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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
UNDER SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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REXALL SUNDOWN, INC.
(Name of Subject Company)
REXALL SUNDOWN, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
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761648104
(CUSIP Number of Class of Securities)
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RICHARD WERBER, ESQ.
VICE PRESIDENT AND GENERAL COUNSEL
REXALL SUNDOWN, INC.
6111 BROKEN SOUND PARKWAY, NW
BOCA RATON, FLORIDA 33487
(561) 241-9400
(Name, Address and Telephone Number of Person
Authorized to Receive Notice and Communications
on Behalf of the Person(s) Filing Statement)
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WITH A COPY TO:
PAUL BERKOWITZ, ESQ.
GREENBERG TRAURIG, P.A.
1221 BRICKELL AVENUE
MIAMI, FLORIDA 33131
(305) 579-0500
/ / Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
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INTRODUCTION
This Solicitation/Recommendation Statement on Schedule 14D-9 (this
"Schedule 14D-9") relates to an offer by Nutricia Investment Corp., a Florida
corporation (the "Purchaser") and an indirect wholly owned subsidiary of
Koninklijke Numico N.V., ("Numico"), to purchase all of the outstanding shares
of Common Stock (as defined below) of Rexall Sundown, Inc., a Florida
corporation (the "Company").
ITEM 1. SUBJECT COMPANY INFORMATION.
The name of the subject company is Rexall Sundown, Inc., its principal
executive offices are located at 6111 Broken Sound Parkway, NW, Boca Raton,
Florida 33487 and its phone number is (561) 241-9400. This Schedule 14D-9
relates to the Company's common stock, par value $0.01 per share (the "Common
Stock"). As of April 28, 2000, there were 64,063,856 shares of Common Stock
outstanding.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON.
(a) NAME AND ADDRESS. The name, business address and business telephone
number of the Company, which is the person filing this statement, are set forth
in Item 1 above, which information is incorporated herein by reference.
(b) TENDER OFFER. This Schedule 14D-9 relates to the tender offer made by
the Purchaser, disclosed in a Tender Offer Statement on Schedule TO dated May 5,
2000 (as amended or supplemented from time to time, the "Schedule TO"), to
purchase all the outstanding shares of Common Stock at a price (the "Offer
Price") of $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 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"), copies of
which are filed as Exhibits (a)(1) and (a)(2) hereto, respectively, and
incorporated herein by reference.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of April 30, 2000, among the Company, Numico and the Purchaser (the "Merger
Agreement"), which provides for (i) the making of the Offer by the Purchaser,
subject to the conditions set forth in the Offer and to the conditions and upon
the terms of the Merger Agreement and (ii) the subsequent merger of the
Purchaser with and into the Company (the "Merger"). In the Merger, each share of
Common Stock outstanding at the Effective Time (as defined in the Merger
Agreement) (other than shares of Common Stock held by the Company, Numico or the
Purchaser or shares held by dissenting shareholders under Florida law) will, by
virtue of the Merger and without any action by the holder thereof, be converted
into the right to receive, without interest, an amount in cash equal to $24.00
per share or such greater amount paid pursuant to the Offer (the "Merger
Consideration"). The Merger Agreement, a copy of which is filed as
Exhibit (e)(1) hereto, is summarized in Sections 1 and 11 of the Offer to
Purchase and incorporated herein by reference.
In connection with the Merger Agreement, certain directors and senior
executives of the Company as well as certain other shareholders of the Company
have entered into a Shareholder Agreement dated April 30, 2000, with Numico and
the Purchaser (the "Shareholder Agreement"), which, among other things, and
subject to certain exceptions, requires each such person to tender his/her/its
shares of Common Stock into the Offer, grants to the Purchaser an irrevocable
option to purchase such shares, and grants to Numico a proxy to vote such shares
with respect to the Merger. A copy of the Shareholder Agreement, filed as
Exhibit (e)(2) hereto, is summarized in Section 11 of the Offer to Purchase and
incorporated herein by reference.
The principal executive offices of the Purchaser are located at, 222 North
LaSalle Street, Chicago, Illinois 60601, and the principal executive offices of
Numico are located at Rokkeveenseweg 49, 2712 PJ Zoetermeer, P.O. Box 1,2700, MA
Zoetermeer, the Netherlands.
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ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
Except as set forth in the response to this Item 3 or in Annex A attached
hereto or as incorporated by reference herein, to the knowledge of the Company,
there are no material agreements, arrangements or understandings and no actual
or potential conflicts of interest between the Company or its affiliates on the
one hand and the Purchaser or its affiliates or the Company's executive
officers, directors or affiliates on the other hand.
A summary of the material provisions of the Merger Agreement is included in
Sections 1 and 11 of the Offer to Purchase, which is incorporated by reference
herein. The summary of the Merger Agreement in the Offer to Purchase is
qualified in its entirety by reference to the Merger Agreement.
Certain contracts, arrangements or understandings between the Company or its
affiliates and certain of the Company's directors, executive officers and
affiliates are described in the Information Statement of the Company attached to
this Schedule 14D-9 as Annex A (the "Information Statement"). The Information
Statement is being furnished to the Company's shareholders pursuant to
Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and Rule 14f-1 issued under the Exchange Act in connection with
Purchaser's right (after acquiring a majority of the Common Stock pursuant to
the Offer) to designate persons to the Board of Directors of the Company (the
"Purchaser Board") other than at a meeting of the shareholders of the Company.
The Information Statement is incorporated by reference.
In connection with the Merger Agreement, a number of officers of the Company
have entered into new employment and consulting agreements with the Company and
Numico (collectively, the "New Employment Agreements and Consulting
Agreements"). In addition, Numico and the Company have agreed to certain actions
with respect to employee benefits pursuant to a letter agreement (the "Benefits
Letter"). In addition, as noted above, certain directors, senior executives and
certain shareholders owning in the aggregate a majority of the Company's
outstanding Common Stock, have entered into the Shareholder Agreement. Under the
Shareholder Agreement, these persons have agreed to tender their shares of
Common Stock into the Offer, have granted the Purchaser an option (the "Option")
to purchase their shares of Common Stock at a price of $24.00 per share
(provided that, in the event the consideration per share of Common Stock 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 of Common Stock purchased pursuant to the Option 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 (as defined in the Merger
Agreement) 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), have agreed to vote in favor of the Merger and
have granted the Purchaser a proxy in respect of such shares. For a description
of these and certain other contracts, agreements, arrangements or understandings
and any actual or potential conflicts of interests between the Company or its
affiliates and (1) the Company's executive officers, directors or affiliates, or
(2) Purchaser or its respective executive officers, directors or affiliates, see
Sections 1 and 11 of the Offer to Purchase, which is incorporated by reference
herein.
In addition, the Board of Directors of the Company (the "Board") amended the
director and officer indemnification provisions of the Company's Bylaws as set
forth in Schedule 5.7 of the Merger Agreement which is incorporated herein by
reference. Such amendment provides that the Company (and any successor to the
Company by merger or otherwise) will indemnify each officer and director of the
Company (including the heirs, personal representatives, executors,
administrators and estate of such person) against all liability (including
judgments, settlements, penalties and fines) and costs, charges,
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and expenses (including attorneys' fees) asserted against such officer or
director by reason of the fact that such person is or was a director or an
officer of the Company (each an "Indemnified Person").
The amendment also provides that costs, charges and expenses (including
attorneys' fees) incurred by an Indemnified Person in defending an indemnifiable
claim may, and in connection with a transaction involving a Change in Control
(as defined below) 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
such claim, 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 be indemnified by the Company as
authorized in the bylaws. "Change in Control" means a merger, sale of all or
substantially all of the assets, or acquisition of more than 40% of the voting
stock of the Company, by a tender offer, stock purchase or otherwise, including
the Offer and the Merger.
Numico and the Purchaser have agreed in the Merger Agreement to keep the
indemnification provisions of the bylaws of the Company in effect for no less
than six years and to not amend such provisions in a manner adverse to any
person who was an officer or director of the Company on the date of the Merger
Agreement.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) SOLICITATION RECOMMENDATION.
At a meeting held on April 28, 2000, the Board unanimously (i) approved the
Merger Agreement, the Shareholder Agreement, the New Employment Agreements and
Consulting Agreements, the Offer and the Merger, (ii) determined that the Offer
and the Merger are fair to, and in the best interests of, holders of shares of
Common Stock and (iii) voted to recommend that holders of shares of Common Stock
tender their shares of Common Stock pursuant to the Offer. Accordingly, the
Board unanimously recommends that the shareholders of the Company tender their
shares of Common Stock pursuant to the Offer. Copies of a letter to the
shareholders of the Company communicating the Board's recommendation and the
Company's press release announcing the Merger Agreement and the transactions
contemplated thereby are filed as Exhibits (a)(3) and (a)(4) hereto,
respectively, and are incorporated herein by reference.
(b)(i) BACKGROUND OF THE OFFER.
From time to time, the Company has been the subject of informal inquiries
regarding a possible acquisition or other business combination transaction.
Although most of such inquiries did not proceed beyond very preliminary stages,
in June 1999, the Company was approached by a pharmaceutical company (the
"Pharmaceutical Company") regarding a possible strategic alliance or business
combination transaction. On July 8, 1999, representatives of the Pharmaceutical
Company attended meetings at the Company's headquarters at which preliminary
discussions were conducted. Based upon these meetings, the Pharmaceutical
Company indicated its desire to explore the acquisition of the entire Company
and the Company indicated that it would consider such a transaction. As a
result, on that date, the Pharmaceutical Company and the Company executed a
confidentiality agreement. The Company also engaged Morgan Stanley & Co.
Incorporated ("Morgan Stanley") to act as its financial advisor in connection
with any sale of the Company. This engagement was later formalized by a letter
executed on August 12, 1999 (the "Morgan Stanley Engagement Letter").
Over the following days, information exchanges took place and on July 28,
1999 representatives of the Pharmaceutical Company and members of the Company's
senior management held a meeting in Florida to discuss a potential acquisition
transaction and at which meeting additional information regarding the Company
was provided. In early August 1999, Mr. Damon DeSantis, the Company's President
and Chief Executive Officer, and Mr. Christian Nast, the Company's Vice
Chairman, met with representatives of the Pharmaceutical Company who provided an
indication of value for the
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Company in a range of $15.00 to $18.00 per share and, although the Company
indicated such price range would be inadequate, discussions regarding a
transaction continued; however, later in August, the Pharmaceutical Company
telephonically informed the Company that, based upon its additional review, it
had reservations regarding the strategic rationale for an acquisition of the
Company by the Pharmaceutical Company. As a result, the discussions with the
Pharmaceutical Company were mutually terminated.
Subsequent to the termination of discussions with the Pharmaceutical
Company, the Company received a number of unrelated inquiries regarding
strategic relationships or other business combination transactions. With the
exception of Numico's, none of these inquiries progressed to a serious
exploration of any such transaction.
At a meeting held on the morning of April 26, 2000, in Boca Raton, Florida,
the Board met to consider the terms of the proposed acquisition of the Company
by Numico. At such meeting, the Board reviewed and discussed the latest terms of
the proposed acquisition and the applicable agreements and heard presentations
from and asked questions of its management and its financial and legal advisors.
The Board met again on April 28, 2000, at which time the Company's financial
and legal advisors described the final terms of the proposed acquisition and the
applicable agreements and Morgan Stanley delivered its opinion, dated April 28,
2000, that, as of such date, and based on and subject to the matters set forth
in its opinion, the consideration to be received pursuant to the Merger
Agreement by the Company's shareholders was fair, from a financial point of
view, to such shareholders. At such meeting, the Board 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 voted to recommend to holders of Shares that they tender their
Shares pursuant to the Offer and adopt the Merger Agreement. The Board also
approved the Shareholder Agreement and the New Employment Agreements and
Consulting Agreements.
For additional information regarding the background of the Offer, See
Section 10 of the Offer to Purchase which is incorporated herein by reference.
(ii) REASONS.
In making the determinations and recommendations set forth in subparagraph
(a) above, the Board considered a number of factors, including, without
limitation, the following:
(1) the amount and form of consideration to be received by the Company's
shareholders in the Offer and the Merger;
(2) the historical market prices, price to earnings ratios, earnings
before interest, taxes, depreciation and amortization (EBITDA) and other
multiples, recent trading activity and trading range of the Common Stock,
including the fact that the Offer Price represents a premium of
approximately 49% over $16.10, the average closing price of the Common Stock
for the 30 trading days ended April 21, 2000, which was considered to be a
trading period largely unaffected by rumors with respect to a transaction;
(3) the fact that the Offer and the Merger provide for a prompt cash
tender offer for all the shares of Common Stock to be followed by the Merger
for the same consideration, thereby enabling the Company's shareholders, at
the earliest possible time, to obtain the benefits of the transaction in
exchange for their shares of Common Stock;
(4) the Company's prospects if it were to remain independent, including
the risks and benefits inherent in remaining independent, including the risk
arising from the dietary supplement industry becoming increasingly
competitive and increasingly dependent on proprietary products, the
possibility of additional regulation of the dietary supplement industry and
the possibility of
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increased regulation of the Company's multi-level marketing operations
resulting in increased costs of compliance and decreased margins;
(5) the possible alternatives to the Offer and the Merger (including the
possibility of continuing to operate the Company as an independent entity)
and other potential business combination transactions, as well as past
discussions with other potential acquirers of the Company, the likelihood
that other potential acquirers would offer greater value for the Company,
the range of possible benefits to the Company's shareholders of such
alternatives and the timing and likelihood of accomplishing the goal of any
of such alternatives;
(6) information with regard to the financial condition, results of
operations, business and prospects of the Company, the regulatory approvals
required to consummate the Offer and the Merger as well as current economic
and market conditions (including current conditions in the industry in which
the Company competes);
(7) the financial analysis and presentation of Morgan Stanley to the
Board on April 26, 2000, and the oral opinion of Morgan Stanley (which
opinion was subsequently confirmed by delivery of a written opinion dated
April 28, 2000, the date the Board adopted the Merger Agreement) to the
effect that, as of such date, and based upon and subject to certain matters
stated in such opinion, the $24.00 per share cash consideration to be
received by holders of shares of Common Stock pursuant to the Merger
Agreement was fair, from a financial point of view, to such holders. The
full text of Morgan Stanley's written opinion, dated April 28, 2000, which
sets forth the assumptions made, matters considered and limitations on the
review undertaken by Morgan Stanley, is attached hereto as Exhibit (e)(3)
and is incorporated herein by reference. Morgan Stanley's opinion is
directed only to the fairness, from a financial point of view, of the cash
consideration to be received pursuant to the Merger Agreement by holders of
shares of Common Stock and is not intended to constitute, and does not
constitute, a recommendation as to whether any shareholder should tender
shares of Common Stock pursuant to the Offer. Holders of shares of Common
Stock are urged to read such opinion carefully in its entirety;
(8) the high likelihood that the proposed acquisition would be
consummated, in light of the fact that the Offer and Merger are not subject
to any financing contingencies;
(9) the terms of the Merger Agreement, including the parties'
representations, warranties and covenants and the conditions to their
respective obligations;
(10) the fact that, pursuant to the Merger Agreement, the Board has the
right, prior to the purchase of shares of Common Stock pursuant to the
Offer, to terminate the Merger Agreement in order to accept a Superior
Proposal (as defined in the Merger Agreement), if (i) the Company gives
Numico written notice of the Company's intention to accept such Superior
Proposal, (ii) Numico, within 72 hours after the receipt of such notice,
does not make an offer which 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 shareholders party to the Shareholder Agreement) as the
Superior Proposal and (iii) the Company, prior to termination, pays to
Numico a $65 million termination fee plus up to $14 million of Numico's
expenses incurred in connection with the Offer and the Merger;
(11) the belief of the Board based upon the Company's negotiations with
Numico and its investigation of Numico and other companies acquired by
Numico, that the Company would continue to operate largely intact after the
transaction is completed, that the Offer and the Merger would likely not
have an adverse effect on the Company's employees, suppliers, customers and
communities, as well as other factors permitted to be considered by Section
607.0830 of the Florida Business Corporation Act (the "FBCA"); and
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(12) the fact that holders of a majority of the outstanding shares of the
Common Stock, including members of the Board and senior management,
considered the Offer Price to be an appropriate price for such shares and
were willing to enter into the Shareholder Agreement which would require
them to tender their shares and vote in favor of the Merger.
The Board did not assign relative weights to the above factors or determine
that any factor was of particular importance. Rather, the Board viewed its
position and recommendations as being based on the totality of the information
presented to and considered by it. In addition, it is possible that different
members of the Board assigned different weights to the various factors described
above.
(c) INTENT TO TENDER.
Pursuant to the Shareholder Agreement, all of the Company's executive
officers and certain of its directors have agreed to tender their shares of
Common Stock and, to the Company's knowledge, after reasonable inquiry, the
Company's other directors and affiliates currently intend to tender all Common
Stock held of record or beneficially (other than Common Stock held directly or
indirectly by other public companies, as to which the Company has no knowledge)
by them pursuant to the Offer or to vote in favor of the Merger. The foregoing
does not include any Common Stock over which, or with respect to which, any such
executive officer, director or affiliate acts in a fiduciary or representative
capacity or is subject to the instructions of a third party with respect to such
tender.
ITEM 5. PERSON/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
Pursuant to the Morgan Stanley Engagement Letter, the Company formally
retained Morgan Stanley to act as its financial advisor in connection with a
proposed sale of the Company. The Board retained Morgan Stanley based upon
Morgan Stanley's qualifications, experience and expertise. Morgan Stanley is an
internationally recognized investment banking and advisory firm. In the ordinary
course of Morgan Stanley's trading, brokerage and financing activities, Morgan
Stanley or its affiliates may at any time hold long or short positions, and may
trade or otherwise effect transactions, for its own account or the accounts of
customers, in debt or equity securities or senior loans of the Company or
Numico. In the past, Morgan Stanley and its affiliates have provided financial
advisory services for the Company, including acting as the Company's financial
advisor in connection with the Company's acquisition of MET-Rx Nutrition, Inc.
in January 2000.
Pursuant to the Morgan Stanley Engagement Letter, the Company has agreed to
pay Morgan Stanley a transaction fee, based on the aggregate value of the
transaction, of approximately $10,750,000. No additional fee is payable in
respect of Morgan Stanley's fairness opinion.
In addition, the Company has agreed to indemnify Morgan Stanley, its
affiliates and their respective officers, directors, employees, and agents and
each other person, if any, controlling Morgan Stanley or its affiliates against
certain liabilities and expenses arising out of Morgan Stanley's engagement.
Neither the Company nor any person acting on its behalf currently intends to
employ, retain or compensate any person to make solicitations or recommendations
to shareholders on its behalf concerning the Offer.
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ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
During the past 60 days, neither the Company nor any subsidiary of the
Company nor, to the best of the Company's knowledge, any executive officer,
director, or affiliate of the Company has effected a transaction in shares of
Common Stock except as follows: (1) on March 1, 2000, the Company purchased in
an open market transaction 2,843 shares at $15.1875 per share and on April 1,
2000 purchased 2,835 shares at $15.125 per share, on behalf of participants in
the Company's Employee Stock Purchase Plan; (2) on March 20, 2000, the Company's
direct sales subsidiary, Rexall Showcase International, Inc., purchased in an
open market transaction 4,489 shares at $16.8125 per share and on April 20, 2000
purchased 2,757 shares at $17.1875 per share, on behalf of participants in the
Company's 1996 Rexall Showcase International Distributor Stock Purchase Plan;
(3) on April 26, 2000, Geary Cotton, the Company's Vice President and Chief
Financial Officer, exercised 30,000 stock options at $3.167 per share which were
due to expire; (4) on April 26, 2000, Nickolas Palin, the Company's Senior
Executive Vice President, exercised 6,000 stock options at $3.167 per share
which were due to expire; (5) on April 26, 2000, Richard Werber, the Company's
Vice President and General Counsel, exercised 15,000 stock options at $3.167 per
share which were due to expire; and (6) between February 29 and April 25, 2000,
the Company's President and Chief Executive Officer, Damon DeSantis, gave an
aggregate of 15,023 shares as bona fide gifts to charitable organizations and
other parties.
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
Other than as set forth in this Schedule 14D-9, no negotiation is being
undertaken or is underway by the Company in response to the Offer that relates
to (1) a tender offer for, or other acquisition of, the Company's securities by
the Company, any subsidiary of the Company or any other person; (2) an
extraordinary transaction, such as a merger, reorganization or liquidation,
involving the Company or any subsidiary of the Company; (3) a purchase, sale or
transfer of a material amount of assets by the Company or any subsidiary of the
Company; or (4) any material change in the present dividend rate or policy, or
indebtedness or capitalization of the Company.
Except as described above or in Item 3 of this Schedule 14D-9, there are no
transactions, Board resolutions, agreements in principle or signed contracts in
response to the Offer which relate to or would result in one or more of the
matters referred to in this Item 7.
ITEM 8. ADDITIONAL INFORMATION.
(a) FLORIDA BUSINESS CORPORATION ACT.
Under the FBCA, if the Purchaser acquires, pursuant to the Offer or
otherwise, at least 80% of the outstanding shares of Common Stock, the Purchaser
will be able to effect the Merger after consummation of the Offer without a vote
of the Company's shareholders. However, if the Purchaser does not acquire at
least 80% of the outstanding shares of Common Stock, a vote of the Company's
shareholders is required under the FBCA and a longer period of time will be
required to effect the Merger. In the event that the Purchaser effects the
Merger without a vote of the shareholders, a shareholder who shall not have
tendered (or tendered but withdrew) such shareholder's shares of Common Stock in
the Offer will have the right to exercise dissenters' rights under
Section 607.1320 of the FBCA, including the right, provided that such dissenting
shareholder shall have properly perfected such shareholder's dissenters' rights
in accordance with Section 607.1320 of the FBCA, to have the fair value of such
shareholder's shares determined by a Florida court.
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For information regarding the inapplicability to the Offer and the Merger of
certain anti-takeover provisions of the FBCA, see Section 15 of the Offer to
Purchase which is incorporated herein by reference.
(b) REGULATORY APPROVALS.
For information regarding governmental and regulatory approvals required in
order to consummate the Offer and the Merger, including pre-merger notifications
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, see
Section 15 of the Offer to Purchase which is incorporated herein by reference.
(c) INFORMATION PROVIDED PURSUANT TO RULE 14F-1 UNDER THE EXCHANGE ACT.
The Information Statement attached as Annex A to this Schedule 14D-9 is
being furnished to the Company's shareholders in connection with the designation
by the Purchaser of persons to the Board other than at a meeting of the
Company's shareholders, and such information is incorporated by reference
herein.
(d) 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 Common Stock 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 Common Stock. The Company believes the
complaint to be without basis in fact or law and intends to oppose the
litigation vigorously; however, no assurances can be given as to the outcome or
effect of the foregoing or any other possible future litigation on the Offer,
the Merger or the Company.
(e) FORWARD LOOKING STATEMENTS.
This Schedule 14D-9 may contain or incorporate by reference certain
"forward-looking statements" which represent the Company's expectations or
beliefs, including, but not limited to, statements concerning industry
performance, the Company's operations, economic performance, financial
condition, growth and acquisition strategies, margins and growth in sales of the
Company's products. For this purpose, any statements contained herein that are
not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the generality of the foregoing, words such as
"may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate"
or "continue" or the negative or other variations thereof or comparable
terminology are intended to identify forward-looking statements. These
statements by their nature involve substantial risks and uncertainties, certain
of which are beyond the Company's control, and actual results may differ
materially depending on a variety of important factors, including uncertainty
related to acquisitions, government regulation, managing and maintaining growth,
the effect of adverse publicity, litigation, reliance on independent
distributors of
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the Company's network marketing subsidiary, Rexall Showcase International, Inc.,
the centralized location of the Company's manufacturing operations, availability
of raw materials, risks associated with international operations, competition,
product liability claims, volatility of stock price and those factors described
in this and other Company filings with the SEC.
(f) OTHER MATERIAL INFORMATION.
The information contained in all of the Exhibits referred to in Item 9 below
is incorporated by reference herein.
ITEM 9. EXHIBITS.
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* (a)(1) Offer to Purchase dated May 5, 2000.
*+ (a)(2) Letter of Transmittal.
* (a)(3) Letter to Shareholders of the Company dated May 5, 2000.
+ (a)(4) Press Release of the Company dated May 1, 2000.
+ (a)(5) Form of Summary Advertisement dated May 5, 2000.
+ (e)(1) Agreement and Plan of Merger dated as of April 30, 2000.
+ (e)(2) Shareholder Agreement dated April 30, 2000.
* (e)(3) Opinion of Morgan Stanley & Co. Incorporated.
+ (e)(4) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Damon DeSantis.
+ (e)(5) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Geary Cotton.
+ (e)(6) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Richard Goudis.
+ (e)(7) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Gerald Holly.
+ (e)(8) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Richard Werber.
+ (e)(9) Consulting Agreement, dated as of April 30, 2000, among
Numico, the Company and Carl DeSantis.
+ (e)(10) Consulting Agreement, dated as of April 30, 2000, among
Numico, the Company and Nickolas Palin.
+ (e)(11) Consulting Agreement, dated as of April 30, 2000, among
Numico, the Company and Christian Nast.
+ (e)(12) Benefits Letter, dated April 30, 2000, by and between Numico
and the Company.
+ (e)(13) Confidentiality Agreement, dated March 22, 2000, by and
between Numico and the Company.
</TABLE>
- ------------------------
* Included in materials delivered to shareholders of the Company.
+ Filed as an exhibit to the Purchaser's Tender Offer Statement on Schedule TO
dated May 5, 2000, and incorporated herein by reference.
9
<PAGE>
SIGNATURE
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.
<TABLE>
<S> <C> <C>
REXALL SUNDOWN, INC.
By: /s/ DAMON DESANTIS
-----------------------------------------
Name: Damon DeSantis
Title: President and Chief Executive
Officer
May 5, 2000
</TABLE>
10
<PAGE>
ANNEX A
REXALL SUNDOWN, INC.
6111 BROKEN SOUND PARKWAY, NW
BOCA RATON, FLORIDA 33487
INFORMATION STATEMENT PURSUANT TO SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
AND RULE 14F-1 THEREUNDER
NO VOTE OR OTHER ACTION OF THE COMPANY'S SHAREHOLDERS IS REQUIRED
IN CONNECTION WITH THIS INFORMATION STATEMENT. NO PROXIES ARE BEING
SOLICITED AND YOU ARE REQUESTED NOT TO SEND A PROXY TO THE COMPANY.
This Information Statement is being mailed on or about May 5, 2000, as a
part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of Rexall Sundown, Inc. (the "Company") to the holders of
record of shares of Common Stock, par value $0.01 per share, of the Company (the
"Common Stock"). You are receiving this Information Statement in connection with
the possible election of persons designated by the Purchaser (as defined below)
to a majority of the seats on the Board of Directors of the Company (the
"Board"). Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned in the Schedule 14D-9.
The Company, Koninklijke Numico N.V. ("Numico") and Nutricia
Investment Corp. (the "Purchaser") entered into an Agreement and Plan of Merger
dated as of April 30, 2000 (the "Merger Agreement"), in accordance with the
terms and subject to the conditions of which the Purchaser commenced the Offer.
The Offer is scheduled to expire at 12:00 Midnight, New York City time, on
Friday, June 2, 2000, unless the Offer is extended.
The Merger Agreement requires the Company to cause the directors designated
by the Purchaser to be elected to the Board under the circumstances described
therein following consummation of the Offer.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1
thereunder. You are urged to read this Information Statement carefully. You are
not, however, required to take any action at this time.
The information contained in the Information Statement (including
information incorporated by reference) concerning the Purchaser and the
Purchaser Designees (as defined herein) has been furnished to the Company by the
Purchaser, and the Company assumes no responsibility for the accuracy or
completeness of such information.
GENERAL INFORMATION REGARDING THE COMPANY
The shares of Common Stock are the only class of voting securities of the
Company outstanding. As of April 28, 2000, there were 64,063,856 shares of
Common Stock outstanding. The Board currently consists of seven members. Each
share of Common Stock is entitled to one vote. The officers of the Company serve
at the discretion of the Board.
INFORMATION WITH RESPECT TO PURCHASER DESIGNEES
Pursuant to the Merger Agreement, immediately following the acceptance for
payment of, and payment for, any shares of Common Stock by the Purchaser
pursuant to and subject to the conditions (including the Minimum Condition (as
defined in the Merger Agreement), which condition may not be waived by the
Purchaser) of the Offer, the Company shall take all necessary actions to cause
such number of such persons rounded up to the nearest whole number designated by
Numico and the Purchaser to become members of the Board (the "Purchaser
Designees") as is at least equal to the
A-1
<PAGE>
product of (x) the number of directors on the Board (including the Purchaser
Designees appointed pursuant to this sentence) and (y) the percentage of
outstanding shares of Common Stock of the Company owned in the aggregate by the
Purchaser and Numico, subject to compliance with Section 14(f) of the Exchange
Act; provided, however, that prior to the Effective Time the Board shall always
have at least two directors (the "Independent Directors") who are neither
officers of the Purchaser nor designees, shareholders or affiliates of the
Purchaser or the Purchaser affiliates; and, provided further that, in such
event, if the number of Independent Directors shall be reduced below two for any
reason whatsoever, the remaining Independent Director shall be entitled to
designate a person to fill such vacancy who shall be deemed to be an Independent
Director for purposes of the Merger Agreement or, if no Independent Directors
then remain, the other directors of the Company shall designate two persons to
fill such vacancies who shall not be officers or affiliates of the Purchaser or
any of its affiliates, and such persons shall be deemed to be Independent
Directors for purposes of the Merger Agreement.
The Purchaser has informed the Company that it will choose the Purchaser
Designees from the persons listed below. The Purchaser has informed the Company
that each of the Purchaser Designees has consented to act as a director, if so
designated. Biographical information concerning each of the Purchaser Designees
is presented below.
The name, business address, age, position with the Purchaser or an affiliate
and five year employment history of each of the Purchaser Designees is set forth
below (unless otherwise indicated, each occupation set forth for each individual
refers to employment with the Purchaser):
JOHANNES C.T. VAN DER WIELEN, 56, has served as the President and Chief
Executive Officer of Numico and Nutricia International N.V. ("Nutricia
International") since January 1992 and as a member of the Executive Board of
Numico and Nutricia International since January 1989. Mr. van der Wielen is also
a member of the Supervisory Board of each 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 Nationaal
B.V.
PHILIPPE J.M. MISTELI, 45, has served as the Chief Financial Officer and as
a member of the Executive Board of Numico since May 2000. From July 1997 to
May 2000, Mr. Misteli was 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.
TON J. BRITTIJN, 46, has served as Manager of Corporate Business Control for
Numico since January 1997. Mr. Brittijn has been with Numico in various
financial related positions since January 1994.
PHILIP VAN RANDWIJK, 47, has served as the Treasurer of Numico since
May 1994.
HENK DEKKER, 54, has served as the Secretary of Numico since October 1994.
Prior to 1994, Mr. Dekker served as the corporate secretary for Unigro N.V.
JULITTE VAN DER VEN, 58, has served as General Counsel for Numico since
July 1989. Mrs. van der Ven also serves as the sole director and executive
officer of each of Nutricia Investment Corp., Nutricia Florida, Inc., Nutricia
Delaware, Inc. and Numico, Inc.
ALBERT EENINK, 56, has served as the Director of Corporate Research for
Numico since December 1996. Prior to 1996, Mr. Eenink served as the Director of
Research for the Agricultural Institute in Wageningen, the Netherlands.
JOS VAN DE SCHRAAF, 46, has served as the Director Corporate Control and
Accounting for Numico since August 1995. From 1990 to 1995, Mr. van de Schraaf
was a partner with Moret Ernest & Young.
The business address for each of the above designees is Rokkeveenseweg 49,
2712 PJ Zoetermeer, P.O. Box 1, 2700 MA Zoetermeer, the Netherlands.
A-2
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Biographical information concerning the Company's current directors and
executive officers as of May 1, 2000, is as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ---- -------- --------------------------------------------------------
<S> <C> <C>
Carl DeSantis........................ 60 Chairman of the Board
Christian Nast....................... 68 Vice Chairman
Damon DeSantis....................... 36 President, Chief Executive Officer and Director; Chief
Executive Officer of Rexall Showcase International, Inc.
Nickolas Palin....................... 52 Senior Executive Vice President and Director
Geary Cotton......................... 48 Vice President, Chief Financial Officer and Treasurer
Richard Werber....................... 47 Vice President, General Counsel and Secretary
Richard Goudis....................... 39 Vice President and Chief Operating Officer
Gerald Holly......................... 58 Senior Executive Vice President
Dean DeSantis........................ 38 Director
Stanley Leedy........................ 65 Director
Melvin Stith......................... 53 Director
</TABLE>
CARL DESANTIS, age 60, founded the Company in 1976 and has been the Chairman
of the Board of the Company since its inception. He served as Chief Executive
Officer of the Company from its inception to February 1997 and President of the
Company from 1976 to April 1995. Mr. DeSantis has had over 18 years of
experience with retail drug store companies, including Super-X Drug Stores and
Walgreen Drug Stores. He is the father of Damon DeSantis, the President, Chief
Executive Officer and a Director of the Company, and Dean DeSantis, a Director
of the Company.
CHRISTIAN NAST, age 68, has been Vice Chairman of the Company since
February 1999 and a Director of the Company since October 1993. Mr. Nast served
as Chief Executive Officer of the Company from February 1997 to February 1999,
President of the Company from April 1995 to February 1998 and Chief Operating
Officer of the Company from April 1995 to February 1997. From December 1989 to
April 1995, Mr. Nast was employed by Colgate Palmolive Company as its Executive
Vice President--North America. Mr. Nast has over 40 years of experience in the
consumer products industry with companies such as Bristol-Myers Squibb Company,
Chesebrough-Ponds, Inc. and the Procter & Gamble Company. Mr. Nast is also a
Director of Q.E.P. Co., Inc.
DAMON DESANTIS, age 36, has been Chief Executive Officer of the Company
since February 1999, President of the Company and Chief Executive Officer of
Rexall Showcase International, Inc., the Company's network marketing subsidiary,
since February 1998 and a Director of the Company since July 1988. He served as
President of Rexall Showcase from January 1993 to February 1998 and as Executive
Vice President of the Company from July 1988 to February 1998. He was a Vice
President of the Company from when he joined the Company in September 1983 until
July 1988. He is the son of Carl DeSantis, the Chairman of the Board of the
Company, and the brother of Dean DeSantis, a Director of the Company.
NICKOLAS PALIN, age 52, has been Senior Executive Vice President of the
Company since July 1998 and a Director of the Company since December 1995.
Mr. Palin served as President of the Company's Sundown Vitamins division from
September 1997 to January 1999, Senior Vice President--Sales and Marketing of
the Company from August 1989 to September 1997 and joined the Company in 1984.
A-3
<PAGE>
GEARY COTTON, age 48, has been Vice President and Chief Financial Officer of
the Company since August 1989, Treasurer of the Company since March 1993 and
joined the Company in 1986. Mr. Cotton is a Certified Public Accountant.
RICHARD WERBER, age 47, has been Vice President and General Counsel of the
Company since joining the Company in August 1991 and Secretary of the Company
since March 1993. Prior to that, Mr. Werber was a partner in the law firm of
Holland & Knight.
RICHARD GOUDIS, age 39, has been Vice President and Chief Operating Officer
of the Company since March 2000. Mr. Goudis served as Vice President--Finance of
the Company from the time he joined the Company in April 1998 through
February 2000. From April 1995 to April 1998, Mr. Goudis was employed by the
Sunbeam Corporation in various executive financial positions including, most
recently, as Vice President of Investor Relations and Corporate Planning.
GERALD HOLLY, age 58, has been Senior Executive Vice President of the
Company since March 2000. Mr. Holly served as Executive Vice
President--Operations from the time he joined the Company in November 1997
through March 2000. For the prior 25 years, Mr. Holly served in various
capacities for Pharmavite Corp., a subsidiary of Otsuka Pharmaceutical
Company, Ltd. of Japan, including Executive Vice President--Operations since
1992.
DEAN DESANTIS, age 38, has been a Director of the Company since March 1990.
He served as Chief Operating Officer of the Company from February 1997 to
March 1998, Senior Vice President--Operations of the Company from June 1989 to
March 1998 and joined the Company in 1985. He is the son of Carl DeSantis, the
Chairman of the Board of the Company and the brother of Damon DeSantis, the
President, Chief Executive Officer and a Director of the Company.
STANLEY LEEDY, age 65, has been a Director of the Company since March 1993.
Since January 1985, Mr. Leedy has been the President and Chief Executive Officer
of Van San Corporation, a consulting firm for the pharmaceutical and vitamin
industry. Mr. Leedy has over 30 years experience in the pharmaceutical and
vitamin industry and has previously served as President and Chief Executive
Officer of the Rexall Drug & Chemical Company, a division of Dart
Industries, Inc.
MELVIN STITH, age 53, has been a Director of the Company since April 1997.
Since July 1991, Mr. Stith has been Dean of the Florida State University College
of Business. From December 1989 to July 1991, Mr. Stith was Chairman of the
Marketing Department of the Florida State University College of Business where
he was also a Professor. Mr. Stith is also a Director of Correctional Services
Corp., Keebler Foods Company, Palmetto Hospital Trust, Inc., Synovous Financial
Corp. and Tallahassee State Bank.
BOARD MEETINGS AND COMMITTEES
During the Company's fiscal year ended August 31, 1999, the Company's Board
of Directors held six meetings and took certain actions by unanimous written
consent. During the 1999 fiscal year, no Director attended fewer than
75 percent of the aggregate of (i) the number of meetings of the Board of
Directors held during the period he served on the Board, and (ii) the number of
meetings of committees of the Board of Directors held during the period he
served on such committees.
The committees of the Board of Directors are the Audit Committee and the
Compensation/Stock Option Committee. The Board does not have a nominating or
similar committee.
AUDIT COMMITTEE
The members of the Audit Committee are Messrs. Leedy, Stith and Dean
DeSantis. Mr. Leedy serves as Chairman of the Committee. During the 1999 fiscal
year, the Audit Committee held three
A-4
<PAGE>
meetings. The Audit Committee is responsible for (i) recommending the firm to be
appointed as independent certified public accountants to audit the Company's
financial statements; (ii) discussing the scope and results of the audit with
the independent certified public accountants; (iii) reviewing with management
and the independent certified public accountants the Company's interim and
year-end results; (iv) considering the adequacy of the internal accounting
controls and audit procedures of the Company; and (v) reviewing the non-audit
services to be performed by the independent certified public accountants.
COMPENSATION COMMITTEE
The members of the Compensation/Stock Option Committee are Messrs. Leedy and
Stith and Mr. Leedy serves as Chairman of the Committee. During the 1999 fiscal
year, the Compensation/Stock Option Committee held two meetings and took certain
actions by unanimous written consent. The Compensation/Stock Option Committee is
responsible for setting compensation of the executive officers of the Company
and for the grant of stock options to purchase Common Stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation of the Company's Chief
Executive Officer and the other four most highly paid executive officers who
were serving as executive officers at the end of fiscal 1999 (collectively, the
"Named Executive Officers"), for the fiscal years ended August 31, 1999, 1998
and 1997.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION(1)
---------------
ANNUAL COMPENSATION NUMBER OF
------------------------------------ OTHER ANNUAL OPTIONS
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY ($) BONUS ($) COMPENSATION(2) GRANTED(3)
- --------------------------- ----------- ---------- --------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Carl DeSantis .................. 1999 $502,586 $ -- $17,025 197,500
Chairman of the Board 1998 491,761 237,500 10,892 300,000
1997 452,362 217,880 16,712 120,000
Damon DeSantis ................. 1999 396,769 -- 13,775 227,000
President and CEO 1998 331,717 109,575 7,715 270,000
1997 197,885 47,297 9,182 80,000
Nickolas Palin ................. 1999 377,899 165,931 6,337 335,000
Senior Executive Vice 1998 360,135 168,750 4,076 280,000
President 1997 285,578 102,266 4,589 80,000
Christian Nast ................. 1999 349,615 -- 13,012 174,000
Vice Chairman 1998 416,278 280,000 11,500 300,000
1997 335,779 157,508 11,298 120,000
Geary Cotton ................... 1999 323,925 -- 17,223 177,500
Vice President, Chief 1998 314,117 100,000 12,126 260,000
Financial Officer and 1997 197,885 63,504 15,468 80,000
Treasurer
</TABLE>
- ------------------------
(1) The columns for "Restricted Stock Awards," "LTIP Payouts" and "All Other
Compensation" have been omitted because there is no compensation required
to be reported in such columns.
(footnotes continued on following page)
A-5
<PAGE>
(2) Represents that portion of the Company's automobile expense allowance
attributable to non-business utilization of such officer's automobile, the
Company's contributions to its 401(k) Plan for the benefit of such officer
and executive long-term disability expenses.
(3) See "Stock Based Plans--Individual Option Grants in the Fiscal Year Ended
August 31, 1999" and "Aggregate Option Exercises in the Fiscal Year Ended
August 31, 1999 and Fiscal Year-End Option Values" for additional
information with respect to these options.
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements on April 1, 1995 with each of
Carl DeSantis, Damon DeSantis, Nickolas Palin, and Geary Cotton pursuant to
which their base annual salaries as of January 14, 2000 were $375,000, $425,000,
$385,900 and $330,800, respectively. Each of such employment agreements is for a
rolling term of three years except for Mr. Palin's employment agreement which is
for a rolling term of four years. The Company entered into an employment
agreement with Christian Nast for a three-year term commencing September 1,
1998, pursuant to which he currently receives a base annual salary of $100,000.
Each of such employment agreements provides for annual increases of base salary
of the greater of 5% or the percentage increase in the consumer price index
published by the United States Department of Labor. In addition, each of Damon
DeSantis, Nickolas Palin and Geary Cotton is entitled to receive incentive
bonuses upon the attainment by the Company of certain net sales and net income
targets. Such bonuses may not exceed 75% of base salary for Damon DeSantis and
62 1/2% of base salary for each of Nickolas Palin and Geary Cotton.
The employment agreements each provide that, if the employee terminates his
employment without good reason or is terminated for cause, such employee is
subject to a non-competition provision for a period of 18 months except for
Mr. Palin's employment agreement which makes him subject to a non-competition
provision for a period of three years. In the event of a change of control of
the Company, the employee is entitled to terminate his employment and receive a
lump sum distribution of compensation in an amount equal to three times such
employee's then current effective yearly compensation, including, but not
limited to, salary and bonuses. If the employee elects to so terminate, the
non-competitive provisions contained in the employment agreement will terminate.
Similar provisions apply in the event an employee is terminated without cause
upon a change of control of the Company. Payments under the agreements by the
Company after a change of control are, however, limited to the amount which
would be deductible by the Company under the Internal Revenue Code of 1986, as
amended (the "Code"). A "change of control" is deemed to occur upon (i) the
acquisition of 30% or more of the Company's voting power by anyone other than a
current director, executive officer of the Company or an affiliate thereof
without the approval of a majority of the Incumbent Directors, as defined
therein, or (ii) the Incumbent Directors becoming less than a majority of the
Board of Directors of the Company or its successor. A change of control, as to
any employee, may not result from a voluntary action of such employee. In
addition, upon a "change of control," all unvested options granted to the
foregoing persons under the Company's 1993 Stock Incentive Plan will vest.
NEW EMPLOYMENT AGREEMENTS AND CONSULTING AGREEMENTS
In connection with the Merger Agreement, a number of officers of the
Company, including those described above, have entered into new employment or
consulting agreements with the Company and Numico. For a description of these
agreements, see "Purpose of the Offer; Plans for the Company; the Merger
Agreement; Other Agreements" in the Offer to Purchase, which is incorporated by
reference herein.
A-6
<PAGE>
STOCK BASED PLANS
The following is a brief summary of the Company's stock-based plans in
effect during the fiscal year ended August 31, 1999, under which directors,
officers and certain employees of the Company received benefits.
STOCK INCENTIVE PLAN
Under the 1993 Stock Incentive Plan, the Company is authorized to grant
stock options to selected officers and key employees. The Plan will remain in
effect for ten years until March 14, 2003, unless terminated by the Company's
Board of Directors. The maximum number of Shares issuable under the Plan is
21,000,000 and is subject to appropriate adjustment in the event of a stock
split, reverse stock split, consolidation of Shares, capital adjustment, payment
of stock dividend or distribution, or other increase or decrease in the Shares
without receipt of consideration. All Options under the Plan must be granted
prior to March 14, 2003, and all Options that have been granted must be
exercised prior to their expiration date. No Option will be exercisable after
ten years after the date the Option is granted.
DIRECTOR STOCK OPTION PLANS
The Company has two plans covering directors.
1993 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN. Under the Amended and
Restated 1993 Non-Employee Director Stock Option Plan (the "1993 Director
Plan"), each director who is not an employee of the Company or its subsidiaries
("Non-Employee Directors") is entitled to a one-time grant of options upon
initial election to the Board of Directors with respect to 15,000 shares of
Common Stock, which vest 33 1/3% per year commencing one year from the date of
grant (except for those stock options granted prior to February 1997 which shall
continue to vest 20% per year commencing one year from the date of grant) and
have a term of 10 years (except for those granted prior to February 1996 which
have a term of six years). The maximum number of shares of Common Stock
available for issuance under the 1993 Director Plan is 120,000 shares. The 1993
Director Plan will expire on, and no options may be granted thereunder after
March 14, 2003, subject to the right of the Board of Directors to earlier
terminate the 1993 Director Plan. Upon a "change of control" (defined in the
same manner as in the employment agreements discussed under "Executive
Compensation--Employment Agreements"), all options outstanding under the 1993
Director Plan will become immediately exercisable in full.
1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN. Under the Amended and
Restated 1994 Non-Employee Director Stock Option Plan (the "1994 Director
Plan"), each then Non-Employee Director was granted stock options to purchase
15,000 shares of Common Stock on July 7, 1994. The 1994 Director Plan also
provides for the grant of an annual option to purchase 15,000 shares of Common
Stock at the first Annual Meeting of Shareholders at which the Non-Employee
Director is re-elected, 20,000 shares at the second Annual Meeting of
Shareholders at which the Non-Employee Director is re-elected, 25,000 shares at
the third Annual Meeting of Shareholders at which the Non-Employee Director is
re-elected, and 30,000 shares at every subsequent Annual Meeting of Shareholders
at which the Non-Employee Director is re-elected, which options vest 33 1/3% per
year commencing one year from the date of grant (except for those stock options
granted prior to February 1997, which shall continue to vest 20% per year
commencing one year from the date of grant) and have a term of 10 years (except
for those granted prior to February 1996, which have a term of five years). The
maximum number of shares of Common Stock available for issuance under the 1994
Director Plan is 600,000 shares. The 1994 Director Plan will expire on, and no
options may be granted thereunder after July 6, 2003, subject to the right of
the Board of Directors to earlier terminate the 1994 Director Plan. Upon a
"change of control" (defined in the same manner as in the employment agreements
discussed under "Executive Compensation--Employment Agreements"), all options
outstanding under the 1994 Director Plan will become immediately exercisable in
full.
A-7
<PAGE>
Effective as of April 26, 2000, the 1993 Stock Incentive Plan, the 1993
Director Plan and the 1994 Director Plan each were amended to provide that upon
the effective date of the merger contemplated by the Merger Agreement (the
"Merger"), each then outstanding option, whether or not then exercisable, is to
be converted into a right to receive a cash payment from the Company equal to
the excess, if any, of the Merger Consideration (as defined in the Merger
Agreement) over the exercise price for such option. Further, the Compensation
Committee under each such plan is given the right to cancel, without
consideration, as of the effective date of the Merger, any options with respect
to which the exercise price exceeds the Merger Consideration.
The following table sets forth certain information concerning grants of
options to purchase Common Stock made during the 1999 fiscal year to the Named
Executive Officers. All stock options were granted pursuant to the Company's
1993 Stock Incentive Plan.
INDIVIDUAL OPTION GRANTS IN THE FISCAL YEAR ENDED AUGUST 31, 1999
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
% OF TOTAL STOCK PRICE APPRECIATION FOR
NUMBER OF OPTIONS GRANTED EXERCISE OPTION TERM(3)
OPTIONS TO EMPLOYEES IN PRICE PER EXPIRATION -----------------------------
GRANTED(1) FISCAL YEAR 1999 SHARE(2) DATE 5% 10%
---------- ---------------- --------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Carl DeSantis............ 147,500(4) 3.1% $11.375 12/06/08 $1,055,167 $2,674,001
50,000(5) 1.0% 11.560 06/14/09 363,501 921,183
Damon DeSantis........... 127,000(4) 2.6% 11.375 12/06/08 908,517 2,302,360
100,000(5) 2.1% 11.560 06/14/09 727,002 1,842,366
Nickolas Palin........... 185,000(4) 3.9% 11.375 12/06/08 1,323,430 3,353,832
50,000(6) 1.0% 14.190 02/28/09 446,201 1,130,760
100,000(5) 2.1% 11.560 06/14/09 727,002 1,842,366
Christian Nast........... 124,000(4) 2.6% 11.375 12/06/08 887,056 2,247,974
50,000(5) 1.0% 11.560 06/14/09 363,501 921,183
Geary Cotton............. 92,500(4) 1.9% 11.375 12/06/08 661,715 1,676,916
85,000(5) 1.8% 11.560 06/14/09 617,952 1,566,011
</TABLE>
- ------------------------
(1) Such options become exercisable with respect to 33 1/3% of the covered
shares one year from the date of grant, 66 2/3% of the covered shares two
years from the date of grant, and the remainder become exercisable three
years from the date of grant, except for the 50,000 options granted to
Nickolas Palin on March 1, 1999, which were exercisable immediately.
(2) The exercise price is the fair market value on the date of grant,
determined by calculating the average of the high and low prices of the
Common Stock on the date of such grant.
(3) The stock price appreciation is computed based on the exercise price per
share. The dollar amounts set forth under these columns are the result of
calculations at the 5% and 10% rates established by the Securities and
Exchange Commission and are not intended to forecast future appreciation in
the price of the Common Stock.
(4) Such options were granted on December 7, 1998.
(5) Such options were granted on June 15, 1999.
(6) Such options were granted on March 1, 1999.
A-8
<PAGE>
AGGREGATE OPTION EXERCISES IN THE FISCAL YEAR ENDED
AUGUST 31, 1999 AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information concerning the exercise
in fiscal 1999 of options to purchase Common Stock by the Named Executive
Officers and the unexercised options to purchase Common Stock held by such
individuals at August 31, 1999.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
VALUE REALIZED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES (MARKET PRICE FISCAL YEAR-END FISCAL YEAR-END(1)
ACQUIRED ON AT EXERCISE LESS --------------------------- ---------------------------
EXERCISE EXERCISE PRICE) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ---------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Carl DeSantis........ 165,000 $1,692,958 360,000 437,500 $1,388,135 $237,938
Damon DeSantis....... 90,000 897,486 368,333 433,667 1,910,433 253,542
Nickolas Palin....... 40,000 566,828 169,002 537,332 114,412 587,195
Christian Nast....... -- -- 161,000 456,000 155,116 471,732
Geary Cotton......... 15,000 150,308 446,000 386,500 2,686,014 283,123
</TABLE>
- ------------------------
(1) Based on a fiscal year-end value of $12.50 per share. Value is calculated
by multiplying (a) the difference between $12.50 and the in-the-money
option exercise price by (b) the number of shares of Common Stock
underlying the in-the-money option.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership of shares of Common Stock of the Company as of April 30, 2000, by all
shareholders of the Company known to be beneficial owners of more than 5% of
such Common Stock, by each director, by each of the executive officers named in
the Summary Compensation Table and by all directors and executive officers as a
group, as determined in accordance with Rule 13d-3(d) under the Exchange Act:
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF SHARES OF COMMON
COMMON STOCK STOCK OUTSTANDING
------------------- -----------------
<S> <C> <C>
Carl DeSantis...................................... 8,233,332(1)(2)(3) 12.7%
Damon DeSantis..................................... 11,190,229(1)(3)(4)(5) 17.3
Christian Nast..................................... 409,629(3) *
Nickolas Palin..................................... 408,001(3) *
Geary Cotton....................................... 726,755(3)(6) 1.1
Dean DeSantis...................................... 8,997,306(1)(3)(4)(7) 14.0
Stanley Leedy...................................... 86,000(3)(8) *
Melvin Stith....................................... 31,667(3) *
Debbie DeSantis.................................... 4,633,802(3)(4)(9) 7.2
CDD Partners, Ltd.................................. 17,637,923(1) 27.6
Triple D Investments, LLC.......................... 13,158,042(4) 21.0
Sylvia DeSantis Irrevocable Life Insurance Trust... 13,158,042(4) 21.0
All directors and executive officers as a group
(11 persons)..................................... 30,893,474(10) 45.7
</TABLE>
- ------------------------
* Represents less than 1%.
(1) In June 1993, each of Carl DeSantis, Damon DeSantis and Dean DeSantis
contributed all shares of Common Stock then owned by them to CDD Partners,
Ltd. ("CDD"), a Texas limited partnership of which Carl DeSantis, Damon
DeSantis and Dean DeSantis are limited partners, and to CDD Management,
Inc. ("CDDM"), a Texas corporation and the general partner of CDD.
A-9
<PAGE>
Each of Carl DeSantis, Damon DeSantis and Dean DeSantis has shared
beneficial ownership and voting power with respect to all such shares held
by CDD. CDD's address is 12770 Coit Road, #850, Dallas, Texas 75251.
(2) Includes 7,523,499 shares held by CDD, which represent Carl DeSantis'
percentage interest in CDD. Does not include 10,114,424 shares beneficially
owned by Dean DeSantis and Damon DeSantis indirectly through CDD.
(3) For each person, includes shares beneficially owned pursuant to currently
exercisable stock options or options which will become exercisable within
60 days: Carl DeSantis--544,833 shares; Damon DeSantis--545,667 shares;
Dean DeSantis--435,000 shares; Christian Nast--380,000 shares; Nickolas
Palin--402,001 shares; Geary Cotton--492,501 shares; Debbie
DeSantis--117,333; Stanley Leedy--75,000 shares; and Melvin Stith-31,667
shares. See "Executive Compensation."
(4) In April 2000, Sylvia DeSantis, as trustee under the Sylvia DeSantis
Revocable Trust dated October 30, 1996, contributed 13,158,042 shares of
Common Stock then owned by such trust to Triple D Investments, LLC, a
Florida limited liability company ("Triple D"). Subsequently, Ms. DeSantis
transferred 100% beneficial ownership in Triple D by gift in equal
percentages to her children, Damon DeSantis, Dean DeSantis and Debbie
DeSantis, as trustees of the Sylvia DeSantis Irrevocable Life Insurance
Trust. As a result, each of Damon DeSantis, Dean DeSantis and Debbie
DeSantis have shared beneficial ownership and voting power with respect to
all such shares held by Triple D. Triple D's address is 9350 S. Dixie
Highway, Suite 1550, Miami, Florida.
(5) Includes 6,029,712 shares held by CDD which represent Damon DeSantis'
percentage interest in CDD and 4,388,044 shares held by Triple D which
represent Damon DeSantis' percentage interest in Triple D. Does not include
(i) 11,608,211 shares beneficially owned by Damon DeSantis that are held by
CDD, which represent the percentage interest of Carl DeSantis and Dean
DeSantis in CDD; (ii) 8,776,088 shares beneficially owned by Damon DeSantis
that are held by Triple D, which represent the percentage interest of Dean
DeSantis and Debbie DeSantis in Triple D; and (iii) 31,114 shares owned by
the wife of Damon DeSantis. Mr. DeSantis disclaims beneficial ownership of
his wife's shares.
(6) Does not include 12,242 shares owned by the wife of Geary Cotton, as to
which shares Mr. Cotton disclaims beneficial ownership.
(7) Includes 4,084,712 shares held by CDD which represent Dean DeSantis'
percentage interest in CDD. Does not include (i) 13,553,211 shares
beneficially owned by Dean DeSantis that are held by CDD which represent
the percentage interest of Carl DeSantis and Damon DeSantis in CDD,
(ii) 8,776,088 shares beneficially owned by Dean DeSantis that are held by
Triple D, which represent the percentage interest of Damon DeSantis and
Debbie DeSantis in Triple D; and (iii) 19,546 shares beneficially owned by
the wife of Dean DeSantis. Mr. DeSantis disclaims beneficial ownership of
his wife's shares.
(8) Does not include 8,900 shares owned by the wife of Stanley Leedy, as to
which shares Mr. Leedy disclaims beneficial ownership.
(9) Does not include 8,776,088 shares beneficially owned by Debbie DeSantis
that are held by Triple D, which represent the percentage interest of Dean
DeSantis and Damon DeSantis in Triple D.
(10) Includes 3,565,153 shares beneficially owned by directors and executive
officers as a group pursuant to currently exercisable stock options or
options which will become exercisable within 60 days. See "Executive
Compensation."
A-10
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
As in prior years, the Company's executive compensation for fiscal 1999
consisted of three primary components: base salary, bonus and grants of stock
options under the Company's Amended and Restated 1993 Stock Incentive Plan. Each
officer's base salary and bonus is set forth in such officer's employment
agreement.
The salary and bonus components of the Company's executive compensation are
designed to facilitate fulfillment of the following compensation objectives:
(i) attracting and retaining competent management; (ii) rewarding management for
short and long-term accomplishments; (iii) aligning the interests of management
with those of the Company's shareholders; and (iv) relating management
compensation to the achievement of Company goals and the Company's performance.
In April 1995, the Company's Board of Directors approved three-year
employment agreements with each of the Company's executive officers. In
addition, in September 1998, the Company entered into a three-year employment
agreement with the Company's Vice Chairman, Christian Nast, which was a renewal
of his prior employment agreement that expired on August 31, 1998. As of
March 1997, the employment agreements of certain executive officers of the
Company were amended to provide for a rolling three-year term and in
September 1998, the employment agreement of Nickolas Palin, the Company's Senior
Executive Vice President, was amended to provide for a rolling four-year term.
Under such employment agreements, the base salaries of Carl DeSantis, Christian
Nast, Damon DeSantis, Nickolas Palin and Geary Cotton as of January 14, 2000
were $375,000, $100,000, $425,000, $385,900 and $330,800, respectively. See
"Executive Compensation--Employment Agreements" and "--New Employment Agreements
and Consulting Agreements." The Board's determination of fiscal 1999 salaries
for the Company's executive officers set forth in their employment agreements
was made after reviewing and considering a number of factors, including each
officer's level of job responsibility, each officer's level of performance (with
respect to specific areas of responsibility and on an overall basis),
achievement of the Company's goals, the Company's performance during the 1999
fiscal year, compensation levels at competitive companies and the Company's
historical compensation levels. The Company's compensation program for its
executive officers is intended to link compensation in substantial part to
corporate performance. A significant portion of executive officer compensation
in the form of bonuses is tied directly to the attainment of net sales and net
income targets as well as the fulfillment of individual objectives. Each
officer's employment agreement also provides for an annual increase in base
salary of the greater of 5% or the percentage increase in the Consumer Price
Index published by the United States Department of Labor. Decisions about
granting stock options to executive officers were made as described below. The
Company also makes contributions under the Company's 401(k) Plan of up to $2,000
per employee, based on a 50% matching contribution. In recognition of the
increased duties of Damon DeSantis as the Company's President and Chief
Executive Officer, his bonus percentage potential was increased. Similarly, as a
result of the reduced duties and responsibilities of Carl DeSantis, the
Company's Chairman of the Board, and Christian Nast, the Company's Vice
Chairman, their respective salaries were reduced and their eligibility to
receive a bonus was eliminated.
In determining the fiscal 1999 salary and bonus for Damon DeSantis, the
Chief Executive Officer of the Company, the principal factors considered by the
Board included (i) an analysis of the compensation of chief executive officers
of public companies within the vitamin and nutritional supplement industry and
public companies similar in size to the Company and (ii) the Company's 1999
fiscal year earnings and other performance measures. Approximately sixty percent
of Mr. DeSantis' compensation is tied directly to the attainment of net sales
and net income targets which were not met in fiscal 1999 and, therefore, no
bonus was earned.
The grants of stock options to executive officers in fiscal 1999 were
determined by the Committee based upon recommendations by the Company's Chief
Executive Officer, Damon DeSantis, and his
A-11
<PAGE>
assessment of each officer's contributions to the Company's success, position
with the Company, potential to contribute to the Company's future performance
and the overall level of responsibility and job performance of each officer.
Section 162(m) of the Internal Revenue Code of 1986, as amended, enacted in
1993, generally disallows a tax deduction to public companies for compensation
over $1,000,000 paid to the Chief Executive Officer and the four other most
highly compensated executive officers of the Company. Qualifying
performance-based compensation is not subject to the deduction limit if certain
requirements are met. The Company's 1993 Stock Incentive Plan has been
structured such that awards thereunder may constitute qualifying
performance-based compensation under Section 162(m). However, the Committee
recognizes that unanticipated future events, such as a change of control of the
Company or a change in executive personnel, could result in a disallowance of
compensation deductions under Section 162(m). Moreover, the Committee may from
time to time award compensation that is non-deductible under Section 162(m) when
in the exercise of the Committee's business judgment such award would be in the
best interest of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors and persons who own more than ten percent of a registered class of
the Company's equity securities to file reports of ownership on Form 3 and
changes in ownership on Form 4 or Form 5 with the SEC. Such officers, directors
and ten percent shareholders are also required by SEC rules to furnish the
Company with copies of all Section 16(a) reports they file.
Based solely on its review of the copies of such forms received by it to
date, the Company believes that during the fiscal year ending August 31, 1999,
all reporting persons complied with Section 16(a) filing requirements applicable
to them.
A-12
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the
Common Stock with the cumulative total return on the Nasdaq Stock Market--U.S.
Index ("Nasdaq Stock Market--U.S.") and the Natural Business Composite Index(TM)
("Natural Business Composite") from June 18, 1993 (the date the Common Stock was
first offered to the public) through August 31, 1999 (assuming the investment of
$100 in the Common Stock, the Nasdaq Stock Market--U.S. and the Natural Business
Composite and reinvestment of dividends). The Natural Business Composite is
prepared by Banc of America Securities LLC. The Company did not pay any
dividends during this period.
COMPARISON OF CUMULATIVE TOTAL
RETURN AMONG REXALL SUNDOWN, INC., THE
NASDAQ STOCK MARKET--U.S. INDEX, AND THE
NATURAL BUSINESS COMPOSITE INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
6/18/93 8/31/96 8/31/97 8/31/98 8/31/99
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Rexall Sundown, Inc. $100 $639.20 $641.50 $673.85 $461.54
Nasdaq Stock Market - U.S. $100 $165.53 $230.18 $217.41 $397.24
Natural Business Composite $100 $122.28 $148.03 $158.77 $140.51
</TABLE>
The comparisons in this table are required by the SEC and are not intended
to forecast or be indicative of possible future performance of the Common Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
A-13
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S> <C>
* (a)(1) Offer to Purchase dated May 5, 2000.
*+ (a)(2) Letter of Transmittal.
* (a)(3) Letter to Shareholders of the Company dated May 5, 2000.
+ (a)(4) Press Release of the Company dated May 1, 2000.
+ (a)(5) Form of Summary Advertisement dated May 5, 2000.
+ (e)(1) Agreement and Plan of Merger dated as of April 30, 2000.
+ (e)(2) Shareholder Agreement dated April 30, 2000.
* (e)(3) Opinion of Morgan Stanley & Co. Incorporated.
+ (e)(4) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Damon DeSantis.
+ (e)(5) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Geary Cotton.
+ (e)(6) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Richard Goudis.
+ (e)(7) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Gerald Holly.
+ (e)(8) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Richard Werber.
+ (e)(9) Consulting Agreement, dated as of April 30, 2000, among
Numico, the Company and Carl DeSantis.
+ (e)(10) Consulting Agreement, dated as of April 30, 2000, among
Numico, the Company and Nickolas Palin.
+ (e)(11) Consulting Agreement, dated as of April 30, 2000, among
Numico, the Company and Christian Nast.
+ (e)(12) Benefits Letter, dated April 30, 2000, by and between Numico
and the Company.
+ (e)(13) Confidentiality Agreement, dated March 22, 2000, by and
between Numico and the Company.
</TABLE>
- ------------------------
* Included in materials delivered to shareholders of the Company.
+ Filed as an exhibit to the Purchaser's Tender Offer Statement on Schedule TO
dated May 5, 2000, and incorporated herein by reference.
A-14
<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.
- --------------------------------------------------------------------------------
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>
<C> <S> <C>
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
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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.
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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
<PAGE>
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,
5
<PAGE>
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.
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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
37
<PAGE>
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
38
<PAGE>
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>
EX-(a)(3)
LETTER TO SHAREHOLDERS
[LOGO] MAY 5, 2000
REXALL SUNDOWN, INC.
6111 BROKEN SOUND PARKWAY, NW
BOCA RATON, FLORIDA 33487
To the Shareholders of Rexall Sundown, Inc.:
I am pleased to report that on April 30, 2000, Rexall Sundown, Inc. (the
"Company") entered into an Agreement and Plan of Merger (the "Merger Agreement")
with Royal Numico N.V. ("Numico") and Nutricia Investment Corp., a Florida
corporation (the "Purchaser"). The Merger Agreement provides for the acquisition
of all outstanding shares of Common Stock, par value $0.01 per share, of the
Company (the "Common Stock") by the Purchaser at a price of $24.00 per share,
net to the seller in cash, without interest. Under the terms of the proposed
transaction, the Purchaser has commenced a tender offer (the "Offer") for all of
the outstanding shares of Common Stock at $24.00 per share, net to the seller in
cash, without interest. The Offer is currently scheduled to expire at 12:00
Midnight, New York City time, on Friday, June 2, 2000, unless otherwise
extended.
Following the successful completion of the Offer and upon approval by a
shareholder vote, if required, the Purchaser will be merged with and into the
Company (the "Merger") and all shares of Common Stock not purchased in the Offer
will be converted into the right to receive, without interest, an amount in cash
equal to $24.00.
YOUR BOARD OF DIRECTORS 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 OF COMMON STOCK AND RECOMMENDS
THAT ALL HOLDERS OF SHARES OF COMMON STOCK TENDER THEIR SHARES OF COMMON STOCK
PURSUANT TO THE OFFER.
Accompanying this letter is a copy of the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 and the Company's
Information Statement pursuant to Section 14(f) of the Securities Exchange Act
of 1934, as amended, each filed by the Company with the Securities and Exchange
Commission. The Board of Directors of the Company has received an opinion, dated
April 28, 2000, of Morgan Stanley & Co. Incorporated, financial advisor to the
Company, that the $24.00 per share cash consideration to be paid in the Offer
and the Merger to the holders of shares of Common Stock is fair, from a
financial point of view, to such holders. A copy of this opinion is attached to
the Schedule 14D-9.
Also accompanying this letter is a copy of the Offer to Purchase and related
materials of the Purchaser, including a Letter of Transmittal for use in
tendering your shares of Common Stock. These documents set forth the terms and
conditions of the Offer and provide instructions for tendering your shares of
Common Stock.
WE URGE YOU TO READ EACH OF THE ENCLOSED MATERIALS CAREFULLY.
The management and directors of the Company thank you for the support you
have given the Company.
Sincerely,
/s/ Damon DeSantis
Damon DeSantis
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
EX-(E)(3)
OPINION OF MORGAN STANLEY & CO. INCORPORATED
[LOGO]
April 28, 2000
Board of Directors
Rexall Sundown, Inc.
6111 Broken Sound Parkway, NW
Boca Raton, Florida 33487
Members of the Board:
We understand that Rexall Sundown, Inc. (the "Company"), Royal Numico N.V.
("Buyer") and Nutricia Investment Corp., a wholly owned subsidiary of Buyer
("Acquisition Sub"), propose to enter into an Agreement and Plan of Merger
substantially in the form of the draft dated April 27, 2000 (the "Merger
Agreement"), which provides, among other things, for (i) the commencement by
Acquisition Sub of a tender offer (the "Tender Offer") for all outstanding
shares of common stock, par value $0.01 per share (the "Common Stock"), of the
Company for $24.00 per share net to the seller in cash, and (ii) the subsequent
merger (the "Merger") of Acquisition Sub with and into the Company. Pursuant to
the Merger, the Company will become a wholly owned subsidiary of Buyer and each
outstanding share of Common Stock, other than shares held in treasury or held by
Buyer or Acquisition Sub or as to which dissenters' rights have been perfected,
will be converted into the right to receive $24.00 per share in cash. The terms
and conditions of the Tender Offer and the Merger are more fully set forth in
the Merger Agreement.
You have asked for our opinion as to whether the consideration to be received by
the holders of shares of Common Stock pursuant to the Merger Agreement is fair
from a financial point of view to such holders.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of the Company;
(ii) reviewed certain internal financial statements and other financial and
operating data concerning the Company prepared by the management of the
Company;
(iii) reviewed certain financial projections prepared by the management of
the Company;
(iv) discussed the past and current operations and financial condition and
the prospects of the Company with senior executives of the Company;
(v) reviewed the reported prices and trading activity for the Common Stock;
(vi) compared the financial performance of the Company and the prices and
trading activity of the Common Stock with that of certain other
comparable publicly-traded companies and their securities;
(vii) reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
(viii) participated in discussions with representatives of the Company, Buyer
and their financial and legal advisors;
(ix) reviewed the draft Merger Agreement and certain related documents; and
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(x) performed such other analyses and considered such other factors as we
have deemed appropriate.
We have assumed and relied upon without independent verification the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the financial projections, we have assumed that they
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the future financial performance of the Company. We
have assumed that the executed version of the Merger Agreement will not differ
in any material respect from the last draft we reviewed. We have also assumed
that the Merger will be consummated in accordance with the terms set forth in
the Merger Agreement. We have not made any independent valuation or appraisal of
the assets or liabilities of the Company, nor have we been furnished with any
such appraisals. Our opinion is necessarily based on financial, economic, market
and other conditions as in effect on, and the information made available to us
as of, the date hereof.
In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any party with respect to the acquisition of, business
combination or other extraordinary transaction involving the Company or any of
its assets.
We have acted as financial advisor to the Board of Directors of the Company in
connection with this transaction and will receive a fee for our services. In the
past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory services for the Company and have received fees for the
rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of the Company, except that this opinion may be included in its
entirety in any filing which is required to be made by the Company with the
Securities and Exchange Commission pursuant to the rules and regulations of the
Commission with respect to the Tender Offer and the Merger. In addition, Morgan
Stanley expresses no opinion or recommendation as to whether the stockholders of
the Company should tender their shares of Common Stock into the Tender Offer.
Based on and subject to the foregoing, we are of the opinion on the date hereof
that the consideration to be received by the holders of shares of Common Stock
pursuant to the Merger Agreement is fair from a financial point of view to such
holders.
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Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ JAMES STYNES
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James Stynes
MANAGING DIRECTOR
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