's spouse and dependents) might have
under any employee benefit plans of the Company by virtue of his prior service
as an employee of the Company or its subsidiaries.
10. ENTIRE UNDERSTANDING. This Agreement, together with the
Confidentiality and Secrecy Agreement between the Company and Executive,
constitute the entire understanding between the parties relating to Executive's
services hereunder and supersedes and cancels all prior written and oral
understandings and agreements with respect to such matters. Executive
acknowledges that effective as of the date of this Agreement, his employment
agreement ("Employment Agreement") with the Company shall terminate without any
liability on the part of the Company thereunder, including any liability
described in Article 5 thereof; provided, however, that nothing in this
Agreement shall relieve the Company from its obligations to Executive under the
existing Employment Agreement with respect to the compensation earned by
Executive during the period prior to the date of resignation pursuant to Section
4 above. In the event neither the closing of the Offer nor the Merger
contemplated by the Merger Agreement occur, then this Agreement shall be of no
force or effect and the Employment Agreement shall be deemed to have remained in
full force and effect notwithstanding the provisions of this Agreement. Any
amendment of this Agreement shall be effective only to the extent that it is in
writing, executed by Parent, the Company and Executive.
11. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of (a) Executive's executors, administrators, legal representatives,
heirs and legatees and (b) Parent and successors and assigns.
4
<PAGE>
12. WAIVER. The waiver by any party hereto of a breach of any provision
of this Agreement by any other party shall not operate or be construed as a
waiver of any subsequent breach.
13. GOVERNING LAW. This Agreement shall be governed by, and interpreted,
construed and enforced in accordance with, the laws of the State of Florida.
14. HEADINGS. The headings of the sections of this Agreement are for
reference purposes only and do not define or limit, and shall not be used to
interpret or construe, the contents of this Agreement.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which shall together constitute a valid and binding agreement.
PARENT
By: /s/ Julitte van der Ven /s/ Nickolas Palin
------------------------- -------------------------
EXECUTIVE SIGNATURE
Its: Attorney-in-Fact
--------------------- Nickolas Palin
-------------------------
PRINT NAME
COMPANY ADDRESS
By: /s/ Damon DeSantis 3600 South Ocean Blvd.
------------------------- -------------------------
Its: CEO Palm Beach, FL
--------------------- -------------------------
5
<PAGE>
CONSULTING AGREEMENT
AGREEMENT dated as of April 30, 2000 among Rexall Sundown, Inc., a Florida
corporation ("Company"), Royal Numico N.V., a company organized under the laws
of The Netherlands ("Parent") and Christian Nast ("Executive").
WHEREAS, Executive is employed as a senior executive officer by Company;
WHEREAS, in connection with an Agreement and Plan of Merger dated as of
April 30, 2000 (the "Merger Agreement"), a subsidiary of Parent will merge with
and into Company (the "Merger"); and
WHEREAS, Executive has indicated his desire to retire from full-time active
employment following the Merger; and
WHEREAS, upon the Merger, Parent will have invested significant amounts in
the acquisition of all of the stock of the Company, whereupon the Company has
become an indirect subsidiary of Parent; and
WHEREAS, Parent and the Company wish to retain the services of the
Executive and obtain certain confidentiality and non-competition covenants from
Executive, and the Executive wishes to perform services for Parent and the
Company and provide such commitments, on the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which consideration are mutually acknowledged by the parties, it
is hereby agreed as follows:
1. RECITALS. The recitals hereinbefore set forth constitute an integral
part of this Agreement, evidencing the intent of the parties in executing this
Agreement and describing the circumstances of its execution. Said recitals are
by express reference made a part of the covenants hereof, and this Agreement
shall be construed in the light thereof.
2. ENGAGEMENT OF EXECUTIVE. Company and Parent engage the Executive to
provide services, as specified in Section 4, below, to Company and Parent and
the Executive hereby agrees to provide these services, in accordance with the
terms and conditions set forth in this Agreement.
3. TERM. Subject to Section 10 below, this Agreement shall be effective
as of the date hereof ("Effective Date") and shall expire on the first
anniversary of the date of the Merger, unless earlier terminated by agreement of
the parties. Upon termination of this Agreement, neither party shall have any
further obligations hereunder, except that Parent or the Company shall be
obligated to pay to Executive any compensation earned or expenses to be
reimbursed under Sections 5 and 6, below, and Executive's obligations described
in Section 7 and Parent's and Company's remedies
<PAGE>
under Section 8 (for breaches under Section 7) shall continue notwithstanding
the expiration or earlier termination of this Agreement.
4. DUTIES OF EXECUTIVE. The Executive shall resign from employment and
all positions as an officer or director of the Company and its subsidiaries as
of the date reasonably requested by Parent, which date shall not be prior to the
closing of the Offer contemplated by the Merger Agreement. Thereafter, the
Executive shall, upon the reasonable request of Parent or the Company, assist
Parent and the Company in the post-Merger transition period, at such times and
in such manner as Executive and Parent or the Company shall mutually agree. The
Executive's on-location requirements will not exceed twelve (12) days per
calendar quarter without the Executive's consent.
5. COMPENSATION. The Executive shall receive:
(a) $37,500, payable in four installments of the first day of
the third, sixth, ninth and twelfth calendar months following the
calendar month in which the Merger occurs, as consideration for the
services described in Section 4 above; and
(b) a lump sum payment of $350,000, 30 days after the date of
the Merger, in consideration of the Non-Compete Covenants set forth in
Section 7 below.
All compensation paid or provided to Executive under this Agreement shall be
subject to any applicable income, payroll or other tax withholding requirements.
6. ASSISTANCE/EXPENSES. Parent agrees to provide or to cause to be
provided to Executive an office and such other assistance as Parent or the
Company determines to be required for Executive to discharge any
responsibilities assigned pursuant to Section 4. Parent shall pay or reimburse,
or cause the Company to pay or reimburse, the Executive for the reasonable and
appropriate out-of-pocket expenses incurred by him in connection with the
performance of services under this Agreement. Executive must provide proper
documentation to Parent or the Company for all such expenses.
7. NON-COMPETE COVENANTS.
(a) Executive agrees that from the date hereof through December 31, 2003
(the "Non-Competition Period"), Executive shall not:
(i) engage in any way, directly or indirectly, in any Competing
Business (as defined below) in the Geographic Area (as defined below);
PROVIDED, HOWEVER, in no event shall this provision be construed to
prohibit Executive's employment with any business in which less than
5% of its consolidated gross revenues for its most recent fiscal year
relates to a Competing Business if Executive's responsibilities at
such business do not directly relate to a Competing Business.
"Competing Business" shall mean any activity relating to the
development, manufacture, or the retail or wholesale sale or
distribution (including but not limited to sale or
2
<PAGE>
distribution through retail, specialty retail, Internet, e-commerce, mail
order, multi-level marketing, mass market, or any other channel of
distribution) of vitamin and mineral supplements, sports nutrition products
or herbs, or any other product which competes with products being offered
for sale or under development by the Company or any subsidiary thereof.
"Geographic Area" shall mean (1) the United States and (2) any other
country in which the Parent, Company or any affiliate thereof owns, leases
or franchises locations, hosts web sites or otherwise conducts business; or
(ii) directly, or indirectly through any person or entity, (1)
induce or attempt to induce any employee of the Parent, Company or any
affiliate thereof (other than an employee who performs purely
ministerial functions) (a "Protected Employee") to leave the employ of
the Parent, Company or such Parent; (2) interfere in any way with the
relationship between the Parent Company or any subsidiary and any
Protected Employee; (3) hire any Protected Employee, or any person
who was a Protected Employee at any time during the Non-Competition
Period; (4) induce or attempt to induce any customer, distributor,
supplier, license, or other business relationship of the Parent,
Company or any affiliate which exists or existed at any time during
the Non-Competition Period, to cease doing business with the Parent
Company or such affiliate, or to interfere in any way with any such
business relationship.
(b) During the Non-Competition Period and thereafter, Executive shall not,
without the Parent's and Company's prior written permission or in connection
with his duties under this Agreement, use or disclose all or any part of the
following valuable, special and unique assets of Parent's or Company's business
to any person, corporation, association or other entity (but excluding
information that had become public knowledge without any action by, or
involvement of, Executive) for any reason whatsoever: the confidential
information and trade secrets of Parent, the Company or any affiliate thereof,
including, but not limited to, the financial and sales information,
manufacturing formulas and processes, business plans and projections, personnel
information and records, procedures, techniques, products, customers, sources of
leads and methods of obtaining new business or the methods generally of doing
and operating the respective businesses of the Parent, Company and affiliates,
trade secrets, product ideas, processes, techniques, formulas, know-how,
marketing plans and strategies. The foregoing obligations of Executive shall be
in addition to his obligations under the Confidentiality and Secrecy Agreement
between the Company and Executive, which agreement shall remain in full force
and effect as if set forth in full in this Section 7(b).
8. REMEDIES.
(a) Executive acknowledges that the restrictions contained in this
Section 7 in view of the nature of the business in which Parent or Company is
engaged, are reasonable and necessary in order to protect the legitimate
interests of the Parent or Company and that any violation of such restrictions
would result in irreparable harm to the Parent or Company. In the event of
Executive's violation of any of these restrictions, the Parent or Company shall
be entitled to seek from any court of competent jurisdiction preliminary and
permanent injunctive relief without proving actual damage
3
<PAGE>
or immediate or irreparable harm. Nothing herein shall prohibit the Parent or
Company from pursuing any other remedies legally available to the Parent or
Company for such breach or threatened breach, including the recovery of damages
from Executive.
(b) If any of the provisions of Section 7 should ever be adjudicated to
exceed the time, geographic, product or service, or other limitations permitted
by applicable law in any jurisdiction, then the affected provisions shall be
deemed reformed in such jurisdiction to the maximum time, geographic, product or
service, or other limitations permitted by applicable law.
(c) The provisions of Section 7 and this Section 8 shall survive the
expiration or termination of this Agreement.
9. INDEPENDENT CONTRACTOR. The parties to this Agreement intend that the
Executive will perform under this Agreement as an independent contractor, and
not as an employee of Parent or the Company. Consequently, during the term of
this Agreement:
(a) The Executive shall be solely responsible for the payment of all taxes
in connection with the Executive's remuneration hereunder, and neither Parent
nor the Company shall withhold taxes from his remuneration, unless required by
law; and
(b) The Executive shall not accrue or receive any benefits under any
employee benefit plan maintained by Parent or the Company attributable to his
services hereunder; provided that nothing in this Agreement shall affect any
rights to benefits Executive (and Executive's spouse and dependents) might have
under any employee benefit plans of the Company by virtue of his prior service
as an employee of the Company or its subsidiaries.
10. ENTIRE UNDERSTANDING. This Agreement, together with the
Confidentiality and Secrecy Agreement between the Company and Executive,
constitute the entire understanding between the parties relating to Executive's
services hereunder and supersedes and cancels all prior written and oral
understandings and agreements with respect to such matters. Executive
acknowledges that effective as of the date of this Agreement, his employment
agreement ("Employment Agreement") with the Company shall terminate without any
liability on the part of the Company thereunder, including any liability
described in Article 5 thereof; provided, however, that nothing in this
Agreement shall relieve the Company from its obligations to Executive under the
existing Employment Agreement with respect to the compensation earned by
Executive during the period prior to the date of resignation pursuant to Section
4 above. In the event neither the closing of the Offer nor the Merger
contemplated by the Merger Agreement occur, then this Agreement shall be of no
force or effect and the Employment Agreement shall be deemed to have remained in
full force and effect notwithstanding the provisions of this Agreement. Any
amendment of this Agreement shall be effective only to the extent that it is in
writing, executed by Parent, the Company and Executive.
11. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of (a) Executive's executors, administrators, legal representatives,
heirs and legatees and (b) Parent and successors and assigns.
4
<PAGE>
12. WAIVER. The waiver by any party hereto of a breach of any provision
of this Agreement by any other party shall not operate or be construed as a
waiver of any subsequent breach.
13. GOVERNING LAW. This Agreement shall be governed by, and interpreted,
construed and enforced in accordance with, the laws of the State of Florida.
14. HEADINGS. The headings of the sections of this Agreement are for
reference purposes only and do not define or limit, and shall not be used to
interpret or construe, the contents of this Agreement.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, which shall together constitute a valid and binding agreement.
PARENT
By: /s/ Julitte van der Ven /s/ Christian A. Nast
------------------------- -------------------------
EXECUTIVE SIGNATURE
Its: Attorney-in-Fact
--------------------- Christian A. Nast
-------------------------
PRINT NAME
COMPANY ADDRESS
By: /s/ Damon DeSantis 2917 S. Ocean Blvd.
---------------------- -------------------------
Its: CEO Highland Beach, FL 33487
--------------------- -------------------------
5
<PAGE>
April 30, 2000
Mr. Damon DeSantis
President and Chief Executive Officer
Rexall Sundown, Inc.
6111 Broken Sound Parkway, N.W.
Boca Raton, Florida 33487
Dear Damon:
This will confirm our agreement as to certain matters affecting the
executive officers and employees of Rexall Sundown, Inc. and its subsidiaries
(collectively, "Company" and, after the Merger, the "Surviving Corporation") on
or after the Merger contemplated by the Agreement and Plan of Merger, dated as
of the date hereof, by and among Royal Numico N.V. ("Parent"), Nutricia
Investment Corp. and Rexall Sundown, Inc. (the "Merger Agreement"). Capitalized
terms not defined herein shall have the meaning ascribed to them in the Merger
Agreement. This letter (the "Benefits Letter") is the letter described in
Section 5.5 of the Merger Agreement.
I. COMPANY BENEFIT PLANS
A. Parent shall cause the Surviving Corporation to assume and honor in
accordance with their terms all Company Benefit Plans listed on
Schedule 3.1(l)(i) of the Company Disclosure Schedule, subject to any
modifications or amendments contemplated by the Merger Agreement or in Paragraph
I.B. of this letter. Notwithstanding the foregoing, except as expressly
provided in the Agreement or Paragraph I.B. of this letter, no provision
hereunder shall be construed to in any way limit or restrict the ability of
Parent or the Surviving Corporation following the Effective Time to modify,
amend or terminate any Company Benefit Plan in accordance with the terms of such
Company Benefit Plan. No provision hereunder shall be construed to limit or
restrict the ability of Parent or the Surviving Corporation to terminate the
employment of any officer or employee of Company.
B. For the period commencing on the Effective Date and ending no earlier
than the current plan year of the respective plan, Parent shall, or shall cause
the Surviving Corporation, to provide employee pension benefit plan and welfare
plan benefits to employees of the Surviving Corporation and its subsidiaries
that, when taken as a whole, are not less favorable in the aggregate than such
respective benefits provided to such employees immediately prior to the
Effective Time; provided, however that nothing herein shall restrict or limit
the liability of parent or the Surviving Corporation to alter such benefits
where such alternation has been made with the prior written consent of Damon
DeSantis.
<PAGE>
II. PAYMENTS UNDER COMPANY MANAGEMENT INCENTIVE PLAN AND COMPANY EQUITY PLANS
A. Parent confirms that for the period ending August 31, 2000, each
participant under any Company annual incentive plan, program or arrangement,
including, without limitation, the Company's Management Incentive Plan (the
"Existing Bonus Plans") in effect immediately prior to the Effective Time, under
which the bonus payable thereunder is based upon the achievement of annual
Company and/or individual performance objectives, shall be paid after August 31,
2000, in accordance with such Plans.
B. Parent shall cause the Surviving Corporation to make the payments to
holders of Company Stock Options contemplated by Section 5.11 of the Merger
Agreement. The Company confirms that as of the date hereof, the Company Equity
Plans have been amended as contemplated by the Merger Agreement.
III. ANNUAL INCENTIVE PLAN
Parent confirms that it maintains (or causes its subsidiaries to maintain)
an annual bonus plan for eligible senior officers. The specifics of these the
bonus programs are determined by Parent on the basis of a variety of factors
applicable to the particular officer and our goal in this regard is to provide
the opportunity to earn performance-based incentive compensation that is
appropriate in light of the circumstances. Parent confirms to you that Parent
will, or will cause the Surviving Corporation to, establish an incentive program
for the Level I and Level II officers identified on Appendix C similar to that
offered to senior executives elsewhere in Parent's organization. A general
description of this program is set forth on Appendix A hereto. Parent confirms
that the Surviving Corporation may establish annual incentive bonus programs for
officers and key employees below Levels I and II as described on Appendix A.
Parent confirms that these bonus programs will be established effective
September 1, 2000 and provide for a PRO RATA payout for 2000 with respect to the
period from September 1, 2000 through December 31, 2000.
IV. EXECUTIVE EMPLOYMENT AND CONSULTING AGREEMENTS
Parent confirms that it will comply and/or will cause the Surviving
Corporation to comply with the Employment Agreements and Consulting Agreements
of even date herewith entered into by Parent, the Company and the senior
officers of Company listed on Appendix B hereof.
V. PARENT EQUITY INCENTIVE PROGRAMS
Parent agrees to establish or cause the Surviving Corporation to establish
the Parent Management Stock Purchase Plan and Parent Stock Option Program as
described on Appendices C and D, respectively.
2
<PAGE>
VI. FURTHER ASSURANCES; ABILITY TO AMEND PLANS
Parent and Company shall use all reasonable efforts and will cause their
respective subsidiaries to use all reasonable efforts to amend plans and take
such other actions contemplated by this letter and the Merger Agreement. Except
as otherwise provided in this letter, the power of Parent or any of its
subsidiaries to amend or terminate any plan or program after the Effective Time,
shall not be altered by this letter.
VII. COUNTERPARTS
This Benefits Letter may be executed in one or more counterparts, which
shall together constitute a valid and binding agreement.
Please confirm your agreement with the foregoing by signing and returning
to me the enclosed copy of this letter.
Very truly yours,
ROYAL NUMICO N.V.
By: /s/ Julitte van der Ven
-------------------------------
Its: Attorney-in-Fact
------------------------------
ACCEPTED AND AGREED TO this
30th day of April, 2000.
REXALL SUNDOWN, INC.
By: /s/ Damon DeSantis
----------------------
Its: CEO
---------------------
3
<PAGE>
APPENDIX A TO BENEFITS LETTER
INCENTIVE PLANS
PARENT ANNUAL INCENTIVE PLAN APPLICABLE TO LEVEL I AND II
Annual performance bonus opportunity range equal to 40% to 140% of annual
base salary.
Performance criteria to include year-to-year increase in sales, increase in
operating profit (after provision for bonuses) and reductions in working
capital.
Annual performance goals to be developed by CEO of Company and approved by
Saturn.
Bonus for 2000 to be pro-rated for four months, based on four- month
performance.
COMPANY ANNUAL INCENTIVE PLAN: LEVELS III AND IV
Annual performance bonus opportunity 35% of annual base salary, for
Level III; annual performance bonus opportunity ranges of 25% to 35% of annual
base salary for Level IV.
Performance targets to be set by CEO of Company.
A-1
<PAGE>
APPENDIX B TO BENEFITS LETTER
PARTIES TO EMPLOYMENT AGREEMENTS
DeSantis, Damon
Cotton, Geary
Frabitore, Steve
Goudis, Richard
Holly, Gerald
Werber, Richard
Schofield, David
Richerson, Timothy
Desimone, John
Michols, J. Kelly
DeSantis, Debbie
Alsina, Jose
Trinker, Deborah
Kronrad, David
Settler, Andy
Todd, Michael (Stu)
Thompson, Keith N.
PARTIES TO CONSULTING AGREEMENTS
DeSantis, Carl
Nast, Christian
Palin, Nickolas
B-1
<PAGE>
APPENDIX C
Summary of Principal Terms
NUMICO/REXALL SHOWCASE MANAGEMENT STOCK PURCHASE PLAN
The opportunity to purchase shares of Numico under the new management stock
purchase plan would be subject to the terms and conditions described below. The
new management stock purchase plan is not intended to qualify as an "employee
stock purchase plan" under Section 423 of the U.S. Internal Revenue Code.
ELIGIBLE EMPLOYEES Officers and key employees of the Company (and its
subsidiaries) specified on the attached schedule.
PURCHASE PRICE The purchase price per share will be equal to the
average closing share price for the 15 trading
days preceding the closing date of the Merger
contemplated by the Merger Agreement. Such
purchase price will be expressed in U.S. dollars
based on the U.S. dollars-to-Euro exchange rate as
of the last day of such 15-trading day period.
EMPLOYEE PURCHASE OF The opportunity to purchase shares will be
SHARES extended to the eligible employees as promptly as
practicable after the Closing Date. Those
electing to participate will be required to pay
for such shares no earlier than the date on which
the Non-Compete Payment is paid by the Company
pursuant to the Employment Agreements. The
maximum value of shares purchased will be as
follows:
<TABLE>
<CAPTION>
Participant Maximum Value
----------- -------------
<S> <C>
Level I 200% of base salary
Level II 100% of base salary
</TABLE>
MATCHING LOAN For each share purchased, the Company will make a
loan in U.S. dollars to finance the participant's
purchase of up to 2 additional shares. The
Company will retain a security interest in all the
initial purchased shares and any additional
purchased shares. The loan will be due 36 full
months after the Closing Date (the "Maturity
Date"). The interest on the loan will be at the
appropriate applicable federal rate at the time of
the loan, payable at the Maturity Date.
TIME-VESTING 50% of the loan (including interest thereon) will
be forgiven upon completion of continuous
employment with the Company (or its subsidiaries)
from the Closing Date until the
C-1
<PAGE>
Maturity Date. If the participant incurs an
Involuntary Termination Without Cause prior to the
loan forgiveness date, 1/3 of the loan will be
forgiven for each full year of employment with the
Company (or its subsidiaries) following the
Closing Date. An "Involuntary Termination Without
Cause" means a termination of employment by the
Company and its subsidiaries (including a
termination by reason of death or disability) for
reasons other than continuing misconduct, a
continuing failure to substantially perform
assigned duties, or other material violation of
Company policy as applied in a manner consistent
with past practices of the Company prior to the
Effective Time, in each case after notice and a
reasonable opportunity to cure such action shall
have been provided to the employee.
PERFORMANCE-VESTING 50% of the loan (including interest thereon) will
be forgiven as of the Maturity Date if the Company
has attained its cumulative "Operating EBITA" goal
as determined under Dutch GAAP for such period,
which goal shall reflect a 15% annual increase in
Operating EBITA during the three-year period from
a starting base equal to the Company's Operating
EBITA for the twelve months ended June 30, 2000,
as determined by Numico and the CEO of the Company
based on the models presented to Numico prior to
the date of the Merger Agreement. If a
participant is involuntarily terminated without
Cause prior to the Maturity Date, 1/3 of the loan
(including interest thereon) will be forgiven for
each annual Operating EBITA goal attained during
such period.
SHARE ACCOUNTS All shares purchased under this plan will be held
in an account by Numico until the Maturity Date
or, if earlier, the date of termination of
employment. Participants will have voting (if
any), dividend and any other shareholder rights
with respect to such shares during such period.
Immediately after the Maturity Date, shares held
in such account will be delivered to participants
(or their nominees) and may be freely sold or
transferred.
SECURITIES LAWS If the purchase of shares of Numico under this
plan by eligible employees of the Company (or its
subsidiaries) is not permissible by reason of the
application of U.S. securities laws or compliance
with such laws or other applicable laws would be
unduly burdensome, such employees will be granted
substitute awards substantially equivalent to the
economic benefit under this plan.
C-2
<PAGE>
MISCELLANEOUS In addition to any limitations on transfer or sale
described above or upon the lifting of such
limitations, the sale of shares of Numico acquired
under this plan will be subject to applicable law
and the policies of Numico generally applicable to
holders of shares of Numico. For purposes of this
plan, "shares" shall mean the depositary receipts
exchangeable into ordinary shares on a restricted
scale which are directly traded on the Amsterdam
Stock Exchange, or to the extent established,
American Depositary Shares representing such
depositary receipts.
C-3
<PAGE>
APPENDIX D
Summary of Principal Terms
NUMICO/REXALL SHOWCASE STOCK OPTION PROGRAM
VIII. NUMBER OF OPTIONS
Options to purchase 400,000 shares of Numico will be available for grant to
key employees of the Company (and its subsidiaries) immediately following the
Closing Date. Additional options to purchase at least 200,000 shares of Numico
will be available for grant annually following the first, second and third
anniversaries of the Closing Date.
2. TERMS OF OPTION
The options granted under the new stock option plan will be on the terms
and conditions provided below.
ELIGIBLE EMPLOYEES Employees of the Company (including its subsidiaries).
GRANTS Option grants as determined by CEO of the Company and
approved by the Supervisory Board of Numico. With regard
to the initial grants of options to purchase 400,000
ordinary shares of Numico as soon as practicable
following Closing.
TYPE OF OPTIONS Nonqualified options to purchase ordinary shares of
Numico.
EXERCISE PRICE Initial grants of options to purchase 400,000 ordinary
shares of Numico as soon as practicable following Closing
Date have an exercise price equal to the average closing
share price for the 15 trading days preceding the Closing
Date. Subsequent grants of options shall have an
exercise price equal to the fair market value of an
ordinary share of Numico on the date of grant. The
exercise price will be expressed in Euros. Initial
grants fully vest upon completion of 3 years of
employment with the Company (or its subsidiaries)
following the Closing Date. Subsequent grants fully vest
upon completion of 3 years of employment following the
date of grant. If option holder incurs an Involuntary
Termination Without Cause prior to the vesting date, 1/3
of such option will be exercisable on the date of such
termination for each full year of employment with the
Company (or its subsidiaries) following the date of
grant. An "Involuntary Termination Without Cause" means
a termination of employment by the Company and its
subsidiaries (including a termination by reason of death
or disability) for reasons other than continuing
misconduct, continuing failure to substantially perform
assigned duties, or other material violation of
D-1
<PAGE>
Company policy as applied in a manner consistent with
past practices of the Company prior to the Effective
Time, in each case after notice and a reasonable
opportunity to cure such action shall have been provided
to the employee.
OPTION TERM Options expire after 5 years.
SECURITIES LAW If option grants to purchase ordinary shares of Numico to
eligible employees of the Company (or its subsidiaries)
are not permissible by reason of the application of U.S.
securities laws or compliance with such laws or other
applicable laws would be unduly burdensome, such
employees will be granted substitute cash awards
substantially equivalent to such option grants.
MISCELLANEOUS Exercise of options and the sale of shares of Numico
acquired upon exercise of options will be subject to
applicable law and the policies of Numico generally
applicable to its world-wide option holders to purchase
shares of Numico.
For purposes of this program, "shares" shall mean the
depositary receipts exchangeable into ordinary shares on
a restricted scale which are directly traded on the
Amsterdam Stock Exchange, or to the extent established,
American Depositary Shares representing such depositary
receipts.
D-2
<PAGE>
Exhibit (d)(12)
[REXALL LOGO] 6111 Broken Sound Parkway NW
Boca Raton, FL 88487
(662) 341-8400
Fax (561) 999-4716
- -------------------------------------------------------------------------------
March 22, 2000
VIA FACSIMILE
Koninklijke (Royal) Numico N.V.
P.O. Box 1
2700 MA Zoetermeer
The Netherlands
Attn: Johannes C.T. van der Wielen
President and Chief Executive Officer
CONFIDENTIALITY AGREEMENT
Dear Hans:
In connection with your possible interest in the purchase of all of the
outstanding shares for cash (the "Transaction") of Rexall Sundown, Inc. (the
"Company"), you have requested that we or our representatives furnish you or
your representatives with certain information relating to the Company or the
Transaction. All such information (whether written or oral) furnished
(whether before or after the date hereof) by us or our directors, officers,
employees, affiliates, representatives (including, without limitation,
financial advisors, attorneys and accountants) or agents (collectively, "our
Representatives") to you or your directors, officers, employees, affiliates,
representatives (including, without limitation, financial advisors, attorneys
and accountants) or agents or your potential sources of financing for the
Transaction (collectively, "your Representatives") and all analyses,
compilations, forecasts, studies or other documents prepared by you or your
Representatives in connection with your or their review of, or your interest
in, the Transaction which contain or reflect any such information is
hereinafter referred to as the "Information". The term Information will not,
however, include information which (i) is or becomes publicly available other
than as a result of a disclosure by you or your Representatives or (ii) is or
becomes available to you on a nonconfidential basis from a source
<PAGE>
Koninklijke (Royal) Numico N.V.
March 22, 2000
Page 2
(other than us or our Representatives) which, to the best of your knowledge,
is not prohibited from disclosing such information to you by a legal,
contractual or fiduciary obligation to us.
Accordingly, you hereby agree that:
1. You and your Representatives (i) will keep the Information confidential
and will not (except as required by applicable law, regulation or legal
process, and only after compliance with paragraph 3 below), without our
prior written consent, disclose any Information in any manner whatsoever,
and (ii) will not use any Information other than in connection with the
Transaction; PROVIDED, HOWEVER, that you may reveal the Information to
your Representatives (a) who need to know the Information for the purpose
of evaluating the Transaction, (b) who are informed by you of the
confidential nature of the Information and (c) who agree to act in
accordance with the terms of this letter agreement. You will cause your
Representatives to observe the terms of this letter agreement, and you
will be responsible for any breach of this letter agreement by any of your
Representatives.
2. You and your Representatives will not (except as required by applicable
law, regulation or legal process, and only after compliance with
paragraph 3 below), without our prior written consent, disclose to any
person the fact that the Information exists or has been made available,
that you are considering the Transaction or any other transaction
involving the Company, or that discussions or negotiations are taking or
have taken place concerning the Transaction or involving the Company or
any term, condition or other fact relating to the Transaction or such
discussions or negotiations, including, without limitation, the status
thereof.
3. In the event that you or any of your Representatives are requested
pursuant to, or required by, applicable law, regulation or legal process
to disclose any of the Information, you will notify us promptly so that
we may seek a protective order or other appropriate remedy or, in our sole
discretion, waive compliance with the terms of this letter agreement. In
the event that no such protective order or other remedy is obtained, or
that the Company does not waive compliance with the terms of this letter
agreement, you will furnish only that portion of the Information which you
are advised by counsel is legally required and will exercise all
reasonable efforts to obtain reliable assurance, where permitted by law,
that confidential treatment will be accorded the Information.
4. If you determine not to proceed with the Transaction, you will promptly
inform the Company or Morgan Stanley & Co. Incorporated ("Morgan
Stanley") of that decision and in that case, and at any time upon the
request of the Company or any of our Representatives, you will promptly
deliver to the Company at your own expense all copies of the written
Information in your or your Representatives' possession; PROVIDED,
HOWEVER, all analyses, compilations, forecasts, studies or other documents
prepared by you or your Representatives shall, in lieu of being returned,
be destroyed, and such
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Koninklijke (Royal) Numico N.V.
March 22, 2000
Page 3
destruction shall be certified to the Company. Any oral Information will
continue to be subject to the terms of this letter agreement.
5. You acknowledge that none of us, Morgan Stanley or its affiliates, our
other Representatives, or any of our or their respective officers,
directors, employees, agents or controlling persons within the meaning
of Section 20 of the Securities Exchange Act of 1934, as amended, makes
any express or implied representation or warranty as to the accuracy or
completeness of the Information, and you agree that no such person will
have any liability relating to the Information or for any errors therein
or omissions therefrom. You further agree that you are not entitled to
rely on the accuracy or completeness of the Information and that you will
be entitled to rely solely on such representations and warranties as may
be included in any definitive agreement with respect to the Transaction,
subject to such limitations and restrictions as may be contained therein.
6. You are aware, and you will advise your Representatives who are informed
of the matters that are the subject of this letter agreement, of the
restrictions imposed by the United States securities laws on the
purchase or sale of securities by any person who has received material,
non-public information from the issuer of such securities and on the
communication of such information to any other person when it is
reasonably foreseeable that such other person is likely to purchase or
sell such securities in reliance upon such information.
7. You agree that, for a period of eighteen (18) months from the date of
this letter agreement, neither you nor any of your affiliates will,
without the prior written consent of the Company or its Board of
Directors: (i) acquire, offer to acquire, or agree to acquire, directly
or indirectly, by purchase or otherwise, any voting securities or direct
or indirect rights to acquire any voting securities of the Company or
any subsidiary thereof, or of any successor to or person in control of
the Company, or any material assets of the Company or any subsidiary or
division thereof or of any such successor or controlling person; (ii)
make, or in any way participate in, directly or indirectly, any
"solicitation" of "proxies" (as such terms are used in the rules of the
Securities Exchange Commission) to vote, or seek to advise or influence
any person or entity with respect to the voting of, any voting
securities of the Company; (iii) make any public announcement with
respect to, or submit a proposal for, or offer of (with or without
conditions) any extraordinary transaction involving the Company or its
securities or assets; (iv) form, join or in any way participate in a
"group" (as defined in Section 13 (d)(3) of the Securities Exchange Act
of 1934, as amended) in connection with any of the foregoing; or (v)
publicly request the Company or any of our Representatives, directly or
indirectly, to amend or waive any provision of this paragraph; PROVIDED,
HOWEVER, that the obligations set forth in this paragraph and in
paragraph 2 of this Agreement shall terminate immediately upon the
Company entering into or announcing a definitive agreement with a third
party providing that (a) a merger pursuant to which the Company would
cease to be a publicly-held company, (b) the acquisition of more than
fifty percent (50%) of the common stock of the
<PAGE>
Koninklijke (Royal) Numico N.V.
March 22, 2000
Page 4
Company, or (c) a sale of all or substantially all of the assets of the
Company. You will promptly advise the Company of any inquiry or proposal
made to you with respect to any of the foregoing.
8. You agree that, for a period of two (2) years from the date of this
letter agreement, you will not, directly or indirectly, solicit for
employment or hire any executive employee of the Company or any of its
subsidiaries; PROVIDED, HOWEVER, that the foregoing provision will not
prevent you from employing any such person who contacts you on his or her
own initiative without any direct or indirect solicitation by or
encouragement from you.
9. You acknowledge and agree that (a) we and our Representatives are free
to conduct the process leading up to a possible Transaction as we and
our Representatives, in our sole discretion, determine (including,
without limitation, by negotiating with any prospective buyer and
entering into a preliminary or definitive agreement without prior notice
to you or any other person), (b) we reserve the right, in our sole
discretion, to change the procedures relating to our consideration of
the Transaction at any time without prior notice to you or any other
person, to reject any and all proposals made by you or any of your
Representatives with regard to the Transaction, and to terminate
discussions and negotiations with you at any time and for any reason,
and (c) unless and until a written definitive agreement concerning the
Transaction has been executed, neither we nor any of our Representatives
will have any liability to you with respect to the Transaction, whether
by virtue of this letter agreement, any other written or oral expression
with respect to the Transaction or otherwise; PROVIDED, HOWEVER, if we
decide not to proceed with the Transaction we will promptly inform you
of that decision.
10. You acknowledge that remedies at law may be inadequate to protect us
against any actual or threatened breach of this letter agreement by you
or by your Representatives, and, without prejudice to any other rights
and remedies otherwise available to us, you agree the Company may seek
the granting of injunctive relief in our favor without proof of actual
damages. In the event of litigation relating to this letter agreement,
if a court of competent jurisdiction determines in a final,
nonappealable order that this letter agreement has been breached by you
or by your Representatives, then you will reimburse the Company for its
costs and expenses (including, without limitation, legal fees and
expenses) incurred in connection with all such litigation; provided,
however, if a court of competent jurisdiction determines in a final
nonappealable order that this letter agreement has not been breached by
you or by your Representatives, then we will reimburse you for your costs
and expenses (including, without limitation, legal fees and expenses)
incurred in connection with all such litigation.
11. You agree that no failure or delay by us in exercising any right, power or
privilege hereunder will operate as a waiver thereof, nor will any single
or partial exercise thereof
<PAGE>
Koninklijke (Royal) Numico N.V.
March 22, 2000
Page 5
preclude any other or further exercise thereof or the exercise of any
right, power or privilege hereunder.
12. This letter agreement will be governed by and construed in accordance
with the laws of the State of Florida applicable to contracts between
residents of that State and executed in and to be performed in that
State.
13. This letter agreement contains the entire agreement between you and us
concerning the confidentiality of the Information, and no modifications
of this letter agreement or waiver of the terms and conditions hereof will
be binding upon you or us, unless approved in writing by each of you and
us.
14. This Agreement shall terminate and have no further effect upon the fifth
anniversary hereof.
Please confirm your agreement with the foregoing by signing and returning to
the undersigned the duplicate copy of this letter enclosed herewith.
Very truly yours,
REXALL SUNDOWN, INC.
By: /s/ Geary Cotton
------------------------------
Name: Geary Cotton
Title: Chief Financial Officer
Accepted and Agreed as of the date
first written above:
KONINKLIJKE (ROYAL) NUMICO N.V.
By: /s/ J.C.T. van der Wielen
----------------------------
Name: J.C.T. van der Wielen
--------------------------
Title: President and CEO
-------------------------
