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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
(AMENDMENT NO. 1)
Solicitation/Recommendation Statement under Section 14(d)(4) of the
Securities Exchange Act of 1934
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)
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 Amendment No. 1 to the Solicitation/Recommendation Statement on
Schedule 14D-9 initially filed with the Securities and Exchange Commission on
May 5, 2000 (as amended, the "Schedule 14D-9") of Rexall Sundown, Inc., a
Florida corporation ("Company"), relates to the offer by Nutricia Investment
Corp., a Florida corporation (the "Purchaser") and an indirect wholly owned
subsidiary of Koninklijko Numico N.V., a company incorporated under the laws of
the Netherlands ("Numico"), to purchase all of the outstanding shares of Common
Stock (as defined below) of the Company, pursuant to an Agreement and Plan of
Merger dated as of April 30, 2000, among the Company, Numico and the Purchaser
(the "Merger Agreement") for a purchase price of $24.00 per share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated May 5, 2000, and in the
related Letter of Transmittal. This Schedule 14D-9 is being filed on behalf of
the Company. Capitalized terms not defined herein have the meanings set forth in
the Schedule 14D-9 filed on May 5, 2000.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
Item 4(b)(i) of the Schedule 14D-9 is hereby amended and supplemented to
include the following immediately prior to the last paragraph thereof:
"On May 17, 2000, the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 expired. No further approvals or
clearances relating to antitrust laws are required in connection with the
Offer or Merger.
On May 22, 2000, the Board met and was briefed by counsel and Company
management as to the status of the litigation captioned LAWRENCE
PECCATIELLO V. CARL DESANTIS, ET AL, Case No. CL00-4284AO pending before
the Circuit Court of the 15th Judicial Circuit, in and for Palm Beach
County, Florida (the 'Litigation') and the proposed settlement thereof on
the terms set forth in Item 8 hereof, including, among other things,
amendments to the Merger Agreement (the 'Amendment') providing for:
(a) the reduction of the Termination Fee set forth in the Merger
Agreement from U.S. $65 million to U.S. $50 million and the reduction of
the maximum transaction expense reimbursement payable by the Company to
Numico in connection with a termination of the Merger Agreement from
U.S. $14 million to U.S. $10 million; and (b) notwithstanding the fact
that the Florida Business Corporation Act (the 'FBCA') might not provide
dissenters' rights to shareholders of the Company in connection with the
Merger, granting all shareholders complying with the procedural
requirements of Section 607.1320 of the FBCA such dissenters' rights.
Management also reported to the Board that since the May 1, 2000
public announcement of the signing of the Merger Agreement, there had
been no expression of interest, offer or proposal to acquire all or more
than 15% of the Company's businesses, assets or capital shares whether by
merger, consolidation, other business combination, purchase of assets,
reorganization, tender or exchange offer or otherwise.
At such meeting, the Board unanimously approved the Amendment, a copy
of which is filed as Exhibit (e)(14) to the Schedule 14D-9 and is
incorporated herein by reference, subject to the approval by the parties
of the conditional settlement of the Litigation, as described in Item 8
below.
On May 25, 2000, following the approval by the parties of the
conditional settlement of the Litigation, as described in Item 8 below,
the Company, the Purchaser and Numico executed the Amendment."
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ITEM 5. PERSON/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
The second paragraph of this item is amended to read in its entirety as
follows:
"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. This fee is
payable only upon the closing of the Offer. The payment of the fee does
not depend on whether Morgan Stanley delivers its fairness opinion and no
additional fee is payable to Morgan Stanley in respect of such fairness
opinion."
ITEM 8. ADDITIONAL INFORMATION.
Item 8 of the Schedule 14D-9 is hereby amended and supplemented as
follows:
The following paragraphs are added to Item 8(d):
"On May 16, 2000, the Court denied without prejudice plaintiff's
motion to conduct expedited discovery in anticipation of seeking to
enjoin preliminarily consummation of the Merger. On May 19, 2000,
plaintiff renewed his motion for expedited discovery and filed a motion
to enjoin preliminarily the Company and the Company's directors from
proceeding to consummate the Merger.
Plaintiff filed, on May 22, 2000, an amended complaint adding the
Purchaser as a defendant and alleging that the Purchaser is aiding and
abetting the alleged breaches of fiduciary duties by the Company's
directors. The Company and the Company's directors served, on May 22,
2000, a motion to dismiss the complaint based on the legal insufficiency
of plaintiff's allegations. On May 24, 2000, the Company and the
Company's directors served a motion to dismiss plaintiff's amended
complaint based on the legal insufficiency of plaintiff's allegations.
On May 25, 2000, the parties to the Litigation entered into a
Memorandum of Understanding (a copy of which is attached hereto as
Exhibit (e)(15) and incorporated herein by reference) providing for the
settlement and dismissal with prejudice of the Litigation. Pursuant to
the Memorandum of Understanding, the defendants to the Litigation have
agreed, in order to avoid the burden and expense of further litigation
and to put to rest all claims arising out of or relating in any way to
the Offer or the Merger, that the Company will (i) mail to the Company's
shareholders an amendment to the Schedule 14D-9 that will contain certain
supplemental disclosures and (ii) issue a press release announcing that
the parties to the Litigation have reached a settlement in principle
subject to the approval of the Circuit Court of the 15th Judicial
Circuit, in and for Palm Beach County, Florida. The Memorandum of
Understanding is subject to a number of conditions, including, without
limitation (i) the completion by plaintiff of discovery; (ii) the
execution of a formal settlement agreement; (iii) the consummation of the
Offer; and (iv) the final approval by the Court of the settlement. The
principal terms of the Memorandum of Understanding are as follows:
1. The Merger Agreement will be amended as set forth in Item 4
hereof; and
2. The Company will amend the Schedule 14D-9, as more fully set
forth herein (a) to disclose that there have been no inquiries by
third parties to the Company since the announcement of the Merger
Agreement on May 1, 2000 with respect to any expression of
interest, offer or proposal to acquire all or more than 15% of
the Company's businesses, assets or capital shares, whether by
merger, consolidation, other business combination, purchase of
assets, reorganization, tender or exchange offer or otherwise;
(b) to provide the assumptions underlying the Company's financial
projections set forth in Section 8 of Exhibit (a)(1) to the
Schedule TO filed by Numico and Nutricia with the Securities and
Exchange Commission on May 5,
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2000; and (c) to state that the receipt by Morgan Stanley of its
transaction fee is not dependent on the issuance of a fairness
opinion regarding the Offer and the Merger.
Notwithstanding the fact that appraisal rights may not be available
in connection with the Merger under the FBCA, the parties to the Merger
Agreement have agreed to make appraisal rights available to all
shareholders complying with the procedural requirements of the FBCA. Set
forth below is a summary of the principal provisions of the FBCA dealing
with the rights and remedies of dissenters to a merger. This summary is
not a complete description and should be read in conjunction with the
full text of Sections 607.1301, 607.1302 and 607.1320 of the FBCA, a copy
of which is attached hereto as Annex B and incorporated herein by
reference.
Under the Merger Agreement as amended by the Amendment thereto (the
'Amended Merger Agreement'), each registered owner of shares of the
Company's Common Stock has the right under Sections 607.1301, 607.1302
and 607.1320 of the FBCA to object to the Merger and demand in writing to
be paid in cash the Fair Value (as hereinafter defined) of such shares.
Such provisions must be strictly complied with or the dissenters' rights
may be lost.
'Fair Value,' with respect to a dissenters' shares, means the value
of the shares as of the close of business on the day prior to (i) the
date on which the Merger is approved by the Company's shareholders,
(ii) the date on which the Company receives written consents from the
requisite number of shareholders to approve the Merger, or (iii) in the
case the Merger is completed without a shareholder vote or written
consent pursuant to Section 607.1104 of the FBCA, the date prior to the
day on which a plan of merger is mailed to each shareholder of the
Company (any such date, the 'Shareholders' Authorization Date'),
excluding any appreciation or depreciation in anticipation of the Merger
unless such exclusion would be inequitable. The FBCA permits a
shareholder to dissent as to less than all the shares registered in his
or her name. In that event, the dissenter's rights shall be determined as
if the shares as to which he or she has dissented and his or her other
shares were registered in the names of different shareholders.
Unless all the procedures prescribed by the FBCA are followed by a
Company shareholder who wishes to dissent from the Merger, the
shareholder will be bound by the terms of the Amended Merger Agreement.
To properly assert dissenters' rights at any meeting of the Company's
shareholders called to approve the Merger, a shareholder must
(i) deliver to the Company before the vote is taken written notice of the
shareholder's intent to demand payment for his or her shares if the
Merger is effectuated, and (ii) not vote his or her shares in favor of
the Merger. A proxy or vote against the Merger does not constitute such a
notice of intent to demand payment. Each written notice of intent to
demand payment should be sent to Rexall Sundown, Inc., 6111 Broken Sound
Parkway, NW, Boca Raton, Florida 33487, Attention: General Counsel. If
the Merger is to be effectuated by written consent without a meeting,
then the Company shall deliver a copy of Sections 607.1301, 607.1302 and
607.1320 of the FBCA to each shareholder simultaneously with any request
for written consent or, if no such request is made, within 10 days after
the date the Company receives written consents from the requisite number
of shareholders necessary to approve the Merger.
Within 10 days after the Shareholders' Authorization Date, the
Company must give written notice of such approval to each shareholder who
filed a notice of intent to demand payment for shares in the case where
the Merger is approved at a meeting of shareholders, or, in any other
case, to each shareholder excepting those who voted for or consented in
writing to the Merger. Within 20 days after receipt of such notice, any
shareholder who elects to dissent must file with the Company a notice of
election, stating the shareholder's name,
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address, the number of shares as to which the dissent is made, and a
demand for payment of the fair value of such shares. The certificates
representing the dissenting shares must be deposited with the Company
simultaneously with filing the election to dissent. Any Company
shareholder failing to timely file an election to dissent will be bound
by the terms of the Amended Merger Agreement. Upon filing such election
to dissent, the shareholder will thereafter be entitled only to payment
as provided in the Amended Merger Agreement and under the FBCA and will
not be entitled to vote or to exercise any other rights of a shareholder.
Once filed, an election to dissent may be withdrawn only under limited
circumstances as described more fully in Section 607.1320 of the FBCA.
Within 10 days after such 20 day period or 10 days after the Merger
is effectuated, whichever is later, the Company must make to each
dissenting shareholder a written offer to pay an amount the Company
estimates to be the Fair Value of such dissenting shares. Such offer must
be accompanied by the Company's balance sheet as of the latest available
date and its related profit and loss statements. If the Company's offer
is accepted by the shareholder within 30 days, payment for the dissenting
shares must be made within 90 days after the date of such written offer
or the Effective Time, whichever is later. Upon payment of the agreed
value, the dissenting shareholder shall cease to have any interest in
such shares.
If the Company fails to make such offer within the period specified
or if it makes the offer and the dissenting shareholder fails to accept
it within 30 days, then an action may be filed in any court of competent
jurisdiction in Palm Beach County, Florida requesting that the Fair Value
of such shares be determined. All dissenting shareholders who are proper
parties to the proceeding are entitled to judgment against the Company
for the amount of the Fair Value of their shares. The court may, if it so
elects, appoint one or more appraisers to receive evidence and recommend
a decision on the question of Fair Value. The Company must pay each
dissenting shareholder the amount found to be due him or her within
10 days after the final determination of the proceedings. The judgment
may, at the discretion of the court, include a fair rate of interest. The
costs and expenses of the proceeding shall be determined by the court and
shall be assessed against the Company, except that all or any part of
such costs and expenses may be apportioned and assessed as the court
deems equitable against any or all of the dissenting shareholders who are
parties to the proceeding, to whom the Company made an offer to pay for
the shares, if the court finds that the action of such shareholders in
failing to accept such offer was arbitrary, vexatious, or not in good
faith. SHAREHOLDERS WISHING TO DISSENT SHOULD CONSULT THEIR OWN COUNSEL.
As a result of the settlement, plaintiff will not pursue his motion
to enjoin preliminarily the consummation of the Merger. The settlement
contemplated by the Memorandum of Understanding is subject to numerous
conditions, including consummation of the Offer, the completion of
confirmatory discovery, the execution of a stipulation of settlement and
Court approval."
A new subsection (g) is added as follows:
"(g) 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 were included in the
Offer to Purchase and are also set forth below. 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,
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earnings before interest and income taxes ('EBIT'), earnings before
interest, income taxes, depreciation and amortization ('EBITDA') and net
earnings were projected to be:
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 income................... 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 foregoing projections are based upon certain assumptions,
including the following:
(i) Assumptions for the fiscal year ending August 31, 2000:
<TABLE>
<CAPTION>
PROJECTED
ACTUAL FOR SIX PROJECTED SIX FISCAL
MONTHS ENDED MONTHS ENDING YEAR ENDING
FEBRUARY 29, 2000 MET-RX(1) WORLDWIDE(2) AUGUST 31, 2000(3) AUGUST 31, 2000
----------------- ----------- ------------ ------------------- ----------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net revenue.......... $318,427 $54,700 $28,700 $345,673 $747,500
EBIT................. 46,869 7,848 6,087 68,592 129,396
EBITDA............... 55,588 9,466 7,359 77,690 150,103
Net income........... 28,662 2,501 2,116 41,108 74,387
</TABLE>
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(1) Represents estimated increase attributable to the January 7, 2000
acquisition of MET-Rx Nutrition, Inc. ('MET-Rx').
(2) Represents estimated increase attributable to the March 23, 2000
acquisition of Worldwide Sport Nutritional Supplements Inc.
('Worldwide').
(3) Represents actual results for the six months ended February 29, 2000,
increased by the organic sales growth in the second half of fiscal
year 2000 as compared to the first half of fiscal year 2000 and cost
savings initiatives expected to be realized during the second half of
fiscal year 2000. The operations of the SDV Vitamins mail order
division, which was sold in March 2000, and the Thompson division, which
the Company is currently attempting to sell, have been eliminated.
(ii) Assumptions for the calendar year ending December 31, 2000:
1. Projections for the September 2000 through December 2000 period have
been added to the fiscal year 2000 projections and the actual
results for the September through December 1999 period have been
eliminated.
2. Projections for September 2000 through December 2000 are assumed to
be four times the projected average monthly results during the
fourth quarter of the Company's fiscal year 2000 less approximately
$10.5 million in revenue and associated profits to account for
seasonality (as the Company's fourth quarter is generally stronger
than the first quarter of the subsequent fiscal year).
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(iii) Assumptions for the calendar year ending December 31, 2001:
1. The calendar year 2000 projections in (ii) above have been adjusted
to account for (A) inclusion of a full year of estimated MET-Rx
integration savings and (B) inclusion of a full year of estimated
Worldwide results.
2. A 15% growth rate in net revenues and EBITDA from the 2000
projections, as adjusted as described above.
(iv) Assumptions for the calendar year ending December 31, 2002:
A 15% growth rate in net revenues and EBITDA from the 2001
projections.
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. THE PROJECTIONS AND ASSUMPTIONS ARE INCLUDED IN
THIS SCHEDULE 14D-9 SOLELY BECAUSE THE PLAINTIFF IN THE LITIGATION
DEMANDED THE DISCLOSURE OF SUCH INFORMATION AS PART OF THE SETTLEMENT OF
THE LITIGATION AS DISCUSSED ABOVE. THE PROJECTIONS WERE NOT PREPARED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND WERE NOT
PREPARED WITH THE ASSISTANCE OF, 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 VARIOUS ASSUMPTIONS
INCLUDING THOSE STATED HEREIN AND MAY ALSO BE AFFECTED BY A VARIETY OF
FACTORS 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. THE 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 AND ASSUMPTIONS 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 OR ASSUMPTIONS TO BE A RELIABLE PREDICTION OF FUTURE EVENTS,
AND THE PROJECTIONS AND ASSUMPTIONS SHOULD NOT BE RELIED UPON AS SUCH.
NONE OF THE COMPANY, NUMICO, THE PURCHASER OR ANY OF THEIR RESPECTIVE
AFFILIATES ASSUMES ANY RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS,
ACCURACY OR COMPLETENESS OF THE PROJECTIONS OR ASSUMPTIONS. NONE OF
NUMICO, THE PURCHASER OR THE COMPANY IS UNDER ANY OBLIGATION TO OR HAS
ANY INTENTION TO UPDATE THE PROJECTIONS OR ASSUMPTIONS AT ANY FUTURE
TIME."
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ITEM 9. EXHIBITS.(1)
<TABLE>
<CAPTION>
<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.
(a)(6) Form of Press Release of the Company dated May 25, 2000.
* (a)(7) Letter to Shareholders of the Company dated May 25, 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) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Carl DeSantis.
+ (e)(10) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Nickolas Palin.
+ (e)(11) Employment 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.
(e)(14) Amendment to Agreement and Plan of Merger dated as of
May 25, 2000.
(e)(15) Memorandum of Understanding dated May 25, 2000.
</TABLE>
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* 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.
(1) All exhibits previously filed except for Exhibits (a)(6), (a)(7), (e)(14)
and (e)(15).
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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
</TABLE>
May 25, 2000
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ANNEX B
DISSENTERS' RIGHTS PROVISIONS
OF THE FLORIDA BUSINESS CORPORATIONS ACT
607.1301 DISSENTERS' RIGHTS; DEFINITIONS.
The following definitions apply to SectionSection 607.1302 and 607.1320:
(1) "Corporation" means the issuer of the shares held by a dissenting
shareholder before the corporate action or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(2) "Fair value," with respect to a dissenter's shares, means the value of the
shares as of the close of business on the day prior to the shareholders'
authorization date, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.
(3) "Shareholders' authorization date" means the date on which the shareholders'
vote authorizing the proposed action was taken, the date on which the
corporation received written consents without a meeting from the requisite
number of shareholders in order to authorize the action, or, in the case of
a merger pursuant to Section 607.1104, the day prior to the date on which a
copy of the plan of merger was mailed to each shareholder of record of the
subsidiary corporation.
607.1302 RIGHT OF SHAREHOLDERS TO DISSENT.
(1) Any shareholder of a corporation has the right to dissent from, and
obtain payment of the fair value of his or her shares in the event of, any of
the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party;
1. If the shareholder is entitled to vote on the merger, or
2. If the corporation is a subsidiary that is merged with its parent
under Section 607.1104, and the shareholders would have been entitled to
vote on action taken, except for the applicability of Section 607.1104;
(b) Consummation of a sale or exchange of all, or substantially all, of the
property of the corporation, other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange
pursuant to Section 607.1202, including a sale in dissolution but not including
a sale pursuant to court order or a sale for cash pursuant to a plan by which
all or substantially all of the net proceeds of the sale will be distributed to
the shareholders within 1 year after the date of sale;
(c) As provided in Section 607.0902(11), the approval of a control-share
acquisition;
(d) Consummation of a plan of share exchange to which the corporation is a
party as the corporation the shares of which will be acquired, if the
shareholder is entitled to vote on the plan;
(e) Any amendment of the articles of incorporation if the shareholder is
entitled to vote on the amendment and if such amendment would adversely affect
such shareholder by:
1. Altering or abolishing any preemptive rights attached to any of
his or her shares;
2. Altering or abolishing the voting rights pertaining to any of his
or her shares, except as such rights may be affected by the voting rights
of new shares then being authorized of any existing or new class or
series of shares;
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3. Effecting an exchange, cancellation, or reclassification of any
of his or her shares, when such exchange, cancellation, or
reclassification would alter or abolish the shareholder's voting rights
or alter his or her percentage of equity in the corporation, or effecting
a reduction or cancellation of accrued dividends or other arrearages in
respect to such shares;
4. Reducing the stated redemption price of any of the shareholder's
redeemable shares, altering or abolishing any provision relating to any
sinking fund for the redemption or purchase of any of his or her shares,
or making any of his or her shares subject to redemption when they are
not otherwise redeemable;
5. Making noncumulative, in whole or in part, dividends of any of
the shareholder's preferred shares which had theretofore been cumulative;
6. Reducing the stated dividend preference of any of the
shareholder's preferred shares; or
7. Reducing any stated preferential amount payable on any of the
shareholder's preferred shares upon voluntary or involuntary liquidation;
or
(f) Any corporate action taken, to the extent the articles of
incorporation provide that a voting or nonvoting shareholder is entitled to
dissent and obtain payment for his or her shares.
(2) A shareholder dissenting from any amendment specified in paragraph
(1)(e) has the right to dissent only as to those of his or her shares which
are adversely affected by the amendment.
(3) A shareholder may dissent as to less than all the shares registered
in his or her name. In that event, the shareholder's rights shall be
determined as if the shares as to which he or she has dissented and his or
her other shares were registered in the names of different shareholders.
(4) Unless the articles of incorporation otherwise provide, this section
does not apply with respect to a plan of merger or share exchange or a
proposed sale or exchange of property, to the holders of shares of any class
or series which, on the record date fixed to determine the shareholders
entitled to vote at the meeting of shareholders at which such action is to
be acted upon or to consent to any such action without a meeting, were
either registered on a national securities exchange or designated as a
national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc., or held of record by not
fewer than 2,000 shareholders.
(5) A shareholder entitled to dissent and obtain payment for his or her
shares under this section may not challenge the corporate action creating
his or her entitlement unless the action is unlawful or fraudulent with
respect to the shareholder or the corporation.
607.1320 PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS.
(1) (a) If a proposed corporate action creating dissenters' rights under
Section 607.1302 is submitted to a vote at a shareholders' meeting, the meeting
notice shall state that shareholders are or may be entitled to assert
dissenters' rights and be accompanied by a copy of SectionSection 607.1301,
607.1302 and 607.1320. A shareholder who wishes to assert dissenters' rights
shall:
1. Deliver to the corporation before the vote is taken written notice
of the shareholder's intent to demand payment for his or her shares if the
proposed action is effectuated, and
2. Not vote his or her shares in favor of the proposed action. A proxy
or vote against the proposed action does not constitute such a notice of
intent to demand payment.
(b) If proposed corporate action creating dissenters' rights under
Section 607.1302 is effectuated by written consent without a meeting, the
corporation shall deliver a copy of SectionSection 607.1301, 607.1302 and
B-2
<PAGE>
607.1320 to each shareholder simultaneously with any request for the
shareholder's written consent or, if such a request is not made, within 10 days
after the date the corporation received written consents without a meeting from
the requisite number of shareholders necessary to authorize the action.
(2) Within 10 days after the shareholders' authorization date, the
corporation shall give written notice of such authorization or consent or
adoption of the plan of merger, as the case may be, to each shareholder who
filed a notice of intent to demand payment for his or her shares pursuant to
paragraph (1)(a) or, in the case of action authorized by written consent, to
each shareholder, excepting any who voted for, or consented in writing to, the
proposed action.
(3) Within 20 days after the giving of notice to him or her, any shareholder
who elects to dissent shall file with the corporation a notice of such election,
stating the shareholder's name and address, the number, classes, and series of
shares as to which he or she dissents, and a demand for payment of the fair
value of his or her shares. Any shareholder failing to file such election to
dissent within the period set forth shall be bound by the terms of the proposed
corporate action. Any shareholder filing an election to dissent shall deposit
his or her certificates for certificated shares with the corporation
simultaneously with the filing of the election to dissent. The corporation may
restrict the transfer of uncertificated shares from the date the shareholder's
election to dissent is filed with the corporation.
(4) Upon filing a notice of election to dissent, the shareholder shall
thereafter be entitled only to payment as provided in this section and shall not
be entitled to vote or to exercise any other rights of a shareholder. A notice
of election may be withdrawn in writing by the shareholder at any time before an
offer is made by the corporation, as provided in subsection (5), to pay for his
or her shares. After such offer, no such notice of election may be withdrawn
unless the corporation consents thereto. However, the right of such shareholder
to be paid the fair value of his or her shares shall cease, and the shareholder
shall be reinstated to have all his or her rights as a shareholder as of the
filing of his or her notice of election, including any intervening preemptive
rights and the right to payment of any intervening dividend or other
distribution or, if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu thereof, at the
election of the corporation, the fair value thereof in cash as determined by the
board as of the time of such expiration or completion, but without prejudice
otherwise to any corporate proceedings that may have been taken in the interim,
if:
(a) Such demand is withdrawn as provided in this section;
(b) The proposed corporate action is abandoned or rescinded or the
shareholders revoke the authority to effect such action;
(c) No demand or petition for the determination of fair value by a court
has been made or filed within the time provided in this section; or
(d) A court of competent jurisdiction determines that such shareholder
is not entitled to the relief provided by this section.
(5) Within 10 days after the expiration of the period in which shareholders
may file their notices of election to dissent, or within 10 days after such
corporate action is effected, whichever is later (but in no case later than 90
days from the shareholders' authorization date), the corporation shall make a
written offer to each dissenting shareholder who has made demand as provided in
this section to pay an amount the corporation estimates to be the fair value for
such shares. If the corporate action has not been consummated before the
expiration of the 90-day period after the shareholders' authorization date, the
offer may be made conditional upon the consummation of such action. Such notice
and offer shall be accompanied by:
(6) A balance sheet of the corporation, the shares of which the dissenting
shareholder holds, as of the latest available date and not more than 12 months
prior to the making of such offer; and
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<PAGE>
(7) A profit and loss statement of such corporation for the 12-month period
ended on the date of such balance sheet or, if the corporation was not in
existence throughout such 12-month period, for the portion thereof during which
it was in existence.
(8) If within 30 days after the making of such offer any shareholder accepts
the same, payment for his or her shares shall be made within 90 days after the
making of such offer or the consummation of the proposed action, whichever is
later. Upon payment of the agreed value, the dissenting shareholder shall cease
to have any interest in such shares.
(9) If the corporation fails to make such offer within the period specified
therefor in subsection (5) or if it makes the offer and any dissenting
shareholder or shareholders fail to accept the same within the period of 30 days
thereafter, then the corporation, within 30 days after receipt of written demand
from any dissenting shareholder given within 60 days after the date on which
such corporate action was effected, shall, or at its election at any time within
such period of 60 days may, file an action in any court of competent
jurisdiction in the county in this state where the registered office of the
corporation is located requesting that the fair value of such shares be
determined. The court shall also determine whether each dissenting shareholder,
as to whom the corporation requests the court to make such determination, is
entitled to receive payment for his or her shares. If the corporation fails to
institute the proceeding as herein provided, any dissenting shareholder may do
so in the name of the corporation. All dissenting shareholders (whether or not
residents of this state), other than shareholders who have agreed with the
corporation as to the value of their shares, shall be made parties to the
proceeding as an action against their shares. The corporation shall serve a copy
of the initial pleading in such proceeding upon each dissenting shareholder who
is a resident of this state in the manner provided by law for the service of a
summons and complaint and upon each nonresident dissenting shareholder either by
registered or certified mail and publication or in such other manner as is
permitted by law. The jurisdiction of the court is plenary and exclusive. All
shareholders who are proper parties to the proceeding are entitled to judgment
against the corporation for the amount of the fair value of their shares. The
court may, if it so elects, appoint one or more persons as appraisers to receive
evidence and recommend a decision on the question of fair value. The appraisers
shall have such power and authority as is specified in the order of their
appointment or an amendment thereof. The corporation shall pay each dissenting
shareholder the amount found to be due him or her within 10 days after final
determination of the proceedings. Upon payment of the judgment, the dissenting
shareholder shall cease to have any interest in such shares.
(10) The judgment may, at the discretion of the court, include a fair rate
of interest, to be determined by the court.
(11) The costs and expenses of any such proceeding shall be determined by
the court and shall be assessed against the corporation, but all or any part of
such costs and expenses may be apportioned and assessed as the court deems
equitable against any or all of the dissenting shareholders who are parties to
the proceeding, to whom the corporation has made an offer to pay for the shares,
if the court finds that the action of such shareholders in failing to accept
such offer was arbitrary, vexatious, or not in good faith. Such expenses shall
include reasonable compensation for, and reasonable expenses of, the appraisers,
but shall exclude the fees and expenses of counsel for, and experts employed by,
any party. If the fair value of the shares, as determined, materially exceeds
the amount which the corporation offered to pay therefor or if no offer was
made, the court in its discretion may award to any shareholder who is a party to
the proceeding such sum as the court determines to be reasonable compensation to
any attorney or expert employed by the shareholder in the proceeding.
(12) Shares acquired by a corporation pursuant to payment of the agreed
value thereof or pursuant to payment of the judgment entered therefor, as
provided in this section, may be held and disposed of by such corporation as
authorized but unissued shares of the corporation, except that, in the case of a
merger, they may be held and disposed of as the plan of merger otherwise
provides. The shares of the surviving corporation into which the shares of such
dissenting shareholders would have been converted had they assented to the
merger shall have the status of authorized but unissued shares of the surviving
corporation.
B-4
<PAGE>
CONTACTS:
Royal Numico N.V.
Klaas A. de Jong, Director Corporate Affairs
FOR IMMEDIATE RELEASE +31 79 353 9221
Jacqueline van der Klift, Investor Relations
Manager
+31 79 353 9003
Edward Nebb, BSMG Worldwide
212-445-8213
Rexall Sundown, Inc.
Carol Walters (Media)
561-999-1960
Donna Conners (Investors)
561-241-9400
Karen Griffiths, FRB/BSMG
212-661-8030
ROYAL NUMICO AND REXALL SUNDOWN
ANNOUNCE AGREEMENT IN PRINCIPLE TO SETTLE
Shareholder LITIGATION
ZOETERMEER, THE NETHERLANDS AND BOCA RATON, FLORIDA - May 25, 2000 - Royal
Numico N.V. ("Royal Numico") (Amsterdam Stock Exchange: NUM) and Rexall
Sundown, Inc. ("Rexall") (Nasdaq: RXSD) announced today that they had
reached an agreement in principle to settle litigation pending in the Circuit
Court of Palm Beach County, Florida brought on behalf of a class of Rexall
shareholders against Rexall, Rexall's directors and an affiliate of Royal
Numico. The plaintiff in the litigation sought, among other things, to
enjoin the Rexall directors from proceeding with the previously announced
merger agreement which provides for the acquisition by Royal Numico of Rexall
through a tender offer and merger at $24 per share (the "Merger").
Pursuant to the agreement in principle to settle the Rexall shareholder
litigation, Royal Numico and Rexall have agreed (i) to reduce the maximum fee
and reimbursement of expenses payable by Rexall to Royal Numico in the event
of termination of the merger agreement under certain circumstances from $79
million to $60 million; (ii) to provide Rexall shareholders with appraisal
rights in connection with the Merger even if such rights are not available
under applicable law; and (iii) to make certain supplemental disclosures to
Rexall's shareholders confirming the absence of any inquiries by third
parties regarding the possible acquisition of Rexall since the announcement
of the Merger, describing the assumptions underlying previously disclosed
financial projections of Rexall, and clarifying the fact that receipt by
Rexall's financial adviser of its transaction fee is not dependent upon the
issuance of a fairness opinion regarding the Merger.
Royal Numico, Rexall and Rexall's directors have vigorously denied any
wrongdoing or liability in connection with the allegations made in the
litigation, and have entered into the agreement in principle solely to avoid
the burdens, expenses and distractions of continued litigation.
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Final settlement of the litigation is conditioned upon, among other things,
consummation of the Offer, the completion of confirmatory discovery, the
execution of a stipulation of settlement, and court approval.
As previously announced, the waiting period required under the United
States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in
connection with Royal Numico's tender offer for all of the outstanding shares
of common stock of Rexall expired on May 17, 2000. Royal Numico's tender
offer is scheduled to expire at 12:00 midnight, New York City time, on
Friday, June 2, 2000.
Royal Numico (www.numico.com), headquartered in Zoetermeer, the
Netherlands, is a world leader in specialized nutrition. A holding company
for a group of companies including General Nutrition Companies, Nutricia,
Milupa and Cow & Gate, its products include infant nutrition, medical
nutrition and nutritional supplements. Royal Numico concentrates on the
development, manufacture and sales of specialized nutrition products based
upon medical scientific concepts with a high added value. The company
operates in some 100 countries.
Rexall (www.rexallsundown.com), headquartered in Boca Raton, Florida, is a
leading manufacturer and marketer of vitamins, nutritional supplements and
consumer health products primarily for the U.S. mass market.
2
<PAGE>
EX-(a)(7)
LETTER TO SHAREHOLDERS
[LOGO] MAY 25, 2000
REXALL SUNDOWN, INC.
6111 BROKEN SOUND PARKWAY, NW
BOCA RATON, FLORIDA 33487-3693
To the Shareholders of Rexall Sundown, Inc.:
On May 5, 2000, we reported that Rexall Sundown, Inc. (the "Company") had,
on April 30, 2000, entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Royal Numico N.V. ("Numico") and Nutricia Investment Corp. (the
"Purchaser"), providing for the acquisition of all of the outstanding shares of
our Common Stock at a price of $24 per share, net to the seller in cash, without
interest.
Our Solicitation/Recommendation Statement on Schedule 14D-9 reported that
litigation had been commenced against the Company and its directors seeking,
among other remedies, to enjoin the Merger. I am pleased to report that a
Memorandum of Understanding to settle the litigation has been signed.
As part of the Memorandum of Understanding, the Company, Numico and the
Purchaser agreed to amend the Merger Agreement to reduce the Termination Fee and
expenses payable by the Company upon termination of the Merger Agreement under
certain circumstances. The amendment also provides Company shareholders with
appraisal rights in connection with the Merger, even if such rights are not
available under Florida law.
Under the Memorandum of Understanding, the Company also agreed to supplement
its prior disclosure to advise, among other things, of the absence of any
expression of interest, offer or proposal to acquire the Company since the
announcement of the Merger Agreement, the underlying assumptions with respect to
certain projections provided to the Purchaser and the fact that receipt by our
financial advisor of its transaction fee is not dependent upon the issuance of a
fairness opinion.
I am further pleased to advise that on May 17, 2000, the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 expired. No
further approvals or clearances relating to antitrust laws are required in
connection with the Offer or Merger.
Accompanying this letter is a copy of the amendment to the Company's
Solicitation/ Recommendation Statement on Schedule 14D-9.
WE URGE YOU TO READ THE ENCLOSED MATERIALS CAREFULLY.
Sincerely,
/s/ Damon DeSantis
Damon DeSantis
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER (this "First
Amendment") is entered into as of this 25th day of May 2000, by and among
Koninklijke Numico N.V., a company incorporated under the laws of the
Netherlands ("Parent"), Nutricia Investment Corp., a Florida corporation
("Merger Sub") and Rexall Sundown, Inc., a Florida corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Parent, Merger Sub and Company entered into an Agreement and
Plan of Merger dated as of April 30, 2000 (the "Agreement"), and now desire to
amend such Agreement.
NOW, THEREFORE, for and in consideration of the premises and mutual
agreements herein contained and for the purposes of setting forth the terms and
conditions of this First Amendment, the parties, intending to be bound, hereby
agree as follows:
1. INCORPORATION OF THE AGREEMENT. All capitalized terms which are not
defined herein shall have the same meanings as set forth in the Agreement, and
the Agreement, to the extent not inconsistent with this First Amendment, is
incorporated herein by this reference as though the same was set forth in its
entirety. To the extent any terms and provisions of the Agreement are
inconsistent with the amendments set forth in PARAGRAPH 2 below, such terms and
provisions shall be deemed superseded hereby. Except as specifically set forth
herein, the Agreement shall remain in full force and effect and its provisions
shall be binding on the parties hereto.
2. AMENDMENT OF THE AGREEMENT. The Agreement is hereby amended as
follows:
a. Paragraph (h) of SECTION 2.9 of the Agreement is amended and
restated in its entirety as follows:
(h) DISSENTING SHARES. Notwithstanding anything in this Agreement to
the contrary, and despite the fact that the FBCA may not provide for
such a right, shares of Company Common Stock that are issued and
outstanding immediately prior to the Effective Time and which are held
by shareholders ("Dissenting Shareholders") who (i) have not voted in
favor of or consented to the Merger, (ii) to the extent required by
and in the manner provided in Section 607.1320 of the FBCA, shall
have delivered a written notice of intent to demand payment for such
shares of Company Common Stock if the Merger is effectuated in the
time and manner provided in FBCA and (iii)
shall not have failed to perfect or shall not have effectively
withdrawn or lost their rights to appraisal and payment under the FBCA
shall not be converted into the right to receive the Merger
Consideration, but shall, in lieu thereof, be entitled to receive the
consideration as shall be determined pursuant to Sections 607.1301
through 607.1320 of the FBCA;
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<PAGE>
provided, however, that any such holder who shall have failed to
perfect or shall have effectively withdrawn or lost his, her or its
right to appraisal and payment under the FBCA, shall thereupon be
deemed to have had such person's shares of Company Common Stock
converted, at the Effective Time, into the right to receive the Merger
Consideration set forth herein, without any interest or dividends
thereon. Notwithstanding anything to the contrary contained in this
Section 2.9(h), if (A) the Merger is rescinded or abandoned or (B) the
shareholders of the Company revoke the authority to effect the Merger,
then the right of any Dissenting Shareholder to be paid the fair value
of such Dissenting Shareholder's Shares shall cease. The Company will
give Parent prompt notice of any demands received by the Company for
appraisals of Company Common Stock held by Dissenting Shareholders. The
Company shall not, except with the prior written consent of Parent,
make any payment with respect to any demands for appraisal or offer to
settle or settle any such demands.
b. Paragraph (b) of SECTION 7.2 of the Agreement is amended and
restated in its entirety as follows:
(b) In the event that this Agreement is terminated pursuant to
Section 7.1(d), Section 7.1(e) (due to a material breach of any
material covenant or agreement on the part of the Company contained in
Article I hereof, or in Sections 5.1, 5.2, 5.3, 5.4, 5.8, 5.9, 5.10 or
7.1(i) hereof), Section 7.1(h), Section 7.1(i), or Section 7.1(j),
then the Company shall pay Parent in cash (A) U.S. $60,000,000 plus
(B) up to U.S. $10,000,000 of Parent's Expenses incurred in connection
with the Offer and Merger. The amounts set forth in this Section
7.2(b) shall be payable by wire transfer of immediately available
funds (A) prior to such termination by the Company pursuant to Section
7.1(i) or (B) on the date of such termination by Parent pursuant to
Section 7.1(d), Section 7.1(e), Section 7.1(h) or Section 7.1(j). The
Company acknowledges that the agreements contained in this Section
7.2(b) are an integral part of the transaction contemplated in this
Agreement, and that, without these agreements, Parent and Merger Sub
would not enter into this Agreement. In the event the Company shall
fail to pay any amount payable pursuant to this Section 7.2(b) when
due, the Expenses of Parent and Merger Sub shall be deemed to include
(i) the costs and expenses actually incurred or accrued by Parent and
Merger Sub (including, without limitations, fees and expenses of
counsel) in connection with the collection under the enforcement of
this Section 7.2(b), together with (ii) interest on such unpaid
amounts, commencing on the date that such amounts became due, at a
rate equal to the prime rate of Citibank, N.A. on the date that such
amounts became due plus 2.00% per annum.
3. EFFECTUATION. The amendment to the Agreement contemplated by this
First Amendment shall be deemed effective as of the date first written above
upon the full execution of this First Amendment and without any further action
required by the parties hereto. There are no conditions precedent or subsequent
to the effectiveness of this First Amendment.
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<PAGE>
4. COUNTERPARTS. This First Amendment may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this First
Amendment as of the date first above written.
"PARENT": KONINKLIJKE NUMICO N.V.
By: /s/ Julitte van der Ven
----------------------------
Name: Julitte van der Ven
Title: Attorney-in-Fact
"MERGER SUB": NUTRICIA INVESTMENT CORP.
By: /s/ Julitte van der Ven
----------------------------
Name: Julitte van der Ven
Title: President
"COMPANY": REXALL SUNDOWN, INC.
By: /s/ Damon DeSantis
----------------------------
Name: Damon DeSantis
Title: President and CEO
3
<PAGE>
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding ("Memorandum") is entered into by
and among (i) Lawrence Peccatiello ("Plaintiff") and (ii) Rexall Sundown,
Inc. ("Rexall" or the "Company"), Nutricia Investment Corporation
("Nutricia") and the Rexall directors named as individual defendants (the
"Individual Defendants") (collectively, "Defendants") in the action captioned
LAWRENCE PECCATIELLO V. CARL DESANTIS, ET AL., Case No. CL 00-4284 AO,
pending before the Circuit Court of the 15th Judicial Circuit, in and for
Palm Beach County, Florida (respectively, the "Action" and the "Court").
WHEREAS:
A. Plaintiff is and has been the beneficial owner of shares of
common stock of the Company ("Common Stock") at all times as of and since the
date of the filing of the complaint in the Action.
B. On May 1, 2000, Rexall, Nutricia and Koninklijke Numico N.V.,
Nutricia's parent corporation ("Numico"), announced that they had entered
into an Agreement and Plan of Merger, dated as of April 30, 2000 (the "Merger
Agreement") regarding the acquisition of Rexall by Numico in an all-cash
transaction valued at approximately $1.7 billion. Pursuant to the Merger
Agreement, Nutricia has commenced a tender offer to acquire all of the
outstanding shares of Rexall for $24.00 per share in cash (the "Tender
Offer"). Following the Tender Offer, Numico will proceed with a second-step
merger (the "Merger") to complete the acquisition of Rexall, and any Rexall
shares not purchased in the Tender Offer will be acquired in the Merger for
$24.00 per share in cash.
C. The initial complaint in the Action was filed on May 1, 2000
and subsequently amended on May 22, 2000 (as amended, the "Complaint"). The
Action was filed on behalf of a putative class consisting of all holders of
the Company's Common Stock, other than Defendants and any person, firm,
trust, corporation or other entity related or affiliated with any of the
Defendants. The Complaint generally alleges that the Individual Defendants,
aided and abetted by Nutricia, engaged in breaches of fiduciary duties
purportedly owed to the Company's stockholders. The Action seeks to enjoin
the consummation of the Merger, and to compel the Individual Defendants to
carry out their fiduciary duties to Plaintiff and the Company's stockholders.
On May 22, 2000, Rexall and the Individual Defendants filed a motion to
dismiss the initial complaint.
D. On May 16, 2000, the Court denied without prejudice plaintiff's
motion to conduct expedited discovery in anticipation of seeking to enjoin
preliminarily consummation of the Merger. On May 19, 2000, plaintiff renewed
his motion for expedited discovery and filed a motion to enjoin preliminarily
the Company and the Company's directors from proceeding to consummate the
Merger. Plaintiff filed on May 22, 2000 an amended complaint adding Nutricia
as a defendant and alleging that Nutricia is aiding and abetting the alleged
breaches of fiduciary duties by the Company's directors. The Company and the
Company's directors served on May 22, 2000 a motion to dismiss the complaint
based on the legal insufficiency of plaintiff's allegations. On May 24, 2000,
the Company and the Company's directors served a motion to dismiss
plaintiff's amended complaint based on the legal insufficiency of plaintiff's
allegations.
E. On May 25, 2000, following extensive discussions and
negotiations, counsel for Plaintiff and Defendants reached an
agreement-in-principle concerning the proposed settlement of the Action which
would result in the public stockholders of the Company receiving a more
favorable transaction than that originally proposed.
F. Because counsel for Plaintiff and Defendants in this Action
have concluded that the terms contained in this Memorandum are fair and
adequate to both the Company and its stockholders and that it is reasonable
to pursue a settlement of the Action based upon the procedures outlined
herein and the substantial benefits and protections offered herein, the
parties wish to document their agreement-in-principle in this Memorandum.
<PAGE>
NOW, THEREFORE, the parties to the Action have reached an agreement
providing for the settlement of the Action on the terms and subject to the
conditions set forth below (the "Settlement"):
1. The purpose of this Memorandum is to set forth the
agreement-in-principle of the parties to the Action with respect to the
matters addressed below. However, the obligations of the parties pursuant to
this Memorandum are subject to modifications, if necessary, to ensure that
the terms thereof will not generate any adverse tax, accounting, financing or
other consequences to the parties (including to enable the parties to obtain
any necessary third party consents). Any necessary adjustments will be made
on a mutually agreeable basis so as to preserve the economic, operational and
other objectives of the parties in reaching this agreement-in-principle.
2. Subject to compliance with all applicable securities laws and
other legal requirements, Numico, Nutricia and the Company will proceed with
the Tender Offer and the Merger pursuant to the terms of the Merger
Agreement, subject to the modifications described below. In consideration for
the full settlement and release of all Settled Claims (as defined below), and
subject in all respects to all terms and conditions of the Merger Agreement,
the parties agree that:
a. The Company, Numico and Nutricia shall cause Section 7.2
of the Merger Agreement to be amended to (i) reduce the termination fee set
forth in subparagraph (b)(A) of Section 7.2 from U.S. $65,000,000 to U.S.
$50,000,000; and (ii) reduce the expense reimbursement fee set forth in
subparagraph (b)(B) of Section 7.2 from U.S. $14,000,000 to U.S. $10,000,000.
b. The Company, Numico and Nutricia shall cause Section
2.9(h) of the Merger Agreement to be amended and restated in its entirety as
follows:
DISSENTING SHARES. Notwithstanding anything in this Agreement to
the contrary, and despite the fact that the FBCA may not provide
for such a right, shares of Company Common Stock that are issued
and outstanding immediately prior to the Effective Time and which
are held by shareholders ("Dissenting Shareholders") who (i) have
not voted in favor of or consented to the Merger, (ii) to the
extent required by and in the manner provided in Section 607.1320
of the FBCA, shall have delivered a written notice of intent to
demand payment for such shares of Company Common Stock if the
Merger is effectuated in the time and manner provided in FBCA and
(iii) shall not have failed to perfect or shall not have effectively
withdrawn or lost their rights to appraisal and payment under the
FBCA shall not be converted into the right to receive the Merger
Consideration, but shall, in lieu thereof, be entitled to receive
the consideration as shall be determined pursuant to Sections
607.1301 through 607.1320 of the FBCA; provided, however, that any
such holder who shall have failed to perfect or shall have
effectively withdrawn or lost his, her or its right to appraisal
and payment under the FBCA, shall thereupon be deemed to have had
such person's shares of Company Common Stock converted, at the
Effective Time, into the right to receive the Merger Consideration
set forth herein, without any interest or dividends thereon.
Notwithstanding anything to the contrary contained in this Section
2.9(h), if (A) the Merger is rescinded or abandoned or (B) the
shareholders of the Company revoke the authority to effect the
Merger, then the right of any Dissenting Shareholder to be paid the
fair value of such Dissenting Shareholder's Shares shall cease. The
Company will give parent prompt notice of any demands received by
the Company for appraisals of Company Common Stock held by
Dissenting Shareholders. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to
any demands for appraisal or offer to settle or settle any such
demands.
c. As promptly as practicable, the Company shall issue a
supplemental disclosure statement which describes the following in a manner
reasonably acceptable to Plaintiff's counsel:
A. the amendments to the Merger Agreement set forth
in paragraphs 2.a and 2.b of this Memorandum;
B. the status of any inquiries by third parties to
the Company since the announcement of the Merger Agreement on
May 1, 2000 with respect to any expression of interest, offer
or proposal to acquire all or more than 15% of the Company's
businesses, assets or capital shares whether by merger,
consolidation, other business combination, purchase of assets,
reorganization, tender or exchange offer or otherwise;
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<PAGE>
C. the assumptions underlying the Company's financial
projections set forth in Section 8 of Exhibit (a)(1) to the
Schedule TO filed by Numico and Nutricia with the Securities
and Exchange Commission on May 5, 2000;
D. the terms and conditions on which Morgan Stanley is
entitled to be paid a transaction fee upon consummation of the
Merger and not in consideration for its issuance of a fairness
opinion regarding the Merger; and
E. the terms and conditions of the Settlement.
3. Subject to such reasonable and appropriate confirmatory
discovery as Plaintiff and Defendants agree, Plaintiff agrees to enter into a
settlement stipulation (and such other related documentation as may be
necessary) which will provide for the settlement of the Action (the
"Settlement Agreement"). Among other things, the Settlement Agreement
expressly will provide as follows:
a. for the conditional certification of the Action, for
settlement purposes only, as a class action pursuant to Rule 1.220(b)(1) and
(b)(2) of the Florida Rules of Civil Procedure on behalf a class consisting
of all record and beneficial holders of Common Stock of the Company (other
than the Defendants and any person, firm, trust, corporation or other entity
related or affiliated with any of the Defendants) for the period from and
including April 30, 2000 through and including the effective date of the
Merger, including any and all of their respective successors in interest,
predecessors, representatives, trustees, executors, administrators, heirs,
assigns or transferees, immediate and remote, and any person or entity acting
for or on behalf of, or claiming under any of them, and each of them (the
"Class");
b. for the complete discharge, dismissal with prejudice,
settlement and release of, and an injunction barring, all claims, demands,
rights, actions or causes of action, rights, liabilities, damages, losses,
obligations, judgments, suits, matters and issues of any kind or nature
whatsoever, whether known or unknown, contingent or absolute, suspected or
unsuspected, disclosed or undisclosed, hidden or concealed, matured or
unmatured, that have been, could have been, or in the future can or might be
asserted in the Action or in any court, tribunal or proceeding (including,
but not limited to, any claims arising under federal or state law relating to
alleged fraud, breach of any duty, negligence, violations of the federal
securities laws or otherwise) by or on behalf of any member of the Class,
whether individual, class, derivative, representative, legal, equitable or
any other type or in any other capacity against Defendants in the Action, or
any of their families, parent entities, associates, affiliates or
subsidiaries and each and all of their respective past, present or future
officers, directors, stockholders, representatives, employees, attorneys,
financial or investment advisors, consultants, accountants, investment
bankers, commercial bankers, engineers, advisors or agents, heirs, executors,
trustees, general or limited partners or partnerships, personal
representatives, estates, administrators, predecessors, successors and
assigns (collectively, the "Released Persons") which have arisen, could have
arisen, arise now or hereafter arise out of, or relate in any manner to, the
allegations, facts, events, transactions, acts, occurrences, statements,
representations,
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misrepresentations, omissions or any other matter, thing or cause whatsoever,
or any series thereof, embraced, involved, set forth or otherwise related,
directly or indirectly, to the complaint in the Action, the Merger Agreement,
the Tender Offer, the Merger, and any Tender Offer or proxy material, public
filings or statements (including, but not limited to, public statements) by
any of the Defendants in the Action or any other Released Persons in
connection with the Tender Offer, the Merger Agreement or the Merger
(collectively, the "Settled Claims"); provided, however, that the Settled
Claims shall not include (x) any properly perfected appraisal rights in
connection with the Merger, and (y) any of the claims asserted in the
following pending litigation; (i) IN RE REXALL SUNDOWN, INC. SECURITIES
LITIGATION Case No. 98-8798-CIV-DIMITROULEAS, in the United States District
Court for the Southern District of Florida; (ii) FOLBAUM ET AL. V. REXALL
SUNDOWN INC., ET AL., No. L-8625-98, in the Superior Court of New Jersey,
Camden County; and (iii) HUTSON V. REXALL SUNDOWN, INC., Case No. 98-10769AI,
in the Circuit Court of the Fifteen Judicial Circuit in and for Palm Beach
County, Florida.
c. that Defendants have denied, and continue to deny, that
any of them have committed or have threatened to commit any violations of law
or breaches of duty to Plaintiff, the Class or anyone;
d. that Defendants are entering into the Settlement Agreement
solely because the proposed Settlement would eliminate the distraction,
burden and expense of further litigation; and
e. subject to the Order of the Court, pending final
determination of whether the Settlement provided for in the Settlement
Agreement should be approved, that Plaintiff and all members of the Class, or
any of them, are barred and enjoined from commencing, prosecuting,
instigating or in any way participating in the commencement or prosecution of
any action asserting any Settled Claims against any of the Released Persons.
4. The parties to the Action will use their best efforts to
complete the discovery contemplated by this Memorandum and to agree upon,
execute and present to the Court, as soon as practicable, a formal Settlement
Agreement and such other documents as may be necessary and appropriate in
order to obtain the prompt approval by the Court of the Settlement and the
dismissal with prejudice of the Action in the manner contemplated herein and
by the Settlement Agreement. Pending the negotiation and execution of the
Settlement Agreement, all proceedings in the Action, except for
Settlement-related proceedings pursuant to this Memorandum, shall be
suspended.
5. Plaintiff will cooperate with Defendants in all reasonable
respects in connection with implementation of the Merger Agreement and the
other understandings set forth herein. The parties to the Action, through
their counsel, (i) agree to use their best efforts to pursue the Settlement
in as expeditious and comprehensive a manner as possible and acknowledge that
time is of the essence; and (ii) agree to cooperate in preparing any and all
necessary papers to define, pursue and effectuate the Settlement.
6. Pending negotiation, execution and Court approval of the
Settlement Agreement and Settlement, the Plaintiff in the Action agrees to
stay any discovery and to stay and not to initiate any proceedings other than
those incident to the Settlement itself. The parties also agree to use their
best efforts to prevent, stay or seek dismissal of or oppose entry of any
interim or final relief in favor of any member of the Class in any other
litigation against any of the parties to this Memorandum which challenges the
Settlement, the Merger Agreement, the Tender Offer or the Merger or otherwise
involves a Settled Claim (other than an action involving solely dissenters'
appraisal rights in connection with the Merger).
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7. The Settlement contemplated by this Memorandum will not be
binding upon any party until, and is otherwise subject to:
a. the completion by Plaintiff in the Action of such
documentary discovery and/or oral depositions or interviews as reasonably are
requested by him and agreed to by the respective party from whom discovery is
requested (the scope of such discovery having been discussed by the parties
prior to the execution of this Memorandum);
b. the execution of a formal Settlement Agreement (and such
other documentation as may be required to obtain final approval by the Court
of the Settlement) by counsel for the parties to the Action, which Settlement
Agreement shall include a provision permitting Defendants to terminate the
Settlement if, prior to the Effective Date of the Settlement (as defined
below), any action is pending in any state or federal court which raises any
Settled Claims against any of the Released Persons;
c. the consummation of the Tender Offer;
d. final approval by the Court of the Settlement (and the
exhaustion of possible appeals, if any) and the dismissal of the Action by
the Court with prejudice and without awarding costs to any party (except as
provided herein) having been obtained, and entry by the Court of a final
order and judgment containing such release language as is contained in the
Settlement Agreement; and
e. the determination by Defendants in the Action that the
dismissal of the Action in accordance with the Settlement Agreement will
result in the release with prejudice of the Settled Claims.
8. This Memorandum shall be null and void and of no force and
effect should any of the conditions set forth herein not be met or should
Plaintiff's counsel in the Action determine in good faith that, based upon
the discovery contemplated by this Memorandum, the proposed Settlement is not
fair, reasonable and adequate; in such event, this Memorandum shall not be
deemed to prejudice in any way the positions of the parties with respect to
the Action nor to entitle any party to the recovery of costs and expenses
incurred to implement this Memorandum (except as provided in paragraph 10
hereof for the costs of notice of the Settlement).
9. The Effective Date of the Settlement shall be the date on which
the order of the Court approving the Settlement becomes final and no longer
subject to further appeal or review, whether by exhaustion of any possible
appeal, lapse of time or otherwise.
10. The Company shall be responsible for providing notice of the
Settlement to the members of the Class. The Company shall pay, on behalf of
and for the benefit of the Individual Defendants in the Action, all
reasonable costs and expenses incurred in providing notice of the Settlement
to the members of the Class and shall cooperate with Plaintiff's counsel in
providing such information as is reasonably available to it and reasonably
identifies potential Class members.
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11. With the exception of any fees and expenses which may be
awarded or approved by the Court to counsel for Plaintiff in the Action,
which shall be the sole responsibility of the Company and/or its successors
in interest acting on behalf of and for the benefit of the Individual
Defendants, the parties in the Action shall bear no other expenses, costs,
damages or fees alleged or incurred by any other party or, by any member of
the Class, or by any of their attorneys, experts, advisors, agents or
representatives (except for the costs of notice set forth in paragraph 10 of
this Memorandum).
12. The provisions contained in this Memorandum shall not be deemed
a presumption, concession or an admission by any Defendant in the Action of
any fault, liability or wrongdoing as to any facts or claims alleged or
asserted in the Action, or any other actions or proceedings, and shall not be
interpreted, construed, deemed, invoked, offered, or received in evidence or
otherwise used by any person in the Action, or in any other action or
proceeding, whether civil, criminal or administrative.
13. This Memorandum constitutes the entire agreement among the
parties with respect to the subject matter hereof, and may not be amended nor
any of its provisions waived except by a writing signed by all of the parties
hereto.
14. This Memorandum and the Settlement contemplated by it shall be
governed by, and construed in accordance with, the laws of the State of
Florida, without regard to conflict of laws principles.
15. This Memorandum will be executed by counsel for the parties to
the Action, each of whom represent and warrant that they have the authority
from their client(s) to enter into this Memorandum. This Memorandum may be
executed in any number of counterparts, each of which shall be deemed to be
an original, but all of which together shall constitute one and the same
instrument.
16. Plaintiff and his counsel in the Action represent and warrant
that none of Plaintiff's claims or causes of action referred to in any
complaint in the Action or this Memorandum have been assigned, encumbered or
in any manner transferred in whole or in part.
17. This Memorandum shall be binding upon and shall inure to the
benefit of the parties and their respective agents, successors, executors,
heirs and assigns.
IN WITNESS WHEREOF, the parties have executed this Memorandum
effective as of the date set forth below.
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/s/ Gerry S. Gibson
-----------------------------------
Gerry S. Gibson
Janet B. Teebagy
Greenberg Traurig, P.A.
777 South Flagler Drive
West Palm Beach, Florida 33401
(561) 650-7900
Attorneys for Rexall Sundown, Inc. and
the Individual Defendants
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<TABLE>
<S> <C>
/s/ Stanley H. Wakshlag
-----------------------------------
Of Counsel: Stanley H. Wakshlag
Akerman, Senterfitt & Eidson, P.A.
David E. Bennett One Southeast Third Avenue
Vedder, Price, Kaufman & Kammholz 28th Floor, SunTrust International Center
222 North LaSalle Street Miami, Florida 33131
Chicago, Illinois 60601-5005 Attorneys for Nutricia Investment Corporation
(312) 609-7600
Kevin G. Abrams
Raymond J. DiCamillo
Christine M. Morabito
Richards, Layton & Finger
One Rodney Square
P.O. Box 551
Wilmington, Delaware 19899
(302) 658-6541
/s/ Paul J. Geller
-----------------------------------
Of Counsel: Paul J. Geller
Jonathan M. Stein
Marc A. Topaz Cauley & Geller, LLP
Gregory M. Castaldo 7200 West Camino Real
Schiffrin & Barroway, LLP Suite 203
Three Bala Plaza East Boca Raton, Florida 33433
Suite 400 (561) 750-3000
Bala Cynwyd, Pennsylvania 19004 Attorneys for Plaintiff Lawrence Peccatiello
(610) 667-7706
William S. Lerach
David J. Robbins
Milberg Weiss Bershad Hynes & Lerach
600 West Broadway
1800 One America Plaza
San Diego, California 92101-5050
(619) 231-1058
Alfred G. Yates, Jr.
Law Offices of Alfred G. Yates, Jr.
519 Allegheny Building
429 Forbes Avenue
Pittsburgh, Pennsylvania 15219
(412) 391-5163
Dated: May 25, 2000
</TABLE>
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