-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V6RhHBvOIhCvRPvzF0XqoSKfk/rVlWpqPosk4bITsFuNgoOaIlTJZjN5JnRixMwN g0sPLUstPTC2q334ajRAyQ== 0000912057-00-023006.txt : 20000511 0000912057-00-023006.hdr.sgml : 20000511 ACCESSION NUMBER: 0000912057-00-023006 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20000510 GROUP MEMBERS: KONINKLIJKE NUMICO NV GROUP MEMBERS: NUTRICIA FLORIDA, INC. GROUP MEMBERS: NUTRICIA FLORIDA, L.P. GROUP MEMBERS: NUTRICIA INTERNATIONAL B.V. GROUP MEMBERS: NUTRICIA INVESTMENT CORP. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: REXALL SUNDOWN INC CENTRAL INDEX KEY: 0000901620 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 591688986 STATE OF INCORPORATION: FL FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-49369 FILM NUMBER: 625084 BUSINESS ADDRESS: STREET 1: 6111 BROKEN SOUND PARKWAY N W CITY: BOCA RATON STATE: FL ZIP: 33487 BUSINESS PHONE: 5612419400 MAIL ADDRESS: STREET 1: 6111 BROKEN SOUND PARKWAY NW CITY: BOCA RATON STATE: FL ZIP: 33487 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: KONINKLIJKE NUMICO NV CENTRAL INDEX KEY: 0001089936 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: P.O. BOX 1 STREET 2: 2700 MA ZOETERMEER CITY: AMSTERDAM BUSINESS PHONE: 01131793539607 MAIL ADDRESS: STREET 1: P.O. BOX 1 STREET 2: 2700 MA ZOETERMEER CITY: AMSTERDAM SC 13D 1 SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 SCHEDULE 13D (Rule 13d-101) Information to be Included in Statements Filed Pursuant to Rule 13d-1(a) and Amendments Thereto Filed Pursuant to Rule 13d-2(a) (Amendment No. __) REXALL SUNDOWN, INC. ------------------------------------------------------------------------ (Name of Issuer) Common Stock, Par Value $0.01 per share ------------------------------------------------------------------------ (Title of Class of Securities) 761648104 ------------------------------------------------------------------------ (CUSIP Number) Steven J. Gray, Esq. Vedder, Price, Kaufman & Kammholz 222 North LaSalle Street Chicago, IL 60601-1003 (312) 609-7500 ------------------------------------------------------------------------ (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) April 30, 2000 ------------------------------------------------------------------------ (Date of Event which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box / / Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 12 Pages) SCHEDULE 13D - ------------------------------------------------------------------------------ CUSIP No. 761648104 Page 2 of 12 Pages - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Nutricia Investment Corp. - ------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/ (b) / / - ------------------------------------------------------------------------------ 3 SEC USE ONLY - ------------------------------------------------------------------------------ 4 SOURCE OF FUNDS* AF - ------------------------------------------------------------------------------ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT / / TO ITEMS 2(d) or 2(e) - ------------------------------------------------------------------------------ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Florida - ------------------------------------------------------------------------------ 7 SOLE VOTING POWER 32,239,270 ------------------------------------------------------ 8 SHARED VOTING POWER NUMBER OF SHARES 0 BENEFICIALLY OWNED ------------------------------------------------------ BY EACH REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 32,239,270 ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 0 - ------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON ----------------------------------------------------------------------- 32,239,270 - ------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN / / SHARES* - ------------------------------------------------------------------------------ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 50.3% - ------------------------------------------------------------------------------ 14 TYPE OF REPORTING PERSON* CO - ------------------------------------------------------------------------------ *SEE INSTRUCTIONS BEFORE FILLING OUT! SCHEDULE 13D - ------------------------------------------------------------------------------ CUSIP No. 761648104 Page 3 of 12 Pages - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Nutricia Florida, L.P. - ------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/ (b) / / - ------------------------------------------------------------------------------ 3 SEC USE ONLY - ------------------------------------------------------------------------------ 4 SOURCE OF FUNDS* AF - ------------------------------------------------------------------------------ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT / / TO ITEMS 2(d) or 2(e) - ------------------------------------------------------------------------------ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------ 7 SOLE VOTING POWER 32,239,270 ------------------------------------------------------ 8 SHARED VOTING POWER NUMBER OF SHARES 0 BENEFICIALLY OWNED ------------------------------------------------------ BY EACH REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 32,239,270 ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 0 - ------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON ----------------------------------------------------------------------- 32,239,270 - ------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN / / SHARES* - ------------------------------------------------------------------------------ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 50.3% - ------------------------------------------------------------------------------ 14 TYPE OF REPORTING PERSON* PN - ------------------------------------------------------------------------------ *SEE INSTRUCTIONS BEFORE FILLING OUT! SCHEDULE 13D - ------------------------------------------------------------------------------ CUSIP No. 761648104 Page 4 of 12 Pages - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Nutricia Florida, Inc. - ------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/ (b) / / - ------------------------------------------------------------------------------ 3 SEC USE ONLY - ------------------------------------------------------------------------------ 4 SOURCE OF FUNDS* AF - ------------------------------------------------------------------------------ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED / / PURSUANT TO ITEMS 2(d) or 2(e) - ------------------------------------------------------------------------------ 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ------------------------------------------------------------------------------ 7 SOLE VOTING POWER 32,239,270 ------------------------------------------------------- 8 SHARED VOTING POWER NUMBER OF SHARES 0 BENEFICIALLY OWNED ------------------------------------------------------- BY EACH REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 32,239,270 ------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - ------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON ----------------------------------------------------------------------- 32,239,270 - ------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN / / SHARES* - ------------------------------------------------------------------------------ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 50.3% - ------------------------------------------------------------------------------ 14 TYPE OF REPORTING PERSON* CO - ------------------------------------------------------------------------------ *SEE INSTRUCTIONS BEFORE FILLING OUT! SCHEDULE 13D - ------------------------------------------------------------------------------ CUSIP No. 761648104 Page 5 of 12 Pages - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Nutricia International B.V. - ------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/ (b) / / - ------------------------------------------------------------------------------ 3 SEC USE ONLY - ------------------------------------------------------------------------------ 4 SOURCE OF FUNDS* AF - ------------------------------------------------------------------------------ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT / / TO ITEMS 2(d) or 2(e) - ------------------------------------------------------------------------------ 6 CITIZENSHIP OR PLACE OF ORGANIZATION The Netherlands - ------------------------------------------------------------------------------ 7 SOLE VOTING POWER 32,239,270 ------------------------------------------------------ 8 SHARED VOTING POWER NUMBER OF SHARES 0 BENEFICIALLY OWNED ------------------------------------------------------ BY EACH REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 32,239,276 ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 0 - ------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON ----------------------------------------------------------------------- 32,239,270 - ------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN / / SHARES* - ------------------------------------------------------------------------------ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 50.3% - ------------------------------------------------------------------------------ 14 TYPE OF REPORTING PERSON* OO - ------------------------------------------------------------------------------ *SEE INSTRUCTIONS BEFORE FILLING OUT! SCHEDULE 13D - ------------------------------------------------------------------------------ CUSIP No. 761648104 Page 6 of 12 Pages - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Koninklijke Numico N.V. (Royal Numico) - ------------------------------------------------------------------------------ 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/ (b) / / - ------------------------------------------------------------------------------ 3 SEC USE ONLY - ------------------------------------------------------------------------------ 4 SOURCE OF FUNDS* BK - ------------------------------------------------------------------------------ 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) - ------------------------------------------------------------------------------ 6 CITIZENSHIP OR PLACE OF ORGANIZATION The Netherlands - ------------------------------------------------------------------------------ 7 SOLE VOTING POWER 32,239,270 ------------------------------------------------------ 8 SHARED VOTING POWER NUMBER OF SHARES 0 BENEFICIALLY OWNED ------------------------------------------------------ BY EACH REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 32,239,270 ------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 0 - ------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON ----------------------------------------------------------------------- 32,239,270 - ------------------------------------------------------------------------------ 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN / / SHARES* - ------------------------------------------------------------------------------ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 50.3% - ------------------------------------------------------------------------------ 14 TYPE OF REPORTING PERSON* OO - ------------------------------------------------------------------------------ *SEE INSTRUCTIONS BEFORE FILING OUT! SCHEDULE 13D CUSIP No. 761648104 Page 7 of 12 Pages Item 1. SECURITY AND ISSUER. This statement on Schedule 13D (this "Statement" or this "Schedule 13D") relates to the common stock, par value $.01 per share (the "Shares"), of Rexall Sundown, Inc., a Florida corporation (the "Company"). The principal executive offices of the Company are located at 6111 Broken Sound Parkway, NW, Boca Raton, Florida 33487. Item 2. IDENTITY AND BACKGROUND. This Statement is being filed by: (i) Nutricia Investment Corp., a Florida corporation ("Purchaser"), (ii) Nutricia Florida, L.P., a Delaware limited partnership ("Nutricia LP"), (iii) Nutricia Florida, Inc., a Delaware corporation ("Nutricia, Inc."), (iv) Nutricia International B.V., a company organized under the laws of the Netherlands ("Nutricia International"), and (v) Koninklijke Numico N.V., a company organized under the laws of the Netherlands ("Numico") (collectively being referred to hereinafter as the "Reporting Persons"). 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 (as defined herein) 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. All outstanding shares of common stock of Purchaser are owned by 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. 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. All of the outstanding shares of common stock of Nutricia, Inc. are owned by 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. Nutricia International is a wholly owned subsidiary of Numico. SCHEDULE 13D CUSIP No. 761648104 Page 8 of 12 Pages 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 Zoetermeer, the Netherlands. 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. The name, citizenship, business, address, present principal occupation or employment and five-year employment history of each of the directors and executive officers of the Reporting Persons are set forth in Schedule A hereto. During the last five years, none of the Reporting Persons 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 or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. This Schedule is being filed in conjunction with a Schedule 13D filed by certain shareholders of the Company in accordance with the Joint Filing Agreement dated May 10, 2000, a copy of which is attatched as Exhibit 1 hereto. Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. On April 30, 2000, Numico and the Purchaser entered into an Agreement and Plan of Merger (the "Merger Agreement") with the Company, pursuant to which Numico and the Purchaser commenced a tender offer to purchase all of the outstanding Shares at a purchase price of $24.00 per Share, net to seller in cash, without interest thereon (the "Offer"). A copy of the Merger Agreement is attached as Exhibit 2 hereto and is incorporated herein by reference. As an inducement to entering into the Merger Agreement, Numico and the Purchaser entered into a Shareholder Agreement dated April 30, 2000 (the "Shareholder Agreement"), with certain shareholders of the Company whereby each such shareholder granted the Purchaser an irrevocable option (the "Option") to purchase certain Shares beneficially owned by such shareholder. This Option grants the Purchaser the right to purchase an aggregate of 32,239,270 Shares at a price of $24.00 per Share subject to certain adjustments. Based on the number of Shares outstanding as of April 28, 2000, as represented by the Company, the Option is exercisable for approximately 50.3% of the outstanding Shares. In addition, pursuant to the Shareholder Agreement, each of the shareholders has (i) agreed to tender and sell their shares in the Offer and (ii) has granted an irrevocable proxy to certain officers of Numico to vote such shareholder's Shares. If the Option was exercised, it is anticipated that the Purchaser would obtain the funds therefor from Numico's internal resources and/or from borrowings. SCHEDULE 13D CUSIP No. 761648104 Page 9 of 12 Pages The information under the caption "Shareholder Agreement" in Section 11 of the Offer to Purchase, a copy of which is attached as Exhibit 4 hereto, is incorporated herein by reference. The Shareholder Agreement is attached to this Schedule as Exhibit 3 and is incorporated herein by reference. Item 4. PURPOSE OF TRANSACTION. The information set forth in Item 3 of this Schedule and Sections 7 and 11 of the Offer to Purchase, a copy of which is attached as Exhibit 4 hereto, is incorporated herein by reference. Item 5. INTEREST IN THE SECURITIES OF THE ISSUER. (a)-(b) As a result and subject to the terms of the Shareholder Agreement and the Option granted pursuant thereto, the Reporting Persons may be deemed to be the beneficial owner of an aggregate of 32,239,270 Shares (assuming exercise of the Option). Furthermore, as a result of the irrevocable proxies granted pursuant the Shareholder Agreement, the Reporting Persons also have the sole power to vote such Shares for the limited purposes described in the Shareholder Agreement, a copy of which is attached as Exhibit 3 hereto and is incorporated herein by reference. These Shares constitute approximately 50.3% of the issued and outstanding Shares based on the number of Shares outstanding on April 28, 2000, as represented by the Company to the Reporting Persons. The Reporting Persons do not have the right to vote the above Shares on matters other than those set forth in the Shareholder Agreement and do not share voting power with respect to any other Shares. Other than with respect to the provisions of the Shareholder Agreement, the Reporting Persons do not have any power to dispose or direct the disposition of any Shares. To the knowledge of the Reporting Persons, none of the persons listed on Schedule A hereto beneficially own any Shares. (c) Except as set forth in this Schedule and the Offer to Purchase, a copy of which is attached as Exhibit 4 hereto and is incorporated herein by reference, none of the Reporting Persons or, to the best of their knowledge, any of the persons listed on Schedule A hereto has effected any transaction in the Shares during the past 60 days. (d) Not applicable. (e) Not applicable. SCHEDULE 13D CUSIP No. 761648104 Page 10 of 12 Pages Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. The Reporting Persons have entered into a Joint Filing Agreement, a copy of which is filed as Exhibit 1 hereto and is incorporated herein by reference, regarding the filing of this Schedule and future amendments hereto. Except as described in this Schedule or in the Offer to Purchase, a copy of which is filed as Exhibit 4 hereto and incorporated herein by reference, none of the Reporting Persons nor any of the persons listed on Schedule A hereto, has any other contracts, arrangements, understandings or relationships with any persons with respect to any securities of the Company. Item 7. MATERIAL TO BE FILED AS EXHIBITS. Exhibit No. 1. Joint Filing Agreement, dated May 10, 2000. 2. Agreement and Plan of Merger, dated April 30, 2000, by and among Koninklijke Numico N.V., Nutricia Investment Corp. and Rexall Sundown, Inc. 3. Shareholder Agreement, dated April 30, 2000 among Koninklijke Numico N.V., Nutricia Investment Corp. and certain shareholders of Rexall Sundown, Inc. 4. Offer to Purchase, dated May 5, 2000. SCHEDULE 13D CUSIP No. 761648104 Page 11 of 12 Pages SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, the undersigned certifies that the information set forth in this statement with respect to it is true, complete and correct. Date: May 10, 2000 KONINKLIJKE NUMICO N.V. By: /s/ Johannes C.T. van der Wielen ---------------------------------------- Name: Johannes C.T. van der Wielen Title: President and Chief Executive Officer NUTRICIA INVESTMENT CORP. By: /s/ Julitte van der Ven ---------------------------------------- Name: Julitte van der Ven Title: President NUTRICIA FLORIDA, L.P. By: Nutricia Florida, Inc., its general partner By: /s/ Julitte van der Ven ---------------------------------------- Name: Julitte van der Ven Title: President NUTRICIA FLORIDA, INC. By: /s/ Julitte van der Ven ---------------------------------------- Name: Julitte van der Ven Title: President SCHEDULE 13D CUSIP No. 761648104 Page 12 of 12 Pages NUTRICIA INTERNATIONAL B.V. By: /s/ Johannes C.T. van der Wielen ---------------------------------------- Name: Johannes C.T. van der Wielen Title: President and Chief Executive Officer SCHEDULE A DIRECTORS AND EXECUTIVE OFFICERS OF NUMICO, THE PURCHASER, NUTRICIA LP, NUTRICIA, INC., AND 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 Numico and 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.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT NAME AND FIVE-YEAR EMPLOYMENT HISTORY - ---------------------------------- ------------------------------------------ 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. A-1 PRESENT PRINCIPLE OCCUPATION OR EMPLOYMENT NAME AND FIVE-YEAR EMPOLYMENT HISTORY - ---------------------------------- ------------------------------------------ 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 and Chairman of "Stichting Continuiteit Wolters Kluwer", and a director of Numico Nationaal B.V. 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. A-2
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 Numico Sub. 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.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT NAME AND FIVE-YEAR EMPLOYMENT HISTORY - ---------------------------------- ------------------------------------------ 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.")
A-3 NUTRICIA FLORIDA, LP ("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 US, 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.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT NAME AND FIVE-YEAR EMPLOYMENT HISTORY - ---------------------------------- ------------------------------------------ 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.
A-4 EX-1 2 EXHIBIT 1 JOINT FILING AGREEMENT In accordance with Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended, the undersigned hereby acknowledge and agree that the Statements on Schedule 13D (the "Statements") with respect to the common stock, par value $.01 per share, of Rexall Sundown, Inc., to which this Agreement is attached as Exhibit 1, were filed on behalf of each of the undersigned and that all subsequent amendments to such Statements shall be filed on behalf of each of the undersigned without the necessity of filing additional joint filing agreements. The undersigned acknowledge that each shall be responsible for the timely filing of such amendments, and for the completeness and accuracy of the information concerning it or him contained herein, but shall not be responsible for the completeness and accuracy of the information concerning the other entities or persons, except to the extent that he or it knows or has reason to believe that such information is inaccurate. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument. IN WITNESS WHEREOF, the undersigned hereby execute this Agreement this 10 day of May, 2000. KONINKLIJKE NUMICO N.V. By: /s/ Johannes C.T. van der Wielen ----------------------------------------------- Name: Johannes C.T. van der Wielen Title: President and Chief Executive Officer NUTRICIA INVESTMENT CORP. By: /s/ Julitte van der Ven ----------------------------------------------- Name: Julitte van der Ven Title: President NUTRICIA FLORIDA, L.P. By: Nutricia Florida, Inc., its general partner By: /s/ Julitte van der Ven ----------------------------------------------- Name: Julitte van der Ven Title: President NUTRICIA FLORIDA, INC. By: /s/ Julitte van der Ven ----------------------------------------------- Name: Julitte van der Ven Title: President NUTRICIA INTERNATIONAL B.V. By: /s/ Johannes C.T. van der Wielen ----------------------------------------------- Name: Johannes C.T. van der Wielen Title: President and Chief Executive Officer CDD PARTNERS, LTD. By: CDD Management, Inc. General Partner /s/ Carl DeSantis ---------------------------------------------- Carl DeSantis, President TRIPLE D INVESMENTS, L.L.C. /s/ Damon DeSantis ---------------------------------------------- Damon DeSantis, as trustee of the Sylvia DeSantis Irrevocable Life Insurance Trust, a Member /s/ Dean DeSantis ---------------------------------------------- Dean DeSantis, as trustee of the Sylvia DeSantis Irrevocable Life Insurance Trust, a Member /s/ Deborah DeSantis ---------------------------------------------- Deborah DeSantis, as trustee of the Sylvia DeSantis Irrevocable Life Insurance Trust, a Member SYLVIA DESANTIS REVOCABLE TRUST /s/ Sylvia DeSantis ---------------------------------------------- Sylvia DeSantis, Trustee SYLVIA DESANTIS IRREVOCABLE LIFE INSURANCE TRUST /s/ Damon DeSantis ---------------------------------------------- Damon DeSantis, Trustee /s/ Dean DeSantis ---------------------------------------------- Dean DeSantis, Trustee /s/ Deborah DeSantis ---------------------------------------------- Deborah DeSantis, Trustee INDIVIDUAL SHAREHOLDERS /s/ Carl DeSantis ---------------------------------------------- Carl DeSantis /s/ Damon DeSantis ---------------------------------------------- Damon DeSantis /s/ Cynthia DeSantis ---------------------------------------------- Cynthia DeSantis, as Custodian /s/ Dean DeSantis ---------------------------------------------- Dean DeSantis /s/ Laura DeSantis ---------------------------------------------- Laura DeSantis /s/ Deborah DeSantis ---------------------------------------------- Deborah DeSantis /s/ Geary Cotton ---------------------------------------------- Geary Cotton /s/ Patricia Cotton ---------------------------------------------- Patricia Cotton /s/ Stephen Frabitore ---------------------------------------------- Stephen Frabitore /s/ Richard Goudis ---------------------------------------------- Richard Goudis /s/ Gerald Holly ---------------------------------------------- Gerald Holly /s/ Christian Nast ---------------------------------------------- Christian Nast /s/ Nickolas Palin ---------------------------------------------- Nickolas Palin /s/ David Schofield ---------------------------------------------- David Schofield /s/ Richard Werber ---------------------------------------------- Richard Werber EX-2 3 EXHIBIT 2 AGREEMENT AND PLAN OF MERGER DATED AS OF APRIL 30, 2000 AMONG KONINKLIJKE NUMICO N.V., a company incorporated under the laws of the Netherlands, NUTRICIA INVESTMENT CORP., a Florida corporation, AND REXALL SUNDOWN, INC. a Florida corporation TABLE OF CONTENTS
Page ARTICLE I. THE TENDER OFFER.........................................................................................1 1.1 The Offer.......................................................................................1 1.2 SEC Filings.....................................................................................3 1.3 Company Action..................................................................................4 1.4 Composition of the Company Board................................................................4 ARTICLE II. THE MERGER...............................................................................................6 2.1 The Merger......................................................................................6 2.2 Closing.........................................................................................6 2.3 Effective Time..................................................................................6 2.4 Effect of the Merger............................................................................6 2.5 Articles of Incorporation.......................................................................6 2.6 Bylaws..........................................................................................6 2.7 Officers and Directors of Surviving Corporation.................................................6 2.8 Effect on Capital Stock.........................................................................7 2.9 Surrender and Payment...........................................................................7 ARTICLE III. REPRESENTATIONS AND WARRANTIES..........................................................................10 3.1 Representations and Warranties of the Company..................................................10 3.2 Representations and Warranties of Parent.......................................................24 3.3 Representations and Warranties of Parent and Merger Sub........................................27 ARTICLE IV. COVENANTS RELATING TO CONDUCT OF BUSINESS...............................................................28 4.1 Covenants of the Company.......................................................................28 4.2 Covenants of Parent and Merger Sub.............................................................31 4.3 Advice of Changes; Government Filings..........................................................31 ARTICLE V. ADDITIONAL AGREEMENTS...................................................................................32 5.1 Approval by the Company's Shareholders.........................................................32 5.2 Access to Information..........................................................................33 5.3 Approvals and Consents; Cooperation............................................................33 5.4 Acquisition Proposals..........................................................................34 5.5 Employee Benefits..............................................................................35 5.6 Fees and Expenses..............................................................................35 5.7 Indemnification; Directors' and Officers' Insurance............................................35 i 5.8 Public Announcements...........................................................................36 5.9 Takeover Statutes..............................................................................36 5.10 Third Party Standstill Agreements; Tortious Interference.......................................36 5.11 Company Option Plans...........................................................................36 ARTICLE VI. CONDITIONS PRECEDENT....................................................................................37 6.1 Conditions to Each Party's Obligation to Effect the Merger.....................................37 ARTICLE VII. TERMINATION AND AMENDMENT...............................................................................38 7.1 Termination....................................................................................38 7.2 Effect of Termination..........................................................................40 7.3 Amendment......................................................................................40 7.4 Extension; Waiver..............................................................................41 ARTICLE VIII. GENERAL PROVISIONS......................................................................................41 8.1 Non-Survival of Representations and Warranties.................................................41 8.2 Notices........................................................................................41 8.3 Interpretation.................................................................................42 8.4 Counterparts...................................................................................42 8.5 Entire Agreement; No Third Party Beneficiaries.................................................42 8.6 Governing Law; Jurisdiction; Waiver of Jury Trial..............................................43 8.7 Severability...................................................................................43 8.8 Assignment.....................................................................................44 8.9 Enforcement....................................................................................44 8.10 Definitions....................................................................................44 8.11 Performance by Merger Sub......................................................................46 8.12 Disclosure Schedules...........................................................................46
ii GLOSSARY OF DEFINED TERMS
LOCATION OF DEFINITION DEFINED TERM - ---------- ------------ Acquisition Proposal.................................................................................Section 5.4(a) Action......................................................................................................Annex A Affiliate...........................................................................................Section 8.10(a) Agreement..................................................................................................Preamble Articles of Merger......................................................................................Section 2.3 Benefits Letter.........................................................................................Section 5.5 Board ..............................................................................................Section 8.10(b) Business Day........................................................................................Section 8.10(c) Certificates.........................................................................................Section 2.9(b) Closing.................................................................................................Section 2.2 Closing Date............................................................................................Section 2.2 Code................................................................................................Section 8.10(d) Company....................................................................................................Preamble Company Assets.......................................................................................Section 3.1(s) Company Benefit Plans.............................................................................Section 3.1(1)(i) Company Board..............................................................................................Recitals Company Common Stock.................................................................................Section 1.1(a) Company Disclosure Schedule.............................................................................Section 3.1 Company Equity Plans................................................................................Section 8.10(e) Company Material Contracts..........................................................................Section 8.10(f) Company Permits......................................................................................Section 3.1(f) Company Products.....................................................................................Section 3.1(p) Company SEC Reports...............................................................................Section 3.1(d)(i) Company Stock Option...................................................................................Section 5.11 Company Stock Options Plans.........................................................................Section 8.10(e) Company Stock Purchase Plans........................................................................Section 8.10(e) Company Shareholders Meeting.........................................................................Section 5.1(a) Company Voting Debt.............................................................................Section 3.1(b)(iii) Confidentiality Agreement...............................................................................Section 5.2 CPSC.................................................................................................Section 3.1(v) Dissenting Shareholders..............................................................................Section 2.9(h) Effective Time..........................................................................................Section 2.3 ERISA.............................................................................................Section 3.1(1)(i) ERISA Affiliate..................................................................................Section 3.1(1)(iv) Environmental Law....................................................................................Section 3.1(r) Exchange Act.........................................................................................Section 1.1(b) Exchange Agent.......................................................................................Section 2.9(a) Expenses................................................................................................Section 5.6 FBCA.......................................................................................................Recitals FDA..................................................................................................Section 3.1(v) iii FTC..................................................................................................Section 3.1(v) GAAP..............................................................................................Section 3.1(d)(i) Governmental Entity.............................................................................Section 3.1(c)(iii) Hazardous Substance..................................................................................Section 3.1(r) HSR Act.....................................................................................................Annex A Indemnified Party.......................................................................................Section 5.7 Independent Directors................................................................................Section 1.4(c) Intellectual Property...............................................................................Section 8.10(g) Liens............................................................................................Section 3.1(b)(ii) Material Adverse Effect.............................................................................Section 8.10(h) Maximum Premium.........................................................................................Section 5.7 Merger.....................................................................................................Recitals Merger Consideration.................................................................................Section 2.8(c) Merger Fees..........................................................................................Section 3.1(n) Merger Sub.................................................................................................Preamble Minimum Condition....................................................................................Section 1.1(b) Multiemployer Plan................................................................................Section 3.1(1)(i) Nasdaq..........................................................................................Section 3.1(c)(iii) Offer...............................................................................................Section 1.1.(a) Offer Conditions.....................................................................................Section 1.1(a) Offer Documents......................................................................................Section 1.2(a) Organizational Documents............................................................................Section 8.10(i) Outside Date.........................................................................................Section 7.1(b) Outstanding Options ..............................................................................Section 3.1(b)(i) Parent.....................................................................................................Preamble Parent Representatives..................................................................................Section 5.2 Payment Fund.........................................................................................Section 2.9(a) Person..............................................................................................Section 8.10(j) Price Per Share......................................................................................Section 1.1(a) Proxy Statement...................................................................................Section 3.1(e)(i) Required Company Votes...............................................................................Section 3.1(j) Required Regulatory Approvals........................................................................Section 6.1(c) Schedule 14D-9.......................................................................................Section 1.2(b) Schedule TO..........................................................................................Section 1.2(a) SEC..................................................................................................Section 1.1(b) Securities Act....................................................................................Section 3.1(d)(i) Shareholder Agreement......................................................................................Recitals Subsidiary..........................................................................................Section 8.10(k) Superior Proposal....................................................................................Section 5.4(c) Surviving Corporation...................................................................................Section 2.1 Takeover Statute.....................................................................................Section 3.1(q) Tax..............................................................................................Section 8.10(l)(i) Tax Return......................................................................................Section 8.10(l)(ii) Taxable..........................................................................................Section 8.10(l)(i) Taxes............................................................................................Section 8.10(l)(i) iv Top 20 List..........................................................................................Section 3.1(u) USDA.................................................................................................Section 3.1(v) Violation........................................................................................Section 3.1(c)(ii)
v This AGREEMENT AND PLAN OF MERGER, dated as of April 30, 2000 (this "Agreement"), by and among KONINKLIJKE NUMICO N.V., a company incorporated under the laws of the Netherlands ("Parent"), NUTRICIA INVESTMENT CORP., a Florida corporation and an indirect wholly owned Subsidiary of Parent ("Merger Sub"), and REXALL SUNDOWN, INC., a Florida corporation (the "Company"). W I T N E S S E T H: WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the Company have each approved the Offer (as defined herein) and the Merger (as defined herein) and have determined that it is in the best interests of their respective companies and shareholders for Parent to acquire the Company upon the terms and subject to the conditions set forth herein; WHEREAS, in order to complete such acquisition, the respective Boards of Directors of Parent, Merger Sub and the Company have approved the merger of Merger Sub with and into the Company (the "Merger"), upon the terms and subject to the conditions of this Agreement and in accordance with the Florida Business Corporation Act (the "FBCA"), whereby each issued and outstanding share of Company Common Stock (as defined herein) not owned directly or indirectly by Parent or the Company will be converted into the right to receive the price per share in cash actually paid in the Offer; WHEREAS, the Board of Directors of the Company (the "Company Board") has unanimously approved this Agreement, the Shareholder Agreement (as defined below), the Offer and the Merger, has determined that the Offer and the Merger are fair to, and in the best interests of, the Company's shareholders, and is recommending that the Company's shareholders accept the Offer, tender their shares of Company Common Stock thereunder and adopt and approve the Merger and this Agreement; WHEREAS, Parent, Merger Sub, the Company and the shareholders named therein have entered into a Shareholder Agreement dated as of April 30, 2000 (the "Shareholder Agreement"); WHEREAS, simultaneously with the execution and delivery of this Agreement certain executive officers of the Company are entering into employment agreements with the Company, which will become effective upon the Merger; NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows: ARTICLE I. THE TENDER OFFER 1.1 THE OFFER. (a) Provided that this Agreement shall not have been terminated in accordance with Article VII hereof and none of the conditions set forth in Annex A hereto (the "Offer Conditions") shall have occurred or be existing, within seven (7) Business Days of the date hereof, Merger Sub will commence a tender offer (the "Offer") for all of the outstanding shares of common stock, par value $0.01 per share, of the Company (the "Company Common Stock") at a price per share of the Company Common Stock of U.S. $24.00 net to the seller in cash (such price, or any higher price paid in the Offer, the "Price Per Share") upon the terms and conditions set forth in this Agreement, including Annex A hereto. (b) Provided that this Agreement shall not have been terminated in accordance with Article VII hereof, the obligation of Merger Sub to accept for payment, purchase and pay for any Company Common Stock tendered pursuant to the Offer shall be subject only to the satisfaction or waiver of the Offer Conditions including the condition that at least that number of shares of Company Common Stock equivalent to a majority of the total issued and outstanding shares of Company Common Stock on a fully diluted basis on the date such shares are purchased pursuant to the Offer shall have been validly tendered and not withdrawn prior to the expiration of the Offer (the "Minimum Condition"). Merger Sub will not, without the prior written consent of the Company (such consent to be authorized by the Company Board): (i) waive the Minimum Condition, (ii) decrease the amount or change the form of consideration payable in the Offer, (iii) decrease the number of shares of Company Common Stock sought in the Offer, (iv) impose additional conditions to the Offer, (v) change any Offer Condition or amend any other term of the Offer if any such change or amendment would be materially adverse to the holders of the Company Common Stock (other than Parent or Merger Sub) or (vi) except as provided below, extend the Offer if all of the Offer Conditions have been satisfied. Subject to the terms and conditions hereof, the Offer shall remain open until midnight, New York City time, on the date that is twenty (20) Business Days after the Offer is commenced (within the meaning of Rule 14d-2 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act")); provided, however, that without the consent of the Company Board, Merger Sub may (w) extend the Offer, if at the scheduled expiration date of the Offer any of the Offer Conditions shall not have been satisfied or waived for one (1) or more periods (none of which shall exceed ten (10) Business Days) until such time as such conditions are satisfied or waived, (x) extend the Offer for such period as may be required by any rule, regulation, interpretation or position of the Securities and Exchange Commission ("SEC") or the staff thereof applicable to the Offer, (y) extend the Offer for one (1) or more periods (each such period to be for not more than five (5) Business Days and such extensions to be for an aggregate period of not more than twenty (20) Business Days beyond the latest expiration date that would otherwise be permitted under clause (w) or (x) of this sentence) if on such expiration date the Offer Conditions shall have been satisfied or waived but there shall not have been tendered that number of shares of Company Common Stock which would equal more than 80% of the outstanding shares of Company Common Stock or (z) extend the Offer for any reason for one (1) or more periods, each period to be for not more than ten (10) Business Days and such extensions to be for an aggregate period of not more than 2 twenty (20) Business Days beyond the latest expiration date that would otherwise be permitted under clause (w) or (x) of this sentence. Merger Sub agrees that if all of the Offer Conditions are not satisfied on any expiration date of the Offer, then, Merger Sub shall extend the Offer for periods of not more than ten (10) Business Days each if requested to do so by the Company; provided that (A) the Company shall be entitled to make only two (2) of such requests; and (B) Merger Sub shall not be required to extend the Offer beyond the Outside Date or, if earlier, the date of termination of this Agreement in accordance with the terms hereof. On the terms of the Offer and subject to the Offer Conditions and this Agreement, Merger Sub shall pay for all shares of Company Common Stock validly tendered and not withdrawn pursuant to the Offer that Merger Sub becomes obligated to purchase pursuant to the Offer as soon as practicable after the expiration of the Offer. Merger Sub may, at its election, provide for a "subsequent offering period" (as contemplated by and in accordance with Rule 14d-11 promulgated under the Exchange Act). 1.2 SEC FILINGS. (a) As soon as reasonably practicable on the date of commencement of the Offer, Parent and Merger Sub shall file with the SEC a Tender Offer Statement on Schedule TO with respect to the Offer (as supplemented or amended from time to time, the "Schedule TO") to provide for the purchase of the issued and outstanding shares of Company Common Stock in accordance with the terms hereof. Parent and Merger Sub agree, as to the Schedule TO, the Offer to Purchase and related Letter of Transmittal (which documents, as supplemented or amended from time to time, together constitute the "Offer Documents") will comply as to form and content in all material respects with the applicable provisions of the federal securities laws. The Company and its counsel shall be given a reasonable opportunity to review and comment upon the Offer Documents and any amendment or supplement thereto prior to the filing thereof with the SEC, and Parent and Merger Sub shall consider such comments in good faith. Parent and Merger Sub agree to provide to the Company and its counsel any comments which Parent, Merger Sub or their counsel may receive from the Staff of the SEC promptly after receipt thereof, and any proposed responses thereto, with respect to the Offer Documents and any amendment or supplement thereto. Parent, Merger Sub and the Company agree to promptly provide corrections to any information provided by any of them for use in the Offer Documents (to the party responsible for filing such documents) which shall have become false or misleading in any material respect, and Parent and Merger Sub further agree to take all steps necessary to cause the Schedule TO as so corrected to be filed with the SEC and to disseminate any revised Offer Documents to the Company's shareholders, in each case as and to the extent required by the applicable provisions of the federal securities laws. (b) The Company Board shall recommend acceptance of the Offer to its shareholders in a Solicitation/Recommendation Statement on Schedule 14D-9 (as supplemented or amended from time to time, the "Schedule 14D-9"), which the Company shall file with the SEC upon commencement of the Offer and which will comply as to form and content in all material respects with the applicable provisions of the federal securities laws; provided, however, that the Company Board may amend, modify or withdraw its recommendation, or make no recommendation, if the Company Board determines, following consultation with the Company's outside legal counsel, that such action is required in order to comply with applicable law. The Company will cooperate with Parent and Merger Sub in mailing or otherwise disseminating the Schedule 14D-9 with the 3 appropriate Offer Documents to the shareholders of the Company. Parent and its counsel shall be given a reasonable opportunity to review and comment upon the Schedule 14D-9 and any amendment or supplement thereto prior to the filing thereof with the SEC, and the Company shall consider any such comments in good faith. The Company agrees to provide to Parent and Merger Sub and their counsel any comments which the Company or its counsel may receive from the Staff of the SEC promptly after receipt thereof, and any proposed responses thereto, with respect to the Schedule 14D-9 and any amendment or supplement thereto. The Company, Parent and Merger Sub agree to correct promptly any information provided by any of them for use in the Schedule 14D-9 which shall have become false or misleading in any material respect, and the Company further agrees to take all steps necessary to cause such Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to the Company's shareholders, in each case as and to the extent required by the applicable provisions of the federal securities laws. Parent, Merger Sub and the Company each hereby agree to provide promptly such information necessary to the preparation of the exhibits and schedules to the Schedule 14D-9 and the Offer Documents which the respective party responsible therefor shall reasonably request. The Company hereby consents to the inclusion in the Offer Documents of the recommendations and approvals referred to in this Section 1.2. 1.3 COMPANY ACTION. (a) The Company hereby represents and warrants to Parent and Merger Sub that, the Company Board (at a meeting duly called and held) has unanimously (i) determined that each of this Agreement, the Offer and the Merger is fair to, and in the best interests of, the Company and the holders of Company Common Stock; (ii) approved this Agreement, the Offer, the Merger and the Shareholder Agreement, and the transactions contemplated hereby, in accordance with the provisions FBCA; and (iii) recommended the acceptance of the Offer, the tender of the Company Common Stock in the Offer and the approval and adoption of this Agreement and the Merger by the shareholders of the Company. Such approval by the Company Board constitutes approval of this Agreement, the Offer, the Merger and the Shareholder Agreement for purposes of Sections 607.0901 and 607.0902 of the FBCA. (b) In connection with the Offer, the Company shall, not later than two (2) Business Days after the date of this Agreement, furnish Merger Sub with such information (including a list of the record holders of the Company Common Stock and their addresses, as well as mailing labels containing the names and addresses of all record holders of Company Common Stock, lists of non-objecting beneficial owners of Company Common Stock and lists of security positions of Company Common Stock held in stock depositories, in each case as of the most recent practicable date), and shall thereafter render such assistance as Parent, Merger Sub or their agents may reasonably request in communicating the Offer to the record and beneficial holders of Company Common Stock. Subject to the requirements of applicable law and except for such steps as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the Offer and the Merger, Parent and Merger Sub shall (i) hold in confidence the information contained in any of such labels and lists; (ii) use such information only in connection with the Offer and the Merger; and (iii) if this Agreement is terminated, shall, upon request, deliver to the Company or destroy all copies of such information then in their possession. 4 1.4 COMPOSITION OF THE COMPANY BOARD. (a) Promptly upon the acceptance for payment of, and payment by Merger Sub in accordance with the Offer for, not less than a majority of the outstanding shares of Company Common Stock pursuant to the Offer, Parent and Merger Sub shall be entitled to designate such number of members of the Company Board, rounded up to the next whole number, equal to that number of directors which equals the product of the total number of directors on the Company Board (giving effect to the directors elected pursuant to this sentence) multiplied by the percentage that such number of shares of Company Common Stock owned in the aggregate by Merger Sub or Parent, upon such acceptance for payment, bears to the number of shares of Company Common Stock outstanding. Upon the written request of Parent or Merger Sub, the Company shall, on the date of such request, (i) either increase the size of the Company Board or use its reasonable efforts to secure the resignations of such number of its incumbent directors as is necessary to enable Parent's and Merger Sub's designees to be so elected or appointed to the Company Board (including by nomination and approval by the current Company Board) and (ii) cause Parent's and Merger Sub's designees to be so elected or appointed, in each case as may be necessary to comply with the foregoing provisions of this Section 1.4(a). The provisions of this Section 1.4(a) are in addition to and shall not limit any rights which Parent or Merger Sub may have as a holder or beneficial owner of Company Common Stock as a matter of applicable law with respect to the election of directors or otherwise. (b) The Company's obligation to cause designees of Parent and Merger Sub to be elected or appointed to the Company Board shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall promptly take all actions required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this Section 1.4, and shall include in the Schedule 14D-9 such information with respect to Parent or Merger Sub and their designees as is required under Section 14(f) and Rule 14f-1. Parent and Merger Sub will supply to the Company in writing and be solely responsible for any information with respect to any of them and their designees, officers, directors and affiliates required by Section 14(f) and Rule 14f-1 and any other applicable rules and regulations. (c) After the time that Merger Sub's designees constitute at least a majority of the Company Board and until the Effective Time, the Company Board shall always have at least two (2) members (the "Independent Directors") who are neither officers of Parent nor designees, shareholders or affiliates of Parent or Parent's affiliates. During such period, any (i) amendment or termination of this Agreement, (ii) extension of time for the performance or waiver of the obligations or other acts of Parent or Merger Sub or waiver of the Company's rights hereunder or (iii) action or inaction by the Company with respect to this Agreement and the transactions contemplated hereby which adversely affects the interests of the shareholders of the Company, including the consummation of the Merger, shall require the approval of a majority of the Independent Directors in addition to any required approval thereof by the full Company Board. If the number of Independent Directors shall be reduced below two (2) for any reason whatsoever, the remaining Independent Director shall be entitled to designate a person to fill the vacancy, which designee shall not be a current or former officer or affiliate of Parent or any of Parent's affiliates, or, if no Independent Directors then remain, the other directors shall designate two (2) persons to fill such 5 vacancies who shall not be current or former officers or affiliates of Parent or any of Parent's affiliates, and such persons shall be deemed to be Independent Directors for purposes of this Agreement. The Company Board shall not delegate any matter set forth in this Section 1.4(c) to any committee of the Company Board. ARTICLE II. THE MERGER 2.1 THE MERGER. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the FBCA, Merger Sub shall be merged with and into the Company at the Effective Time. Following the Merger, the separate corporate existence of Merger Sub shall cease, and the Company shall continue as the surviving corporation (the "Surviving Corporation") in accordance with the FBCA. 2.2 CLOSING. The closing of the Merger (the "Closing") will take place as soon as practicable (but not later than the third Business Day) after satisfaction or waiver (as permitted by this Agreement and applicable law) of the conditions (excluding conditions that, by their terms, cannot be satisfied until the Closing Date) set forth in Article VI hereof (the "Closing Date"), unless another time or date is agreed to in writing by the parties hereto. The Closing shall be held at the offices of Vedder, Price, Kaufman & Kammholz, 222 North LaSalle Street, Suite 2600, Chicago, Illinois 60601, unless another place is agreed to in writing by the parties hereto. 2.3 EFFECTIVE TIME. Upon the Closing, the parties shall file with the Department of State of the State of Florida articles of merger (the "Articles of Merger") executed in accordance with the relevant provisions of the FBCA and shall make all other filings, recordings or publications required under the FBCA in connection with the Merger. The Merger shall become effective at such time as the Articles of Merger are duly filed with the Department of State of the State of Florida, or at such other time as the parties may agree and specify in the Articles of Merger (the time the Merger becomes effective being the "Effective Time"). 2.4 EFFECT OF THE MERGER. At and after the Effective Time, the Merger will have the effects specified in the FBCA. 2.5 ARTICLES OF INCORPORATION. At the Effective Time and without any further action on the part of the Company and Merger Sub, the articles of incorporation of the Company shall be amended to read in their entirety as the articles of incorporation of Merger Sub in effect immediately prior to the Effective Time until thereafter changed or amended as provided therein or by applicable law, provided that such articles of incorporation shall be further amended to reflect Rexall Sundown, Inc. as the name of the Surviving Corporation. 2.6 BYLAWS. The bylaws of Merger Sub as in effect at the Effective Time shall be the bylaws of the Surviving Corporation until thereafter changed or amended as provided therein or by applicable law. 6 2.7 OFFICERS AND DIRECTORS OF SURVIVING CORPORATION. The directors of Merger Sub and/or any individuals designated by Merger Sub immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, until the earlier of their resignation or removal or otherwise ceasing to be a director or until their respective successors are duly elected and qualified, as the case may be. The officers of the Company immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, until the earlier of their resignation or removal or otherwise ceasing to be an officer or until their respective successors are duly elected and qualified, as the case may be. 2.8 EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or the holder of any shares of Company Common Stock or any shares of capital stock of Merger Sub: (a) CAPITAL STOCK OF MERGER SUB. Each issued and outstanding share of capital stock of Merger Sub shall be converted into and become one fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation. (b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. Each share of Company Common Stock that is owned by the Company and each share of Company Common Stock that is owned by Parent or Merger Sub shall automatically be canceled and shall cease to exist, and no Merger Consideration shall be delivered in exchange therefor. (c) CONVERSION OF COMPANY COMMON STOCK. Subject to Section 2.9(h), at the Effective Time each issued and outstanding share of Company Common Stock (other than shares to be canceled in accordance with Section 2.8(b)) shall be converted into the right to receive the Price Per Share in cash, without interest (the "Merger Consideration"). Subject to Section 2.9(h), as of the Effective Time, all such shares of Company Common Stock shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of a certificate representing any such shares of Company Common Stock shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration upon surrender of such certificate in accordance with Section 2.9. 2.9 SURRENDER AND PAYMENT. (a) EXCHANGE AGENT. Prior to the Effective Time, Parent shall designate a bank or trust company reasonably acceptable to the Company to act as agent for the holders of shares of Company Common Stock in connection with the Merger (the "Exchange Agent") to receive the Merger Consideration to which holders of shares of Company Common Stock shall become entitled pursuant to Section 2.8. Prior to the filing of the Articles of Merger with the Department of State of the State of Florida, Parent or Merger Sub shall deposit with the Exchange Agent cash in an aggregate amount equal to the product of (i) the number of shares of Company Common Stock outstanding (and not to be canceled pursuant to Section 2.8(b)) immediately prior to the Effective Time, multiplied by (ii) the Merger Consideration (the "Payment Fund"). The Exchange Agent shall cause the Payment Fund to be (A) held for the benefit of the holders of Company Common Stock 7 and (B) promptly applied to making the payments provided for in Section 2.8(c). The Payment Fund shall not be used for any purpose that is not provided for herein. (b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the Effective Time, Parent shall cause the Exchange Agent to mail to each holder of record of a certificate or certificates (the "Certificates") which immediately prior to the Effective Time represented outstanding shares of Company Common Stock, other than shares to be canceled in accordance with Section 2.8(b), (i) a Letter of Transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration. Upon surrender of a Certificate for cancellation to the Exchange Agent, together with such Letter of Transmittal, duly executed, and such other documents as may reasonably be required by the Exchange Agent, the Exchange Agent shall pay the holder of such Certificate the Merger Consideration in respect of such Certificate, less any required withholding taxes, and the Certificate so surrendered shall forthwith be canceled. If any portion of the Merger Consideration is to be paid to a Person other than the registered holder of the shares represented by the Certificate or Certificates surrendered in exchange therefor, it shall be a condition to such payment that the Certificate or Certificates so surrendered shall be properly endorsed or otherwise be in proper form for transfer and that the Person requesting such payment shall pay to the Exchange Agent any transfer or other taxes required as a result of such payment to a Person other than the registered holder of such shares or establish to the satisfaction of the Exchange Agent that such tax has been paid or is not payable. Until surrendered as contemplated by this Section 2.9, each Certificate (other than Certificates representing Dissenting Shares (as defined below) or shares of Company Common Stock to be canceled pursuant to Section 2.8(b)) shall be deemed at any time after the Effective Time to represent only the right to receive the Merger Consideration upon such surrender. (c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All Merger Consideration paid upon the surrender for exchange of Certificates in accordance with the terms of this Article II shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of Company Common Stock theretofore represented by such Certificates. There shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Company Common Stock which were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation or the Exchange Agent for any reason, they shall be canceled and exchanged as provided in this Article II, except as otherwise provided by law. (d) UNCLAIMED FUNDS. Any portion of the Payment Fund made available to the Exchange Agent pursuant to Section 2.9(a) that remains unclaimed by holders of the Certificates for six (6) months after the Effective Time shall be delivered to the Surviving Corporation or a United States parent thereof, upon demand, and any holders of Certificates who have not theretofore complied with this Article II shall thereafter look only to Parent for payment of their claim for Merger Consideration. Any portion of the Merger Consideration made available to the Exchange Agent to pay for Company Common Stock for which dissenters' rights have been perfected shall be returned to Parent, upon demand. 8 (e) NO LIABILITY. None of Parent, Merger Sub, the Company or the Exchange Agent shall be liable to any Person in respect of any Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. If any Certificate has not been surrendered prior to five (5) years after the Effective Time (or immediately prior to such earlier date on which Merger Consideration in respect of such Certificate would otherwise escheat to or become the property of any public official), any such shares, cash, dividends or distributions in respect of such Certificate shall, to the extent permitted by applicable law, become the property of the Surviving Corporation, free and clear of all claims or interest of any person previously entitled thereto. (f) INVESTMENT OF FUNDS. The Payment Fund shall be invested by the Exchange Agent in obligations of, or guaranteed by, the United States of America, in commercial paper obligations rated A-1 or P-1 or better by Moody's Investor Services or Standard & Poor's Corporation, respectively, in each case with maturities not exceeding seven (7) days. All earnings thereon shall inure to the benefit of Parent or Merger Sub. (g) LOST CERTIFICATES. In the event that any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent, the granting of an indemnity reasonably satisfactory to Parent against any claim that may be made against it, the Surviving Corporation or the Exchange Agent, with respect to such Certificate, will issue in exchange for such lost, stolen or destroyed Certificate the Merger Consideration with respect to such Certificate, to which such Person is entitled pursuant hereto. (h) DISSENTING SHARES. Notwithstanding anything in this Agreement to the contrary, if required under the FBCA, but only to the extent required thereby, shares of Company Common Stock that are issued and outstanding immediately prior to the Effective Time and which are held by shareholders ("Dissenting Shareholders") who (i) have not voted in favor of or consented to the Merger, (ii) in the manner provided in Section 607.1320 of the FBCA, shall have delivered a written notice of intent to demand payment for such shares of Company Common Stock if the Merger is effectuated in the time and manner provided in FBCA and (iii) shall not have failed to perfect or shall not have effectively withdrawn or lost their rights to appraisal and payment under the FBCA shall not be converted into the right to receive the Merger Consideration, but shall, in lieu thereof, be entitled to receive the consideration as shall be determined pursuant to Sections 607.1301 through 607.1320 of the FBCA; provided, however, that any such holder who shall have failed to perfect or shall have effectively withdrawn or lost his, her or its right to appraisal and payment under the FBCA, shall thereupon be deemed to have had such person's shares of Company Common Stock converted, at the Effective Time, into the right to receive the Merger Consideration set forth herein, without any interest or dividends thereon. Notwithstanding anything to the contrary contained in this Section 2.9(h), if (A) the Merger is rescinded or abandoned or (B) the shareholders of the Company revoke the authority to effect the Merger, then the right of any Dissenting Shareholder to be paid the fair value of such Dissenting Shareholder's Shares pursuant to Section 607.1302 of the FBCA shall cease as provided in the FBCA. The Company will give Parent prompt notice of any demands received by the Company for appraisals of Company Common Stock held by Dissenting 9 Shareholders. The Company shall not, except with the prior written consent of Parent, make any payment with respect to any demands for appraisal or offer to settle or settle any such demands. ARTICLE III. REPRESENTATIONS AND WARRANTIES 3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as specifically set forth in the Company Disclosure Schedule delivered by the Company to Parent on the date hereof (the "Company Disclosure Schedule") or as disclosed in the Company SEC Reports (as defined below) filed with the SEC and publicly available prior to the date hereof, the Company represents and warrants to Parent and Merger Sub as follows: (a) ORGANIZATION, STANDING AND POWER. Each of the Company and its Subsidiaries has been duly organized and is validly existing and in good standing under the laws of its jurisdiction of incorporation. Each of the Company and its Subsidiaries is duly qualified and in good standing or otherwise authorized or licensed to do business in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary, except for any such failure to be so qualified, authorized or licensed or in good standing when taken together with all other such failures, could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or materially impair or delay the ability of the Company to consummate the transactions contemplated hereby. The copies of the Organizational Documents of the Company and of each Subsidiary which were previously furnished or made available to Parent are, in each case, true, complete and correct copies of such documents as in effect on the date of this Agreement. Each of the Company and its Subsidiaries has the requisite corporate power and corporate authority to own, lease and operate its properties and to carry on its respective businesses as they are now being conducted. The Company's Articles of Incorporation and By-laws and the comparable governing instruments of each of its Subsidiaries are in full force and effect. Neither the Company nor any of its Subsidiaries is in violation of any provisions of its Organizational Documents in any material respect. Section 3.1(a) of the Company Disclosure Schedule contains a true and accurate list of all the Subsidiaries of the Company. Except for its interests in its Subsidiaries, the Company does not own, directly or indirectly, any capital stock, membership interest, partnership interest, joint venture interest or other equity interest in any Person. (b) CAPITAL STRUCTURE. (i) The authorized capital stock of the Company consists of 200,000,000 shares of Company Common Stock, of which, as of the date hereof, 63,971,522 shares have been issued and are outstanding and 19,816,271 shares have been reserved for issuance upon exercise of outstanding options, warrants or other rights to acquire capital stock from the Company. The Company has authorized 5,000,000 shares of preferred stock, none of which is issued or outstanding. Except as provided in this Section 3.1(b), there are no shares of capital stock or other equity securities of the Company issued, reserved for issuance or outstanding. All issued and outstanding shares of the capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable, and no class of capital stock is entitled to preemptive rights. As of the date of this Agreement, there are no outstanding 10 options, warrants, convertible or exchangeable securities or other rights to acquire capital stock from the Company other than options representing in the aggregate the right to purchase not more than 13,245,023 shares of Company Common Stock under the Company Stock Option Plans (the "Outstanding Options"), and options or rights to purchase shares of Company Common Stock under the Company Stock Purchase Plans. There are 11,879,215 Outstanding Options which have an exercise price of less than the Price Per Share which options have an aggregate weighted average exercise price of $12.40 per share of Company Common Stock. (ii) All of the issued and outstanding shares of capital stock of the Company's Subsidiaries are duly authorized, validly issued, fully paid and nonassessable and are owned solely by the Company, free and clear of any liens, pledges, security interests, claims, encumbrances, restrictions (including any restriction on the right to vote or sell such shares, except as may be imposed as a matter of law), preemptive rights or any other claims of any third party ("Liens"). (iii) As of the date of this Agreement, no bonds, debentures, notes or other indebtedness of the Company having the right to vote on any matters on which shareholders may vote ("Company Voting Debt") are issued or outstanding. (iv) Except as otherwise set forth in this Section 3.1(b), as of the date of this Agreement, there are no securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which the Company or its Subsidiaries is a party or by which any of them is bound obligating (and no contract, agreement, understanding, arrangement or obligation, whether or not contingent, providing for) the Company or any of its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other voting securities of the Company or such Subsidiary or obligating the Company or such Subsidiary to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking. Except as set forth on Section 3.1(b)(iv) of the Company Disclosure Schedule, as of the date of this Agreement, there are no outstanding obligations, arrangements, agreements or commitments of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of the Company or such Subsidiary. Immediately prior to the consummation of the Offer and Merger, no shares of Company Common Stock or other securities of the Company will be issuable and, immediately after the Effective Time, the Surviving Corporation will have no obligation to issue, transfer or sell any shares of common stock of the Surviving Corporation pursuant to any compensation and benefit plan of the Company or any of its Subsidiaries. (c) AUTHORITY; NO CONFLICTS. (i) The Company has all requisite corporate power and corporate authority to enter into this Agreement and, subject to the adoption of this Agreement and approval of the Merger by the requisite vote of the holders of Company Common Stock, to consummate the transactions contemplated hereby. The execution and delivery of this 11 Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of the Company, subject in the case of the consummation of the Merger to the adoption of this Agreement by the requisite vote of the shareholders of the Company, and no other corporate proceedings are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company and, assuming the due execution and delivery of this Agreement by Parent and Merger Sub, constitutes a valid and binding agreement of the Company, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws relating to or affecting creditors generally and by general equity principles (regardless of whether such enforceability is considered in a proceeding in equity or at law). (ii) The execution, delivery and performance of this Agreement do not or will not, as the case may be, and the consummation of the transactions contemplated hereby will not, conflict with, or result in any violation of, or constitute a default (with or without notice or lapse of time, or both) under, or give rise to a right of consent, termination, amendment, cancellation or acceleration of any obligation or the loss of a material benefit under, or the creation of a Lien on any assets (any such conflict, violation, default, right of consent, termination, amendment, cancellation or acceleration of any obligations or creation, a "Violation"), or result in any adverse change in the rights or obligations of the Company pursuant to: (A) any provision of the Organizational Documents of the Company or any of its Subsidiaries or (B) except as could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or prevent, impair or materially delay the consummation of any of the transactions contemplated hereby and, subject to obtaining or making the consents, approvals, orders, authorizations, registrations, declarations and filings referred to in paragraph (iii) below, the terms, provisions or conditions of any loan or credit agreement, note, mortgage, bond, indenture, lease, compensation or benefit plan (or any grant or award made pursuant thereto) or other agreement, obligation, instrument, contract, permit, concession, franchise, license, judgment, order, writ, injunction, award, decree, statute, law, ordinance, rule or regulation applicable to the Company, the Company's Subsidiaries or any of their respective properties or assets. (iii) No consent, registration, permit, approval, order or authorization of, or registration, declaration, notice, report, or other filing with, any supranational, national, state, municipal or local government, any instrumentality, subdivision, court, administrative agency or commission or other authority thereof, or any quasi-governmental or private body exercising any regulatory, taxing, importing or other governmental or quasi-governmental authority, whether U.S. or foreign (a "Governmental Entity"), is required by or with respect to the Company or any of its Subsidiaries in connection with the execution and delivery of this Agreement by the Company or the consummation by the Company of the transactions contemplated hereby, except for (x) those required under or in relation to (A) the Exchange Act, (B) the FBCA with respect to the filing and recordation of the Articles of Merger and any other appropriate merger or other documents, (C) the rules and regulations of The Nasdaq National Market System ("Nasdaq"), and (D) the filing of a pre-merger notification 12 and report form by the Company under the HSR Act, and the rules and regulations thereunder and (y) such other consents, registrations, permits, approvals, orders, authorizations, registrations, declarations, notices, reports and other filings the failure of which to make or obtain could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or prevent, impair or materially delay the consummation of the transactions contemplated hereby. (d) REPORTS AND FINANCIAL STATEMENTS. (i) Since August 31, 1998, the Company has timely filed all required reports, schedules, forms, statements and other documents required to be filed by it with the SEC (collectively, including all exhibits thereto, the "Company SEC Reports"). The Company SEC Reports, as of their respective dates (and, if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing), did not, and any Company SEC Reports filed with the SEC subsequent to the date hereof and prior to the purchase of shares pursuant to the Offer will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated (or incorporated by reference) therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Each of the financial statements (including the related notes) included or to be included in, or incorporated by reference into, the Company SEC Reports presents or will present fairly, in all material respects, the consolidated financial position and consolidated results of operations and cash flows of the Company and its Subsidiaries as of the respective dates or for the respective periods set forth therein, all in conformity with U.S. generally accepted accounting principles ("GAAP") consistently applied during the periods involved except as otherwise noted therein, and subject, in the case of the unaudited interim financial statements, to normal accounting year-end adjustments that have not been and will not be material in amount or nature. All of such Company SEC Reports, as of their respective dates (and as of the date of any amendment to the respective Company SEC Report filed prior to the date hereof), complied in all material respects with the applicable requirements of the Securities Act of 1933, as amended (the "Securities Act"), the Exchange Act and the rules and regulations promulgated under such acts (as in effect on the dates on which such SEC Reports were filed). (ii) Except as set forth in Section 3.1(d)(ii) of the Company Disclosure Schedule, and except for the Merger Fees as estimated and set forth in Section 3.1(n) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries has any liabilities or obligations of any nature required to be set forth in a consolidated balance sheet of the Company and its consolidated Subsidiaries under GAAP (whether accrued, absolute, contingent or otherwise) and there is no existing condition, situation or set of circumstances, which could reasonably be expected to result in such a liability or obligation, except for liabilities or obligations which individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect on the Company. (iii) The Company has delivered to Parent a complete and correct copy of any amendments or modifications, which have not yet been filed with the SEC, to all 13 agreements, documents or other instruments which previously had been filed by the Company with the SEC pursuant to the Exchange Act. (e) INFORMATION SUPPLIED. (i) None of the information supplied or to be supplied by the Company for inclusion or incorporation by reference in (A) the proxy statement relating to the Company Shareholders Meeting (as defined herein) or the information statement relating to approval of the Merger and this Agreement by written consent (together, the "Proxy Statement"), if applicable, (B) the Schedule 14D-9, (C) the Offer Documents and (D) any other document filed or to be filed with the SEC or any other Government Entity in connection with the Offer or this Agreement will, at the respective times such documents or any amendments or supplements thereto are filed, and, with respect to the Offer Documents and the Proxy Statement, if any, when first published, sent or given to the shareholders of the Company, contain any untrue statement of material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not false or misleading or, in the case of the Proxy Statement, if any, or any amendment thereof or supplement thereto, at the time of the Company Shareholders Meeting, if any, and at the Effective Time, contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they are made, not false or misleading or necessary to correct any statement in any earlier communication with respect to the Offer or the solicitation of proxies for the Company Shareholders Meeting, if any, which shall have become false or misleading. The Proxy Statement, if any, and Schedule 14D-9 will comply as to form and content in all material respects with the requirements of the Exchange Act and the Securities Act and the rules and regulations of the SEC thereunder. (ii) Notwithstanding the foregoing provisions of this Section 3.1(e), no representation or warranty is made by the Company with respect to statements made or incorporated by reference in the Proxy Statement, if any, or the Offer Documents based on information supplied by Parent or Merger Sub in writing specifically for inclusion or incorporation by reference therein. (f) COMPLIANCE WITH APPLICABLE LAWS; REGULATORY MATTERS. The Company and each of its Subsidiaries hold all permits, licenses, certificates, franchises, registrations, variances, exemptions, orders and approvals of all Governmental Entities other than those the failure to so hold individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect on the Company (the "Company Permits"). The Company and each of its Subsidiaries have performed their respective obligations under and are in compliance with the terms of the Company Permits, except where the failure so to comply or perform, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect on the Company. No event has occurred or condition or state of facts exists which constitutes or, after notice or lapse of time or both, would constitute a breach or default under the Company Permits or, after notice or lapse of time or both, would permit revocation or termination of the Company Permits, except where such 14 event, condition or state of facts, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect on the Company. The businesses of the Company and its Subsidiaries are not being and have not been conducted in violation of any law, ordinance, regulation, judgment, decree, injunction, rule or order of any Governmental Entity, except for violations which could not reasonably be expected to have a Material Adverse Effect on the Company. As of the date of this Agreement, no lawsuit, claim, suit, proceeding or investigation by any Governmental Entity with respect to the Company or any of its Subsidiaries is pending or, to the best knowledge of the Company, threatened, nor, to the best knowledge of the Company, has any Governmental Entity indicated an intention to conduct the same, other than lawsuits, claims, suits, proceedings or investigations which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect on the Company. (g) LITIGATION. There is no litigation, arbitration, claim, suit, action, investigation or proceeding pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries or any of their respective properties or assets, which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or could reasonably be expected to prevent or materially delay the consummation of the transactions contemplated by this Agreement, nor is there any judgment, award, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against the Company or any of its Subsidiaries which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. This provision shall not apply to environmental matters which are the subject of Section 3.1(r). (h) TAXES. (i) The Company and its Subsidiaries have duly and timely filed (taking into account any extension of time within which to file) all Tax Returns required to be filed by any of them other than those the failure of which to file could not reasonably be expected to have individually or in the aggregate a Material Adverse Effect on the Company and all such filed Tax Returns are complete and accurate in all material respects; (ii) the Company and its Subsidiaries have paid all Taxes due and payable by them (whether or not shown on any Tax Return), other than those the failure of which to pay could not reasonably be expected to have individually or in the aggregate a Material Adverse Effect on the Company; (iii) as of the date of this Agreement, there are no pending or, to the knowledge of the Company, threatened in writing audits, examinations, investigations or other proceedings in respect of Taxes or Tax matters relating to the Company or any of its Subsidiaries which, if determined adversely to the Company or such Subsidiary, could reasonably be expected to have a Material Adverse Effect on the Company; (iv) no claim has ever been made by an authority in a jurisdiction where the Company or any of its Subsidiaries does not file tax returns that it is or may be subject to taxation by that jurisdiction except as could not reasonably be expected to have a Material Adverse Effect; (v) there are no deficiencies or claims for any Taxes that have been proposed, asserted or assessed, or material issues that have been raised in connection with the examination of Tax Returns and that could reasonably be expected to give rise to such deficiencies or claims, against the Company or any of its Subsidiaries which, if such deficiencies or claims were finally resolved against the Company or such Subsidiary, could reasonably be expected to have a Material Adverse Effect on the Company; (vi) there are no material Liens for Taxes upon the assets of the Company or any of its Subsidiaries, other than Liens for current Taxes not yet due and payable and Liens for Taxes that are being contested in good faith by 15 appropriate proceedings and that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company if any such contest is unsuccessful; (vii) neither the Company nor any of its Subsidiaries is or was at any time during the five (5) year period ending on the date on which the Effective Time occurs, a "United States real property holding corporation" within the meaning of Section 897(c) of the Code; (viii) neither the Company nor any of its Subsidiaries has made an election under Section 341(f) of the Code; (ix) neither the Company nor any of its Subsidiaries has filed or been required to file any reports under Section 999 of the Code; (x) the Company and each of its Subsidiaries has disclosed on its federal Income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income tax within the meaning of Section 6662 of the Code; (xi) neither the Company nor any of its Subsidiaries is now or has ever been a party to any tax allocation or sharing agreement; (xii) other than the consolidated group of which the Company is now the common parent, neither the Company nor any of its Subsidiaries has ever been (A) a member of an affiliated group filing a consolidated federal income Tax Return or (B) responsible for any liability for the Taxes of any Person as a transferee or successor, by contract, by operation of law, or otherwise; and (xiii) except where the failure to do so could not reasonably be expected to have individually or in the aggregate a Material Adverse Effect on the Company, the Company and each of its Subsidiaries has (A) withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder, or other third party and (B) collected any and all amounts required from customers or other third parties in the form of sales, use, or similar Taxes and paid, when due, such Taxes to the appropriate governmental authority. (i) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since August 31, 1999 (A) each of the Company and the Company's Subsidiaries has conducted its business in the ordinary course; (B) there has not been any change in the business, condition (financial or otherwise), prospects or results of operations of the Company or its Subsidiaries that has had, or could reasonably be expected to have, a Material Adverse Effect on the Company; (C) there has not been any entry by the Company or its Subsidiaries into any employment agreement, severance agreement or termination agreement with any employee of the Company other than in the ordinary course of business and except as contemplated hereby; (D) there has not been any declaration, setting aside or payment of any dividend or other distribution with respect to the capital stock of the Company nor has there been any repurchase, redemption or other acquisition by the Company or any of its Subsidiaries of any outstanding shares of capital stock or other securities of, or other ownership interests in, the Company or such Subsidiary; (E) there has not been any material change by the Company in accounting principles, practices or methods except as required by GAAP; (F) except as provided or contemplated hereby for herein, there has not been any material increase in the compensation payable or which could become payable by the Company and its Subsidiaries to their officers or key employees, or any material amendment of any compensation and benefit plans; (G) there has not been any amendment of any material term of any outstanding security of the Company or any of its Subsidiaries; (H) there has not been any acquisition, sale or transfer of any material assets of the Company or any of its Subsidiaries; and (I) there has not been any entry by the Company or its Subsidiaries into any material joint venture or other similar arrangement with any Person. 16 (j) VOTE REQUIRED. The affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock adopting this Agreement (the "Required Company Votes") is the only vote of the holders of any class or series of the Company capital stock necessary to approve this Agreement and the transactions contemplated hereby and is only necessary in the event that the number of shares of Company Common Stock tendered pursuant to the Offer represents less than 80% of the issued and outstanding shares of Company Common Stock. The Company Common Stock which is subject to the Shareholder Agreement (not counting any option for Company Common Stock which is subject to the Shareholder Agreement) constitutes a majority of the outstanding shares of the Company Common Stock on the date hereof. (k) CONTRACTS; DEBT INSTRUMENTS. (i) Except as disclosed in the SEC Reports or on Section 3.1(k)(i) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party to or subject to: (A) any employment, consulting, severance, termination, or indemnification agreement, contract or arrangement providing for future payments, written or oral, with any current or former officer, consultant, director or employee which (1) exceeds $200,000 per annum or (2) requires aggregate annual payments or total payments over the life of such agreement, contract or arrangement to such current or former officer, consultant, director or employee in excess of $200,000, and is not terminable by it or its subsidiary on 30 days' notice or less without penalty or obligation to make payments related to such termination; (B) any joint venture contract or arrangement or any other agreement which has involved or is expected to involve a sharing of revenues of $200,000 per annum or more with other persons; (C) any lease for real or personal property in which the amount of payments which the Company is required to make on an annual basis exceeds $200,000; (D) any material agreement, contract, policy, license, permit, document, instrument, arrangement or commitment which has not been terminated or performed in its entirety and not renewed which may be, by its terms, terminated, impaired or adversely affected by reason of the execution of this Agreement, the closing of the Offer or the Merger, or the consummation of the other transactions contemplated hereby; (E) any agreement, contract, policy, license, permit, document, instrument, arrangement or commitment that limits in any material respect the freedom of the Company or any Subsidiary of the Company to compete in any line of business or with any person or in any geographic area or which would so limit in any material respect the freedom of the Company or any Subsidiary of the Company after the Effective Time; or 17 (F) any other agreement, contract, policy, license, permit, document, instrument, arrangement or commitment not made in the ordinary course of business which is material to the Company and its Subsidiaries taken as a whole. (ii) All of the Company Material Contracts are valid and in full force and effect, except to the extent they have previously expired in accordance with their terms, and other than as could not reasonably be expected to have a Material Adverse Effect on the Company. Neither the Company nor its Subsidiaries has violated any provision of, or committed or failed to perform any act which, with or without notice, lapse of time, or both, could reasonably be expected to constitute a default under the provisions of, any such Company Material Contract, and neither the Company nor any of its Subsidiaries has received notice that any party to any Company Material Contract intends to cancel, terminate or otherwise modify the terms of any applicable Company Material Contract, except in each case, as could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. To the knowledge of the Company, no counterparty to any such Company Material Contract has violated any provision of, or committed or failed to perform any act which, with or without notice, lapse of time, or both, could reasonably be expected to constitute a default or other breach under the provisions of, such Company Material Contract, except for defaults or breaches which could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on the Company. (iii) Set forth in Section 3.1(k)(iii) of the Company Disclosure Schedule is (A) a list of all loan or credit agreements, notes, bonds, mortgages, indentures and other agreements and instruments pursuant to which any indebtedness of the Company or any of its Subsidiaries in an aggregate principal amount in excess of $300,000 is outstanding or may be incurred and (B) the respective principal amounts currently outstanding thereunder. For purposes of this Section 3.1(k)(iii), "indebtedness" shall mean, with respect to any Person, without duplication, (A) all obligations of such Person for borrowed money, or with respect to deposits or advances of any kind to such Person, (B) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (C) all obligations of such Person upon which interest charges are customarily paid, (D) all obligations of such Person under conditional sale or other title retention agreements relating to property purchased by such Person, (E) all obligations of such Person issued or assumed as the deferred purchase price of property or services (excluding obligations of such Person to creditors for raw materials, inventory, services, supplies and other trade payables incurred in the ordinary course of such person's business), (F) all capitalized lease obligations of such Person, (G) all obligations of others secured by any Lien on property or assets owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (H) all obligations of such Person under interest rate or currency swap transactions (valued at the termination value thereof), (I) all letters of credit issued for the account of such Person (excluding letters of credit issued for the benefit of suppliers to support accounts payable to suppliers incurred in the ordinary course of business), (J) all obligations of such Person to purchase securities (or other property) which arises out of or in connection with the sale of the same or substantially similar securities or property, and (K) all guarantees and 18 arrangements having the economic effect of a guarantee of such Person of any indebtedness of any other Person. (l) EMPLOYEE BENEFIT PLANS: LABOR MATTERS. (i) With respect to each employee benefit plan as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and with respect to each other material employee and/or director benefit plan, program, arrangement and contract (including any bonus, deferred compensation, stock bonus, stock purchase, restricted stock, stock option, fringe benefit, sick pay, vacation, employment, termination, change in control and severance plan, program, arrangement and contract), to which the Company or any of its Subsidiaries is a party, which is maintained or contributed to by the Company or any of its Subsidiaries, or with respect to which the Company or any of its Subsidiaries could incur material liability under Section 4069, 4201 or 4212(c) of ERISA other than any "multiemployer plan" within the meaning of Section 3(37) of ERISA (a "Multiemployer Plan") (collectively, together with any and all amendments thereto, and any related trust agreement, insurance contract or other funding instrument, the "Company Benefit Plans") the Company has listed such Company Benefit Plan on Section 3.1(1)(i) of the Company Disclosure Schedule and has made available to Parent a true and complete copy of such Company Benefit Plan (or, to the extent no such copy exists, an accurate description thereof). A true and complete copy of the most recent annual report, actuarial reports, summary plan description or other employee communication material (including any summary of material modification) and Internal Revenue Service determination letter with respect to each Company Benefit Plan (to the extent applicable thereto) has been made available to Parent. (ii) Each of the Company Benefit Plans that is an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA and that is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the United States Internal Revenue Service, and the Company is not aware of any circumstances likely to result in the revocation of any such favorable determination letter. (iii) With respect to the Company Benefit Plans and any Multiemployer Plan, no event has occurred and, to the knowledge of the Company, there exists no condition or set of circumstances, including but not limited to any non-exempt "prohibited transactions" (as described in ERISA or the Code) with respect to any Company Benefit Plan, in connection with which the Company or any of its Subsidiaries could be subject to any liability under the terms of such Company Benefit Plans, Multiemployer Plan, ERISA, the Code or any other applicable law which could reasonably be expected to have a Material Adverse Effect on the Company. (iv) All Company Benefit Plans, to the extent subject to ERISA have been and are in substantial compliance with ERISA. There is no material pending or, to the knowledge of the Company threatened, litigation relating to the Company Benefit Plans. No Company Benefit Plan is subject to Title IV of ERISA and no liability under Title IV of 19 ERISA has been or is expected to be incurred by the Company or any of its Subsidiaries with respect to any ongoing, frozen or terminated "single-employer plan", within the meaning of Section 4001(a)(15) of ERISA, of any entity which is considered one employer with the Company under Section 4001 of ERISA or Section 414 of the Code (an "ERISA Affiliate"). (v) Neither the Company nor any of its Subsidiaries has any material obligations for retiree health and life benefits under any Company Benefit Plan except to the extent required by applicable law. (vi) All Company Benefit Plans maintained outside of the United States have been and are in substantial compliance with applicable local law except where such failure to comply could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. (vii) Neither the Company nor any of its Subsidiaries is a party to any collective bargaining or other labor union contracts and no collective bargaining agreement is being negotiated by the Company or any of its Subsidiaries. There is no pending labor dispute, strike or work stoppage against the Company or any of its Subsidiaries which may interfere with the respective business activities of the Company or any of its Subsidiaries, except where such dispute, strike or work stoppage could not reasonably be expected to have individually or in the aggregate a Material Adverse Effect on the Company. There is no pending charge or complaint against the Company or any of its Subsidiaries by the National Labor Relations Board or any comparable state agency, except where such unfair labor practice, charge or complaint could not reasonably be expected to have a Material Adverse Effect on the Company. (viii) Section 3.1(1)(viii) of the Company Disclosure Schedule sets forth (A) the estimated maximum amount that could be paid to or received by each "disqualified individual" (as defined in proposed regulations under Section 280G of the Code) (whether in cash or property or the vesting of property or the forgiveness of indebtedness) as a result of the Offer, Merger or the other transactions contemplated by this Agreement under all Company Benefit Plans or otherwise; (B) the "base amount" (as defined in Section 280G(b)(3) of the Code) for each disqualified individual calculated as of the date of this Agreement; and (C) a list of each employee of the Company or any of its Subsidiaries who is entitled to receive a retention bonus, severance and/or other payment as a result of the Offer, Merger or any other transaction contemplated hereby, the amount of each such bonus, severance and/or other payment and the date and other terms relating to the payment thereof. Neither the Offer, Merger or any other transaction or action contemplated by this Agreement will constitute an "Acquisition Proposal" (or change in control or words of similar import) as defined in any Company Benefit Plan. (ix) Other than as set forth on Section 3.1(1)(viii) of the Company Disclosure Schedule, or as set forth in the Company Equity Plans, no employee of the Company or any of its Subsidiaries will be entitled to any additional benefits or any 20 acceleration of the time of payment or vesting of any benefits under any Company Benefit Plan or otherwise as a result of the transactions contemplated by this Agreement. (x) No deduction for compensation payable by the Company or any of its Subsidiaries to any of its employees under any Company Benefit Plan or otherwise after the date of this Agreement (including by reason of the Offer, Merger or other transactions contemplated hereby) will be subject to disallowance under Section 162(m) of the Code. (m) INTELLECTUAL PROPERTY. (i) Except as could not reasonably be expected to have a Material Adverse Effect on the Company, (A) all patents, trademarks, trade names, service marks and copyrights and registrations and applications relating thereto held by the Company and its Subsidiaries are valid and enforceable, (B) neither the Company nor any of its Subsidiaries is, nor will the Company or any of its Subsidiaries be as a result of the execution and delivery of this Agreement or the performance of the Company's obligations hereunder, in violation of, and no claims are pending or, to the knowledge of the Company, threatened that the Company or any of its Subsidiaries is infringing on or otherwise violating the rights of any person with regard to any Intellectual Property and (C) to the Company's knowledge, no person is infringing on or otherwise violating any right of the Company or any of its Subsidiaries with respect to any Intellectual Property owned by and/or licensed to the Company or any of its Subsidiaries. (ii) It is the general policy of the Company to require that its employees execute agreements assigning to the Company all rights such employees otherwise would have in Intellectual Property developed by such employees while in the employ of the Company. (n) BROKERS OR FINDERS. No agent, broker, investment banker, financial advisor or other firm or Person is or will be entitled to any broker's or finder's fee or any other similar commission or fee payable by the Company or any of its Subsidiaries in connection with any of the transactions contemplated by this Agreement, except Morgan Stanley & Co. Incorporated, the arrangements with which have been disclosed in writing to Parent prior to the date hereof. Section 3.1(n) of the Company Disclosure Schedule sets forth the Company's good faith estimate of the Merger Fees (as defined herein) owed or which will be owing by the Company and its Subsidiaries in connection with the Offer, the Merger and the other transactions contemplated by this Agreement. The term "Merger Fees" means all fees and expenses paid since December 31, 1999 or payable by or on behalf of the Company or any of its Subsidiaries to all attorneys, accountants, investment bankers, financial advisors and other experts and advisers incident to the negotiation, preparation, execution and consummation of this Agreement and the transactions contemplated hereby. (o) OPINION OF FINANCIAL ADVISOR. The Company has received a written opinion of Morgan Stanley & Co. Incorporated dated the date of this Agreement, to the effect that, as of such 21 date, the consideration to be paid in the Offer and the Merger is fair, from a financial point of view, to the holders of Company Common Stock. A copy of this opinion has been provided to Parent. (p) PRODUCTS AND SERVICES. (i) The Company has provided to Parent a written list of each product under development, developed, manufactured, licensed, distributed or sold by the Company and its Subsidiaries and any other products in which the Company and its Subsidiaries have any proprietary rights or beneficial interest (collectively, the "Company Products"). Each Company Product has been designed and manufactured in accordance with (A) the specifications under which the Company Product is normally and has normally been manufactured, and (B) the provisions of all applicable laws, policies, guidelines and any other governmental requirements, the violation of which could reasonably be expected to have a Material Adverse Effect on the Company. (ii) Except as set forth on Section 3.1(p)(ii) of the Company Disclosure Schedule, to the Company's knowledge there exists no set of facts which could reasonably be expected to furnish a basis for the recall, withdrawal or suspension of any product registration, produce license, manufacturing license, export license or other license, approval or consent of any governmental or regulatory authority (whether foreign or U.S.) with respect to the Company and its Subsidiaries or any of the Company Products, which recall, withdrawal or suspension could reasonably be expected to have a Material Adverse Effect on the Company. (iii) Except as which would not reasonably be expected to have a Material Adverse Effect on the Company, there are no claims existing and, to the knowledge of the Company, there is no basis for any claim against the Company and its Subsidiaries for injury to persons, animals or property as a result of the sale, distribution or manufacture of any product or performance of any service by the Company, including, but not limited to, claims arising out of the defective or unsafe nature of its products or services. (q) TAKEOVER STATUTES; RIGHTS PLANS. No "fair price," "moratorium," "control share acquisition," "interested shareholder," "business combination" or other similar anti-takeover statute or regulation (including, without limitation, Sections 607.0901 and 607.0902 of the FBCA, which have been rendered inapplicable) (each a "Takeover Statute") or restrictive provision of any applicable anti-takeover provision in the articles of incorporation of the Company or bylaws of the Company is applicable to the Company, the Company Common Stock, the Offer, the Merger, this Agreement, the Shareholders Agreement, or any of the transactions contemplated by this Agreement. The Company does not have any stockholder rights plans or similar anti-takeover device in effect. (r) ENVIRONMENTAL MATTERS. Except as could not reasonably be expected to have a Material Adverse Effect on the Company: (i) the Company and each Subsidiary is in compliance and to the knowledge of the Company has been in compliance with all Environmental Laws; (ii) no property that is currently owned or operated or has been owned or operated by the Company or any current or former Subsidiary contains any Hazardous Substance or other condition which could 22 reasonably be expected to require investigation or remediation or lead to any liability of the Company or its Subsidiaries under any Environmental Law; (iii) to the Company's knowledge, neither the Company nor any of its Subsidiaries are subject to liability for any offsite disposal or release of any Hazardous Substance under any Environmental Law; (iv) there are no pending, or to the knowledge of the Company, threatened claims against the Company or any of its Subsidiaries alleging a violation of Environmental Law; (v) neither the Company nor any of its Subsidiaries has received written notice alleging any claims, orders or notices alleging responsibility, liability or non-compliance under any Environmental Law; and (vi) to the Company's knowledge, there are no other past or present circumstances involving the Company or any of its Subsidiaries that are likely to result in any claims, liabilities, costs, penalties or property restrictions in connection with any Environmental Law. As used herein, "Environmental Law" means any law, regulation, rule, order, decree, or common law relating to the protection of the environment "Hazardous Substance" means any substance that is listed, classified or regulated in any concentration under any Environmental Law including petroleum products, asbestos and polychlorinated biphenyls. Notwithstanding anything to the contrary contained in this Agreement, this Section 3.1(r) shall be the sole and exclusive representation and warranty of the Company or any of its Subsidiaries with regard to environmental matters. (s) PROPERTIES. Section 3.1(s) of the Company Disclosure Schedule contains a true and complete list, as of the date hereof, of all real properties owned or leased by the Company or any of its Subsidiaries. Each of the Company and its Subsidiaries has good and marketable title to all properties, assets and rights of any kind whatsoever whether real, personal or mixed, and whether tangible or intangible owned by it (collectively, the "Company Assets"), in each case free and clear of all liens and other encumbrances except those which, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect on the Company. There are no pending or, to the knowledge of the Company, threatened condemnation proceedings against or affecting any Company Asset, and none of the Company Assets is subject to any commitment or other arrangement for its sale to a third party outside the ordinary course of business, which either individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect on the Company. (t) CUSTOMERS AND SUPPLIERS. Since August 31, 1999, there has been no termination, cancellation or curtailment of the business relationship of the Company with (i) any customer or supplier or group of affiliated customers or suppliers or (ii) any joint venture or alliance partners, in each case which could reasonably be expected to result in a Material Adverse Effect on the Company, and the Company has not received notice or any indication of any such termination, cancellation or curtailment and the Company has no knowledge of any facts or circumstances in existence that could reasonably be expected to result in any such termination, cancellation or curtailment. (u) DISTRIBUTORS. Rexall Showcase International, Inc. distributes its products through approximately 120,000 active (as defined in the Company SEC Reports) independent distributors. Except as the same could not reasonably be expected to have a Material Adverse Effect on the Company, the Company and its Subsidiaries are in compliance with its agreements with the distributors and all laws applicable to their businesses related to the distributors and their distribution 23 practices, and there is no pending, or, to Company's knowledge, threatened, grievance by or with respect to the distributors that, if adversely decided, could reasonably be expected to have a Material Adverse Effect on the Company. The Company has previously provided a list (the "Top 20 List") to Parent which accurately sets forth the names of the twenty (20) distributors who received the highest commissions and overrides paid by Rexall Showcase International, Inc. for the calendar year ended 1999 and the amounts paid to such Persons. There are no material disputes existing between the Company or any of its Subsidiaries on the one hand, and any distributor who is listed on the Top 20 List on the other hand which, if not resolved to the satisfaction of the Company, could reasonably be expected to have a Material Adverse Effect on the Company. (v) REGULATORY COMPLIANCE. The Company and its Subsidiaries have received approval of all registrations, applications, licenses, requests for exemptions, permits and other regulatory authorizations necessary or desirable to the conduct of the business of the Company and its Subsidiaries as they are now conducted whether foreign or U.S., including, without limitation, with the United States Food and Drug Administration ("FDA"), the Federal Trade Commission ("FTC"), the Consumer Product Safety Commission ("CPSC") and the United States Department of Agriculture ("USDA"), as applicable, except for such registrations, applications, licenses, requests for exemptions, permits and other regulatory authorizations of which the failure to so obtain could not reasonably be expected to have a Material Adverse Effect on the Company. The Company and its Subsidiaries are in compliance in all respects with all such registrations, applications, licenses, requests for exemptions, permits and other regulatory authorizations whether foreign or U.S., including, without limitation, all applicable FDA, FTC, CPSC, USDA, federal, state and local rules and regulations, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect on the Company. The Company has not received any written notice and has no reason to believe that any party granting any such registration, application, license, request for exemption, permit or other authorization is considering limiting, suspending or revoking the same. 3.2 REPRESENTATIONS AND WARRANTIES OF PARENT. Except as disclosed in the Parent's Annual Report for the year ended December 31, 1999 and publicly available prior to the date hereof, Parent represents and warrants to the Company as follows: (a) ORGANIZATION, STANDING AND POWER. Parent has been duly organized and is validly existing under the laws of its jurisdiction of organization. Parent is duly qualified or otherwise authorized to do business in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary, except where the failure so to qualify or be so authorized when taken together with all such other failures, could not reasonably be expected to have a Material Adverse Effect on Parent or materially impair or delay the ability of the Parent or Merger Sub to consummate the transactions contemplated hereby. Parent has the requisite corporate power and corporate authority, in all material respects, to own, lease and operate its properties and to carry on its businesses as they are now being conducted. Parent is not in violation of any provisions of its Organizational Documents in any material respect. 24 (b) AUTHORITY; NO CONFLICTS. (i) Parent has all requisite corporate power and corporate authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of Parent and no other corporate proceedings are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by Parent and, assuming due execution by the Company, constitutes a valid and binding agreement of Parent, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws relating to or affecting creditors generally, or by general equity principles (regardless of whether such enforceability is considered in a proceeding in equity or at law). The Supervisory Board of Parent has, at a meeting duly called and held, approved the transactions contemplated by this Agreement. (ii) The execution and delivery of this Agreement do not or will not, as the case may be, and the consummation of the transactions contemplated hereby will not, result in any Violation or result in any adverse change in the rights or obligations of the Parent pursuant to: (A) any provision of the Organizational Documents of Parent or (B) except as could not reasonably be expected to have a Material Adverse Effect on Parent or prevent, impair or materially delay the consummation of any of the transactions contemplated hereby and subject to obtaining or making the consents, approvals, orders, authorizations, registrations, declarations and filings referred to in paragraph (iii) below, the terms, provisions or conditions of any loan or credit agreement, note, mortgage, bond, indenture, lease, compensation or benefit plan or grant or award made pursuant thereto, or other agreement, obligation, instrument, contract, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Parent, or its properties or assets. (iii) No consent, registration, permit, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity or foreign securities exchange is required by or with respect to Parent in connection with the execution and delivery of this Agreement by Parent or the consummation by Parent of the transactions contemplated hereby, except for (A) the consents, approvals, orders, authorizations, registrations, declarations and filings required under or in relation to clause (x) of Section 3.1(c)(iii) as applicable; (B) any filings required to be made or consents that have to be obtained or arrangements that have to be made in order to ensure that the United States government or any agency thereof will not challenge the consummation of the transactions contemplated hereby on national security grounds; and (C) such consents, approvals, orders, authorizations, registrations, declarations and filings the failure of which to make or obtain could not reasonably be expected to have a Material Adverse Effect on Parent or prevent the consummation of the transactions contemplated hereby. 25 (c) INFORMATION SUPPLIED. (i) None of the information supplied or to be supplied by Parent or Merger Sub for inclusion or incorporation by reference in (A) the Offer Documents or (B) the information supplied or to be supplied by Parent or Merger Sub for inclusion or incorporation by reference in the Proxy Statement, if any, the Schedule 14D-9 and (C) any other documents to be filed with the SEC or any other Governmental Entity or foreign securities exchange in connection with the transactions contemplated hereby, including any amendment or supplement to such documents, will, at the respective times such documents are filed, and, with respect to the Proxy Statement, if any, and the Offer Documents, when first published, sent or given to shareholders of the Company, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they are made, not false or misleading or, in the case of the Proxy Statement, if any, or any amendment thereof or supplement thereto, at the time of the Company Shareholders Meeting, if any, and at the Effective Time, contain any untrue statement of a material fact, or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they are made, not false or misleading or necessary to correct any statement in any earlier communication with respect to the Offer or the solicitation of proxies for the Company Shareholders Meeting, if any, which shall have become false or misleading. The Offer Documents will comply as to form in all material respects with the requirements of the Exchange Act and Securities Act and the rules and regulations of the SEC thereunder. (ii) Notwithstanding the foregoing provisions of this Section 3.2(c), no representation or warranty is made by Parent or Merger Sub with respect to statements made or incorporated by reference in the Proxy Statement, if any, or the Offer Documents based on information supplied by the Company for inclusion or incorporation by reference therein. (d) VOTE REQUIRED. No vote of the holders of any capital stock of Parent is necessary to approve this Agreement and the transactions contemplated hereby. (e) BROKERS OR FINDERS. No agent, broker, investment banker, financial advisor or other firm or Person is or will be entitled to any broker's or finder's fee or any other similar commission or fee in connection with any of the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent on Merger Sub, except J. Henry Schroder & Co. Limited and Salomon Smith Barney Inc. and their affiliates. (f) OWNERSHIP OF COMPANY CAPITAL STOCK. Except as is contemplated in connection herewith, as of the date of this Agreement, neither Parent nor any of its Subsidiaries, "affiliates" or "associates" (as such terms are defined in the FBCA) (i) beneficially owns, directly or indirectly or (ii) is party to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of, in case of either clause (i) or (ii), shares of capital stock of the Company. 26 (g) LITIGATION. As of the date of this Agreement, there is no litigation, arbitration, claim, suit, action, investigation or proceeding pending or, to the knowledge of Parent, threatened against or affecting Parent or any of its Subsidiaries or any of their respective properties or assets, which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Parent or could reasonably be expected to prevent the consummation of the transactions, contemplated by this Agreement, nor is there any judgment, award, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against Parent or any of its Subsidiaries which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Parent. (h) FINANCING. Parent will have the funds necessary to consummate the Offer and the Merger on the terms contemplated by this Agreement and will provide such funds to Merger Sub at or prior to the consummation of the Offer or the Merger, as applicable. 3.3 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. Parent and Merger Sub represent and warrant to the Company as follows: (a) ORGANIZATION AND CORPORATE POWER. Merger Sub is an indirect wholly owned Subsidiary of Parent and a corporation duly incorporated, validly existing and in good standing under the laws of the State of Florida. (b) CORPORATE AUTHORIZATION. Merger Sub has all requisite corporate power and corporate authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance by Merger Sub of this Agreement and the consummation by Merger Sub of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of Merger Sub and no other corporate proceedings are necessary to authorize this Agreement or to consummate the transactions as contemplated hereby. This Agreement has been duly executed and delivered by Merger Sub and, assuming due execution by the Company, constitutes a valid and binding agreement of Merger Sub, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws relating to or affecting creditors generally, or by general equity principles (regardless of whether such enforceability is considered in a proceeding in equity or at law). The Board of Directors of Merger Sub has unanimously approved the transactions contemplated by this Agreement. (c) NON-CONTRAVENTION. (i) The execution and delivery of this Agreement do not or will not, as the case may be, and the consummation of the transactions contemplated hereby will not, result in any Violation or result in any adverse changes in the rights or obligations of the Merger Sub pursuant to: (A) any provisions of the Organizational Documents of Merger Sub or (B) except as could not reasonably be expected to have a Material Adverse Effect on Parent or prevent, impair or materially delay the consummation of the transactions contemplated hereby and subject to obtaining or making the consents, approvals, orders, authorizations, registrations, declarations and filings referred to in paragraph (ii) below, the 27 terms, provisions or conditions of any loan or credit agreement, note, mortgage, bond, indenture, lease, compensation or benefit plan or any grant or award made pursuant thereto or other agreement, obligation, instrument, contract, permit, concession, franchise, license, judgment, order, writ, injunction, award, decree, statute, law, ordinance, rule or regulation applicable to Merger Sub or any of its properties or assets. (ii) No consent, registration, permit, approval, order or authorization of, or registration, declaration, notice, report or filing with, any Governmental Entity or foreign securities exchange is required by or with respect to Merger Sub in connection with the execution and delivery of this Agreement by Merger Sub or the consummation by Merger Sub of the transactions contemplated hereby, except for (A) the consents, approvals, orders, authorizations, registrations, declarations and filings required under or in relation to clause (x) of Section 3.1 (c)(iii) as applicable; (B) any filings required to be made or consents that have to be obtained or arrangements that have to be made in order to ensure that the United States government or any agency thereof will not challenge the consummation of the transactions contemplated hereby on national security grounds; and (C) such consents, approvals, orders, authorizations, registrations, declarations and filings the failure of which to make or obtain could not reasonably be expected to have a Material Adverse Effect on Parent or to prevent, impair or materially delay the consummation of the transactions contemplated hereby. (d) NO BUSINESS ACTIVITIES. Merger Sub is not and has never been a party to any material agreements and has not conducted any activities other than in connection with the organization of Merger Sub, the commencement of the Offer, the negotiation and execution of this Agreement and the Shareholders Agreement and the consummation of the transactions contemplated hereby. Merger Sub has no Subsidiaries. ARTICLE IV. COVENANTS RELATING TO CONDUCT OF BUSINESS 4.1 COVENANTS OF THE COMPANY. During the period from the date of this Agreement and continuing until the Effective Time (except as expressly contemplated or permitted by this Agreement, set forth in Section 4.1 of the Company Disclosure Schedule or to the extent that Parent shall otherwise consent in writing): (a) ORDINARY COURSE. The Company and its Subsidiaries shall carry on their respective businesses in the usual, regular and ordinary course in all respects, consistent with past practice and shall use their respective reasonable best efforts to preserve intact their present business organizations and preserve their existing relationships with customers, suppliers, employees, Governmental Entities and others having business dealings with them, and shall not enter into any material joint venture or other similar arrangement; provided, however, that no action by the Company or its Subsidiaries with respect to matters specifically addressed by any other provision of this Section 4.1 shall be deemed a breach of this Section 4.1(a) unless such action would constitute a breach of one or more of such other provisions. 28 (b) DIVIDENDS; CHANGES IN SHARE CAPITAL. The Company shall not, and shall not propose to, (i) declare or pay any dividends on or make other distributions in respect of any of its capital stock; (ii) split, subdivide, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for, shares of its capital stock; (iii) repurchase, redeem or otherwise acquire any shares of its capital stock or any securities convertible into or exercisable for any shares of its capital stock except as otherwise permitted with respect to the payment of the option exercise price or tax withholding under certain option agreements in effect on the date of this Agreement under the Company Equity Plans; or (iv) effect any reorganization or recapitalization. (c) ISSUANCE OF SECURITIES. The Company shall not and shall cause its Subsidiaries not to issue, pledge, dispose of or encumber, deliver or sell, or authorize or propose the issuance, disposition, encumbrance, pledge, delivery or sale of, any shares of its capital stock of any class, any Company Voting Debt or any securities convertible into or exercisable for, or any rights, warrants or options to acquire, any such shares or Company Voting Debt, or enter into any agreement with respect to any of the foregoing, other than the issuance of Company Common Stock upon the exercise of stock options or rights to purchase Company Common Stock outstanding on the date of this Agreement in accordance with the terms of the Company Equity Plans as in effect on the date of this Agreement. (d) ORGANIZATIONAL DOCUMENTS. Except to the extent required to comply with their respective obligations hereunder or required by law, the Company and its Subsidiaries shall not amend or propose to amend their respective Organizational Documents. (e) INDEBTEDNESS. The Company shall not (i) incur any indebtedness for borrowed money or guarantee any such indebtedness or issue or sell any debt securities or warrants or rights to acquire any debt securities of the Company or guarantee any debt securities of other Persons other than indebtedness (including short term borrowings) of the Company or its Subsidiaries to the Company or its Subsidiaries and other than in the ordinary course of business which shall include, without limitation, borrowings in the ordinary course under its existing credit agreements; (ii) make any loans, advances or capital contributions to, or investments in, any other Person, other than by the Company or its Subsidiaries to or in the Company or its Subsidiaries; or (iii) pay, discharge, modify or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than in the case of clauses (ii) and (iii), loans, advances, capital contributions, investments, payments, discharges or satisfactions incurred or committed to in the ordinary course of business consistent with past practice. (f) COMPENSATION. The Company shall not, and shall not permit its Subsidiaries to (i) increase the compensation payable or to become payable to any of its executive officers or employees or (ii) take any action with respect to the grant of any severance or termination pay, or stay, bonus or other incentive arrangement (other than as required by applicable law or the terms of any collective bargaining agreement or as required pursuant to benefit plans and policies in effect on the date of this Agreement); except any such increases or grants made in the ordinary course of business consistent with past practice, pursuant to agreements, plans or policies existing on the date hereof or as otherwise provided under this Agreement; provided, however that in no event shall the 29 Company grant, or permit to be granted, any options or other awards or rights to purchase under any Company Equity Plan or otherwise after the date of this Agreement. (g) TAX ELECTIONS. The Company shall not, and shall not permit its Subsidiaries to, make any Tax election or change any method of accounting for Tax purposes except as required by applicable law or GAAP. (h) EMPLOYMENT. Except as contemplated by this Agreement, the Company shall not, and shall not permit its Subsidiaries to, release or otherwise terminate the employment of any management employee or hire any new management employees, except in the ordinary course of business. (i) BENEFIT PLANS AND AGREEMENTS. (i) The Company shall not, and shall not permit its Subsidiaries to, establish, adopt or enter into any new employee benefit plans or agreements (including pension, profit sharing, bonus, incentive compensation, director and officer compensation, severance, medical, disability, life or other insurance plans, and employment agreements) or amend or modify any existing Company Benefit Plans, or extend coverage of the Company Benefit Plans, except as required by applicable law, the terms of any collective bargaining agreement. (ii) Subject to Section 5.11, simultaneous with the execution of this Agreement, the Company shall freeze all Company Equity Plans as of the date of this Agreement, such that, as a result thereof, no officer, employee or any other Person or entity shall be entitled to purchase any additional Company Common Stock under any Company Equity Plan (other than pursuant to currently outstanding stock options and stock purchase periods) and no stock options or other awards shall be granted under any Company Equity Plan after the date of this Agreement. (j) OTHER ACTIONS. (i) The Company shall not, and shall not permit its Subsidiaries to, take any action that could reasonably be expected to result in any of the Offer Conditions not being satisfied. (ii) The Company shall not, and shall not permit its Subsidiaries to, (A) transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or encumber any assets except in the ordinary course of business consistent with past practice; (B) authorize capital expenditures in any manner not reflected in the capital budget of the Company as currently in effect or make any acquisition of, or investment in, any business or stock of any other person or entity other than a current Subsidiary; (C) settle or compromise any material claims or litigation or, except in the ordinary course of business consistent with past practice, modify, amend or terminate any of the Company Material Contracts or waive, release or assign any material rights or claims; (D) permit any material insurance policy naming it as 30 a beneficiary or a loss payable payee to be canceled or terminated without the prior written approval of Parent, except in the ordinary course of business consistent with past practice; or (E) terminate the employment of any employee who is covered by a change in control, employment, termination or similar agreement, except for Cause (as defined in such agreements) or permit circumstances to exist that would allow such employee to terminate employment and be entitled to enhanced or special severance or other payments thereunder. 4.2 COVENANTS OF PARENT AND MERGER SUB. During the period from the date of this Agreement and continuing until the Effective Time (except as expressly contemplated or permitted by this Agreement or to the extent that the Company shall otherwise consent in writing) Parent shall not, and shall not permit any of its Subsidiaries to, take any action that could reasonably be expected to result in (a) any of the representations and warranties of Parent and Merger Sub set forth in this Agreement (i) to the extent qualified by Material Adverse Effect becoming untrue or inaccurate and (ii) to the extent not qualified by Material Adverse Effect becoming untrue or inaccurate, except that this clause (ii) shall be deemed satisfied so long as such representations and warranties being untrue or inaccurate, taken together, do not have a Material Adverse Effect on Parent, or (b) any of the Offer Conditions not being satisfied. 4.3 ADVICE OF CHANGES; GOVERNMENT FILINGS. Each party shall (a) confer on a regular and frequent basis with the other; (b) report (to the extent permitted by law, regulation and any applicable confidentiality agreement) to the other on operational matters; and (c) promptly advise the other orally and in writing of (i) any representation or warranty made by it in this Agreement (A) to the extent qualified by Material Adverse Effect becoming untrue or inaccurate and (B) to the extent not qualified by Material Adverse Effect becoming untrue or inaccurate, except that this clause (B) shall be deemed satisfied so long as such representations or warranties being untrue or inaccurate, taken together, do not have a Material Adverse Effect on the Company or Parent, as the case may be, or (ii) the failure by it to comply with or satisfy in any material respect any covenant, condition or agreement required to be complied with or satisfied by it under this Agreement; provided, however, that no such notification shall affect the representations, warranties, covenants or agreements of the parties or the conditions to the obligations of the parties under this Agreement. The Company shall file all reports and amendments thereto required to be filed by it with the SEC (and all other Governmental Entities) between the date of this Agreement and the Effective Time and shall (to the extent permitted by law or regulation) deliver to Parent copies of all such reports promptly after the same are filed. Subject to applicable laws relating to the exchange of information, each of the Company and Parent shall have the right to review in advance, and to the extent practicable each will consult with the other, with respect to all the information relating to the other party and each of their respective Subsidiaries, which appears in any filings, announcements or publications made with, or written materials submitted to, any third party or any Governmental Entity in connection with the transactions contemplated by this Agreement. In exercising the foregoing right, each of the parties hereto agrees to act reasonably and as promptly as practicable. Each party agrees that, to the extent practicable, it will consult with the other party with respect to the obtaining of all permits, consents, approvals and authorizations of all third parties and Governmental Entities necessary or advisable to consummate the transactions contemplated by this Agreement and each party will keep the other party apprised of the status of matters relating to completion of the transactions contemplated hereby. 31 ARTICLE V. ADDITIONAL AGREEMENTS 5.1 APPROVAL BY THE COMPANY'S SHAREHOLDERS. (a) If required by the FBCA or the Company's Organizational Documents in order to consummate the Merger, the Company shall, at Parent's option and direction and as soon as practicable either (i) duly call, give notice of, convene and hold a meeting of its shareholders (the "Company Shareholders Meeting") or (ii) submit the Merger to its shareholders for approval through shareholder action by written consent in lieu of a meeting for the purpose of obtaining the Required Company Votes, and, the Company shall, through the Company Board, recommend to its shareholders that they vote in favor of the adoption of this Agreement and the Merger; provided, however, that the Company Board may amend, modify or withdraw its recommendation if the Company Board determines, following consultation with the Company's outside legal counsel, that such action is required in order to comply with applicable law and so long as the Company Board submits the Merger to the Company's shareholders for approval at a meeting or by written consent with no recommendation and in accordance with FBCA Section 607.1103(2)(a). Parent and Merger Sub shall vote or cause to be voted all the shares of Company Common Stock owned of record by Parent, Merger Sub or any other Subsidiary of Parent in favor of the approval of the Merger and adoption of this Agreement. (b) Notwithstanding the preceding paragraph or any other provision of this Agreement, in the event Parent, Merger Sub or any other Subsidiary of Parent shall beneficially own, in the aggregate, at least 80% of the outstanding shares of the Company Common Stock, the Company shall not be required to call the Company Shareholders Meeting or to file or mail the Proxy Statement, and the parties hereto shall, at the request of Parent and subject to Article VI, take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after the acceptance for payment of and payment for shares of the Company Common Stock by Merger Sub pursuant to the Offer without a meeting of shareholders of the Company in accordance with the FBCA. (c) If required by applicable law, as soon as practicable following Parent's request, the Company and Parent shall prepare and file with the SEC the Proxy Statement. Each of the Company and Parent shall use reasonable best efforts to cause the Proxy Statement to be mailed to the Company's shareholders as promptly as practicable and to solicit proxies in favor of the adoption of this Agreement and the approval of the Merger; provided, however, in the event the Company Board withdraws its recommendation for the adoption of this Agreement and the approval of the Merger, the Company shall solicit proxies regarding this Agreement and this Merger in a neutral fashion; provided that such obligation to solicit proxies in a neutral fashion shall not prohibit the Company Board from communicating the basis for its determination not to make a recommendation to the extent required by FBCA Section 607.1103(2)(a). (d) Unless required by the rules of the National Association of Securities Dealers, subsequent to Merger Sub's acceptance of the Company Common Stock pursuant to the Offer and 32 prior to the Effective Time, the Company shall not take any action to cause the Company Common Stock to be removed from quotation on the Nasdaq National Market System and de-registered under the Exchange Act. 5.2 ACCESS TO INFORMATION. Consistent with its legal obligations, from the date hereof until the earlier of the Effective Time or the termination of this Agreement, upon reasonable notice, the Company shall afford to the officers, employees, accountants, counsel, financial advisors and other representatives of Parent ("Parent Representatives") reasonable access during normal business hours to all of its and its Subsidiaries' properties, books, contracts, commitments and records (including security position listings or other information concerning beneficial and record owners of the Company's securities) and its officers, management employees and representatives and, during such period, the Company shall furnish promptly to Parent, all information concerning its business, properties and personnel as the other party may reasonably request. Such information shall be held in confidence to the extent required by, and in accordance with, the provisions of the letter (the "Confidentiality Agreement") dated as of March 22, 2000, between the Company and Parent, which Confidentiality Agreement shall remain in full force and effect subject to the terms hereof. 5.3 APPROVALS AND CONSENTS; COOPERATION. Each of the Company and Parent shall cooperate with each other and use (and shall cause their respective Subsidiaries to use) its reasonable best efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on their part under this Agreement and applicable laws to consummate and make effective the Offer and the Merger and the other transactions contemplated by this Agreement as soon as practicable, including (a) preparing and filing as promptly as practicable all documentation to effect all necessary applications, notices, petitions, filings and other documents and to obtain as promptly as practicable all consents, waivers, licenses, orders, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party and any Governmental Entity in order to consummate the Offer, the Merger and the other transactions contemplated by this Agreement and (b) taking all reasonable steps as may be necessary to obtain all such consents, waivers, licenses, registrations, permits, authorizations, orders and approvals. Without limiting the generality of the foregoing, each of the Company and Parent agrees to make all necessary filings in connection with the Required Regulatory Approvals as promptly as practicable after the date of this Agreement, and in any event no later than nine (9) Business Days after the date hereof, and to use its reasonable best efforts to furnish or cause to be furnished, as promptly as practicable, all information and documents requested with respect to such Required Regulatory Approvals and shall otherwise cooperate with the applicable Governmental Entity in order to obtain any Required Regulatory Approvals in as expeditious a manner as possible. Each of the Company and Parent shall use its reasonable best efforts to resolve such objections, if any, as any Governmental Entity may assert with respect to this Agreement and the transactions contemplated hereby in connection with the Required Regulatory Approvals. In the event that a suit is instituted by a Person or Governmental Entity challenging this Agreement and the transactions contemplated hereby as violative of applicable antitrust or competition laws, each of the Company and Parent shall use its reasonable best efforts to resist or resolve such suit. The Company and Parent each shall, upon request by the other, furnish the other with all information concerning itself, its Subsidiaries, directors, officers and shareholders and such other matters as may reasonably be necessary or advisable in connection with the Offer Documents, Schedule 14D-9, Proxy Statement or any other 33 statement, filing, notice or application made by or on behalf of the Company, Parent or any of their respective Subsidiaries to any third party and any Governmental Entity in connection with the Offer, the Merger or the other transactions contemplated by this Agreement. 5.4 ACQUISITION PROPOSALS. (a) The Company agrees that neither the Company, its Subsidiaries, nor any of the respective officers and directors of the Company or its Subsidiaries, shall and the Company shall direct and use its best efforts to cause its employees, agents and representatives (including, without limitation, any investment banker, attorney or accountant retained by the Company or any of its Subsidiaries) not to, take or cause, directly or indirectly, any of the following actions with any party other than Parent, Merger Sub or their respective designees: (a) directly or indirectly solicit, encourage, initiate, participate in or otherwise facilitate (including by way of furnishing information) any negotiations, inquiries or discussions with respect to any offer, indication or proposal to acquire all or more than 15% of the Company's businesses, assets or capital shares whether by merger, consolidation, other business combination, purchase of assets, reorganization, tender or exchange offer or otherwise (each of the foregoing, an "Acquisition Proposal") or (b) disclose, in connection with an Acquisition Proposal, any information or provide access to its properties, books or records. The Company will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any of the foregoing. The Company will take the necessary steps to promptly inform the individuals or entities referred to in the first sentence of Section 5.4 hereof of the obligations undertaken in this Section 5.4. The Company also will promptly request any Person which may have heretofore executed a confidentiality agreement in connection with its consideration of acquiring the Company and/or any of its Subsidiaries to return or destroy all confidential information heretofore furnished to such person by or on behalf of the Company. If the Company receives an Acquisition Proposal, or the Company learns that someone intends to solicit tenders of Company Common Stock or otherwise proposes to acquire the Company or a significant portion of its equity securities or its and its Subsidiaries' assets if the Company's shareholders do not approve the Merger, the Company will promptly notify Parent of that fact and provide Parent promptly, from time to time, with all information and documents in the possession of the Company and its legal or financial advisors regarding the Acquisition Proposal, solicitation of tenders or other proposed transaction. (b) Notwithstanding anything to the contrary contained in Section 5.4(a) or elsewhere in this Agreement, prior to the consummation of the Offer, the Company may participate in discussions or negotiations with, and furnish non-public information, and afford access to the properties, books, records, officers, employees and representatives of the Company to any Person, if such Person has delivered to the Company, prior to the consummation of the Offer, and in writing, an Acquisition Proposal which the Company Board reasonably determines in good faith (after consultation with its independent financial advisor) constitutes a Superior Proposal (as defined in Section 5.4(c)). (c) A "Superior Proposal" is an Acquisition Proposal (i) which would result in the Company's shareholders receiving consideration per share of Company Common Stock (valuing non-cash consideration at its fair market value as determined in good faith by the Company Board 34 after consultation with its independent financial advisor) which is superior, from a financial point of view after consultation with its independent financial advisor, to the Price Per Share; (ii) which is not subject to a financing contingency; (iii) (A) for which financing, to the extent required, has at least the same degree of certainty as the Parent's financing (at the time the Company Board is making such determination), or (B) to the extent financing is not required, is made by a Person which the Company's Board reasonably determines in good faith (after consultation with its independent financial advisor) has the financial resources necessary to carry out the transaction and (iv) has been publicly disclosed. 5.5 EMPLOYEE BENEFITS. Parent shall or shall cause the Surviving Corporation to comply with the provisions of the letter of even date herewith from Parent to Company relating to the employee benefits matters (the "Benefits Letter"). 5.6 FEES AND EXPENSES. Whether or not the transactions contemplated hereby are consummated, all Expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such Expenses, except (a) if the Merger is consummated, the Surviving Corporation shall pay, or cause to be paid, any and all property or transfer taxes imposed on the Company or its Subsidiaries; (b) the Expenses incurred in connection with the printing, filing and mailing to shareholders of the Proxy Statement, if any, and the solicitation of shareholder approvals shall be shared equally by the Company and Parent; and (c) as provided in Section 7.2. As used in this Agreement, "Expenses" includes all expenses (including, without limitation, (i) all fees and expenses of counsel, accountants, investment bankers, experts and consultants to a party hereto and its affiliates and (ii) the fees, costs and expenses relating to obtaining financing for the transactions contemplated hereby, including commitment fees and the like) incurred by a party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement and the transactions contemplated hereby, including the preparation, printing, filing and mailing of the Offer Documents and the Proxy Statement, if any, and the solicitation of shareholder approvals and all other matters related to the transactions contemplated hereby. 5.7 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. Parent shall cause to be maintained in effect (a) for a period of six (6) years the provisions regarding indemnification of current or former officers and directors of the Company (each an "Indemnified Party") contained in the Organizational Documents of the Company and its Subsidiaries in effect following the Effective Time, provided that in the event any claim or claims are asserted or made within such six (6) year period all rights to indemnification in respect of any claim or claims shall continue until final disposition of any and all such claims and (b) for a period of six (6) years, the current policies of directors' and officers' liability insurance and fiduciary liability insurance maintained by the Company (provided that Parent or the Surviving Corporation may substitute therefor policies of at least the same coverage and amounts containing terms and conditions which are, in the aggregate, no less advantageous to the insured and provided that such substitution shall not result in any gaps or lapses in coverage with respect to matters occurring prior to the Effective Time) with respect to claims arising from facts or events that occurred on or before the Effective Time. Parent shall not be obligated to pay annual premiums to the extent such premiums exceed $450,000 (the "Maximum Premium"). If such insurance coverage cannot be obtained at all, or can only be obtained at an 35 annual premium in excess of the Maximum Premium, Parent shall maintain the most advantageous policies of directors' and officers' insurance obtainable for an annual premium equal to the Maximum Premium. This covenant is intended to be for the benefit of, and may be enforced by, each of the Indemnified Parties and their respective heirs and legal representatives. Notwithstanding anything contained herein to the contrary, the Company Board shall be permitted to amend the Company's Bylaws so that Section 8.1 thereof shall read in its entirety as set forth in Schedule 5.7 attached hereto. Parent and Merger Sub agree that, for a period of no less than six (6) years, the bylaws of the Surviving Corporation shall include the same indemnification provisions as those set forth in the Company's bylaws in effect on the date hereof (including the amendment set forth in Schedule 5.7) and none of the Company, Parent and the Surviving Corporation shall take any action (including amendment of any bylaw provision of the Company or the Surviving Corporation) which adversely affects the rights of any Indemnified Person (as such term is defined in the Company's Bylaws (including the amendment set forth in Schedule 5.7)) who was an officer or director of the Company on the date hereof. This paragraph shall be enforceable by any such Indemnified Person. 5.8 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect, the Company and Parent shall use all reasonable best efforts to develop a joint communications plan and each party shall use all reasonable best efforts (a) to ensure that all press releases and other public statements with respect to the transactions contemplated hereby shall be consistent with such joint communications plan and (b) unless otherwise required by applicable law or by obligations pursuant to any listing agreement with or rules of any securities exchange, to consult with each other before issuing any press release or otherwise making any public statement with respect to this Agreement or the transactions contemplated hereby. 5.9 TAKEOVER STATUTES. If any Takeover Statute shall become applicable to the transactions contemplated hereby, the Company and the members of the Company Board shall grant such approvals and take such actions as are necessary so that the transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to eliminate or minimize the effects of such Takeover Statute on the transactions contemplated hereby. 5.10 THIRD PARTY STANDSTILL AGREEMENTS; TORTIOUS INTERFERENCE. During the period from the date of this Agreement through the Effective Time, the Company shall not terminate, amend, modify or waive any provision of any confidentiality or standstill or similar agreement to which the Company or any of its Subsidiaries is a party (other than involving Parent). Subject to the foregoing, during such period, the Company agrees to enforce, to the fullest extent permitted under applicable law, the provisions of any such agreements, including seeking to obtain injunctions to prevent any breaches of such agreements and to enforce specifically the terms and provisions thereof and any court having jurisdiction. 5.11 COMPANY OPTION PLANS. Upon the Effective Time, each outstanding option (a "Company Stock Option") to purchase Company Common Stock, whether or not fully exercisable, shall be canceled and, in exchange therefore, each holder thereof shall, upon delivery of a 36 cancellation agreement in form and substance satisfactory to Parent, receive a cash payment at the Effective Time (or, if later, on the fifth business day after delivery of such cancellation agreement), in an amount equal to the product of (x) the excess, if any, of the Merger Consideration per share over the exercise price per share of the Company Common Stock subject to such Company Stock Options and (y) the number of shares of Company Common Stock subject to such Company Stock Options. All amounts payable pursuant to this Section 5.11 shall be subject to any required withholding of taxes and shall be paid without interest. In furtherance of the foregoing, the Company has, as of the date of this Agreement, amended each of the Company Stock Option Plans to provide that at the Effective Time, each Company Stock Option shall thereupon represent the right, upon exercise, to receive the Merger Consideration, in cash (without interest) and, that in lieu of exercise, each holder of the Company Stock Option may receive the cash payment described in this Section 5.11 upon delivery of the cancellation agreement. ARTICLE VI. CONDITIONS PRECEDENT 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The obligations of the Company, Parent and Merger Sub to effect the Merger are subject to the satisfaction or waiver (subject to Section 1.4(c)) on or prior to the Effective Time of the following conditions: (a) SHAREHOLDER APPROVAL. The Company shall have obtained all approvals of holders of shares of capital stock of the Company necessary to approve this Agreement and all the transactions contemplated hereby (including the Merger) to the extent required by law. (b) NO INJUNCTION OR RESTRAINTS; ILLEGALITY. No temporary restraining order, preliminary or permanent injunction or other order issued by a court or other Governmental Entity of competent jurisdiction shall be in effect and have the effect of making the Merger illegal or otherwise prohibiting consummation of the Merger. (c) REQUIRED REGULATORY APPROVALS. All authorizations, consents, orders and approvals of, and declarations and filings with, and all expirations of waiting periods imposed by, any Governmental Entity which, if not obtained in connection with the consummation of the transactions contemplated hereby, could reasonably be expected to have a Material Adverse Effect on the Company or prevents the Company, Parent or Merger Sub from consummating the transactions contemplated hereby (collectively, "Required Regulatory Approvals"), shall have been obtained, have been declared or filed or have occurred, as the case may be, and all such Required Regulatory Approvals shall be in full force and effect. (d) COMPLETION OF THE OFFER. Merger Sub shall have (i) commenced the Offer pursuant to Section 1.1 hereof and (ii) subject to the satisfaction or waiver of all conditions to the Offer, purchased, pursuant to the terms and conditions of such Offer, all shares of Company Common Stock duly tendered and not withdrawn; provided, however, that neither Parent nor Merger Sub shall be entitled to rely on the condition in clause (ii) above if either of them shall have failed to purchase shares of Company Common Stock pursuant to the Offer in breach of their obligations under this Agreement. 37 ARTICLE VII. TERMINATION AND AMENDMENT 7.1 TERMINATION. This Agreement may be terminated at any time prior to the Effective Time, by action taken or authorized by the Board of Directors of the terminating party or parties, whether before or after approval of this Agreement and the matters contemplated herein, including the Merger, by the shareholders of the Company: (a) By mutual written consent of Parent and the Company, by action of their respective Boards of Directors; (b) By either the Company or Parent if the Offer shall not have been consummated by the date which is four (4) months from the date of this Agreement (the "Outside Date"); provided that the right to terminate this Agreement under this Section 7.1 (b) shall not be available to any party whose failure to fulfill any obligation or condition under this Agreement has been the cause of, or resulted in, the failure of the Offer to be consummated on or before such date; notwithstanding the foregoing, if the sole reason the Offer shall not have been consummated by the Outside Date is the failure to have obtained all Required Regulatory Approvals prior to the date which is four (4) months from the date of this Agreement, the Outside Date shall, at the request of either Parent or the Company, be extended for a period of sixty (60) days; (c) By either the Company or Parent if any court or other Governmental Entity shall have issued an order, decree or ruling or taken any other action (which order, decree, ruling or other action the parties shall have used their reasonable best efforts to resist, resolve or lift, as applicable, subject to the provisions of Section 5.3) permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and such order, decree, ruling or other action shall have become final and nonappealable; (d) By Parent if (i) the Company Board (or any committee thereof) shall have withdrawn or adversely modified (including by amendment of the Schedule 14D-9) its approval or recommendation of the Offer, the Merger or this Agreement or the Company Board, upon request by Parent following receipt by the Company of an Acquisition Proposal, shall fail to reaffirm such approval or recommendation within ten (10) Business Days after such request or shall have resolved to do any of the foregoing; (ii) the Company Board shall have recommended to the shareholders of the Company that they approve an Acquisition Proposal other than transactions contemplated by this Agreement; or (iii) a tender offer or exchange offer is commenced that, if successful, would result in any Person becoming a "beneficial owner" (as such term is defined under Regulation 13D under the Exchange Act) of 15% or more of the outstanding shares of Company Common Stock (other than by Parent or an affiliate of Parent) and the Company Board recommends that the shareholders of the Company tender their shares in such tender or exchange offer; (e) By Parent, prior to the purchase by Merger Sub of shares of Company Common Stock pursuant to the Offer, upon a material breach of any material covenant or agreement on the part of the Company set forth in this Agreement, or if the Offer Condition contained in 38 paragraph (c)(i) or (ii) of Annex A is not capable of being satisfied or cured by the earlier of (x) the Outside Date or (y) within thirty (30) days after any executive officer of the Company becomes aware of the breach of any representation or warranty resulting in the failure to satisfy such Offer Condition; (f) By the Company, upon a material breach of any material covenant or agreement on the part of Parent or Merger Sub set forth in this Agreement, or upon the failure of any representation or warranty of Parent or Merger Sub set forth in this Agreement (i) to the extent such representation or warranty is qualified by Material Adverse Effect, to be true and correct and (ii) to the extent such representation or warranty is not qualified by Material Adverse Effect, to be true and correct, except that, in the case of this clause (ii), no failure shall be deemed to have occurred so long as such failure, taken together with all other such failures, does not have a Material Adverse Effect on Parent in the case of each of clause (i) and (ii) as of the date of this Agreement and (except to the extent such representation or warranty speaks as of an earlier date) as of the consummation of the Offer as though made on and as of such date, and except that, in the case of each of clause (i) and (ii), no failure shall be deemed to have occurred so long as such failure is capable of being satisfied or cured by the earlier of (x) the Outside Date or (y) within thirty (30) days after any executive officer of Parent becomes aware of the breach of any representation or warranty resulting in such failure; (g) By the Company, if Merger Sub fails to (i) commence the Offer or keep the Offer open as required in Section 1.1 hereof or (ii) purchase validly tendered shares of the Company Common Stock in violation of the terms of the Offer and this Agreement; (h) By Parent, if any Person other than Parent, Merger Sub, or any of their affiliates or any group of which any of them is a member, shall have entered into a definitive agreement or an agreement in principle with the Company or any of its Subsidiaries with respect to an Acquisition Proposal or the Company Board (or any committee thereof) shall have adopted a resolution approving any of the foregoing; (i) By the Company, prior to the purchase by Merger Sub of Shares of Company Common Stock pursuant to the Offer, if (i) the Company Board determines to accept a Superior Proposal pursuant to Section 5.4(b); (ii) the Company notifies Parent in writing that it intends to enter into such agreement, attaching the final version of such agreement to such notice; and (iii) Purchaser does not make within 72 hours after receipt of the Company's written notice of its intention to enter into a binding agreement for a Superior Proposal, any offer the Company Board reasonably and in good faith determines (after consultation with its independent financial advisor and outside legal counsel) is at least as favorable to the shareholders of the Company (other than the shareholders who are parties to the Shareholder Agreement) as the Superior Proposal and during such period the Company reasonably considers and discusses in good faith all proposals submitted by Parent and, without limiting the foregoing, meets with, and causes its financial advisors and legal advisors to meet with, Parent and its advisors from time to time as required by Parent to consider and discuss in good faith Parent's proposals. The Company agrees to notify Parent immediately if its intention to enter into a binding agreement referred to in its notice to Parent shall change at any time after giving notice; or 39 (j) By Parent, if the holders of shares of Company Common Stock which are a party to the Shareholder Agreement either (i) fail to tender into the Offer (and not withdraw) a majority of the outstanding shares of Company Common Stock or (ii) in any material respect, fail to vote, fail to act by consent or interfere with or frustrate the exercise of the rights conferred upon the holders of proxies identified and set forth in Section 6(a) of the Shareholder Agreement. 7.2 EFFECT OF TERMINATION. (a) In the event of termination of this Agreement by either the Company or Parent as provided in Section 7.1, this Agreement shall forthwith become void and there shall be no liability or obligation on the part of Parent or the Company or their respective officers or directors except that (a) Section 5.6, Section 5.7 (but only if the Parent or any affiliate thereof owns any Company Common Stock), this Section 7.2 and Section 8.5(a) shall survive any termination of this Agreement and (b) notwithstanding anything to the contrary contained in this Agreement, neither Parent or Company shall be relieved or released from any liabilities or damages arising out of its breach of any provision of this Agreement which shall include the obligation to pay all expenses incurred by the non-breaching party in connection with this Agreement. (b) In the event that this Agreement is terminated pursuant to Section 7.1(d), Section 7.1(e) (due to a material breach of any material covenant or agreement on the part of the Company contained in Article I hereof, or in Sections 5.1, 5.2, 5.3, 5.4, 5.8, 5.9, 5.10 or 7.1(i) hereof), Section 7.1(h), Section 7.1(i), or Section 7.1(j), then the Company shall pay Parent in cash (A) U.S. $65,000,000 plus (B) up to U.S. $14,000,000 of Parent's Expenses incurred in connection with the Offer and Merger. The amounts set forth in this Section 7.2(b) shall be payable by wire transfer of immediately available funds (A) prior to such termination by the Company pursuant to Section 7.1(i) or (B) on the date of such termination by Parent pursuant to Section 7.1(d), Section 7.1(e), Section 7.1(h) or Section 7.1(j). The Company acknowledges that the agreements contained in this Section 7.2(b) are an integral part of the transaction contemplated in this Agreement, and that, without these agreements, Parent and Merger Sub would not enter into this Agreement. In the event the Company shall fail to pay any amount payable pursuant to this Section 7.2(b) when due, the Expenses of Parent and Merger Sub shall be deemed to include (i) the costs and expenses actually incurred or accrued by Parent and Merger Sub (including, without limitations, fees and expenses of counsel) in connection with the collection under the enforcement of this Section 7.2(b), together with (ii) interest on such unpaid amounts, commencing on the date that such amounts became due, at a rate equal to the prime rate of Citibank, N.A. on the date that such amounts became due plus 2.00% per annum. 7.3 AMENDMENT. Subject to Section 1.4(c), this Agreement may be amended by the parties hereto, by action taken or authorized by their respective Boards of Directors, at any time before or after approval of the matters presented in connection with the Merger by the shareholders of the Company, but, after any such approval, no amendment shall be made which by law or in accordance with the rules of Nasdaq requires further approval by such shareholders without such further approval. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. 40 7.4 EXTENSION; WAIVER. Subject to Section 1.4(c), at any time prior to the Effective Time, the parties hereto, by action taken or authorized by their respective Boards of Directors, may, to the extent legally allowed, (a) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party. No delay on the part of any party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party hereto of any right, power or privilege hereunder operate as a waiver of any other right, power or privilege hereunder, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. Unless otherwise provided, the rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies which the parties hereto may otherwise have at law or in equity. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of those rights. ARTICLE VIII. GENERAL PROVISIONS 8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the representations and warranties in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time. This Section 8.1 shall not limit any covenant or agreement of the parties which by its terms contemplates performance after the Effective Time. 8.2 NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed duly given (a) on the date of delivery if delivered personally; (b) on the first Business Day following the date of dispatch if delivered by a nationally recognized next-day courier service; or (c) if sent by facsimile transmission, with a copy mailed on the same day in the manner provided in (a) or (b) above, when transmitted and receipt is confirmed by telephone. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice: (a) if to Parent or Merger Sub, to: Koninklijke Numico N.V. Rokkeveenseweg 49 2712 PJ Zoetermeer The Netherlands Facsimile: 011-31-79-353-9671 Attention: Julitte van der Ven, General Counsel 41 with a copy to: Vedder Price Kaufman & Kammholz 222 North LaSalle Street, Suite 2400 Chicago, Illinois 60601 Facsimile: (312) 609-5005 Attention: Guy E. Snyder William J. Bettman (b) if to the Company, to, Rexall Sundown, Inc. 6111 Broken Sound Parkway, NW Boca Raton, Florida 33487 Facsimile: (561) 999-4729 Attention: Richard Werber, Vice President and General Counsel with a copy to Greenberg Traurig, P.A. 1221 Brickell Avenue Miami, Florida 33131 Facsimile: (305) 579-0717 Attention: Paul Berkowitz Ira Rosner 8.3 INTERPRETATION. When a reference is made in this Agreement to Sections, Exhibits or Schedules, such reference shall be to a Section of or Exhibit or Schedule to this Agreement unless otherwise indicated. The table of contents, glossary of defined terms and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden or proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the content requires otherwise. 8.4 COUNTERPARTS. This Agreement may be executed in counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. 42 8.5 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. (a) This Agreement (including the Company Disclosure Schedule) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, other than the Confidentiality Agreement, which Confidentiality Agreement shall survive the execution and delivery of this Agreement or any termination hereof. Notwithstanding the foregoing, the entering into of this Agreement by the Company shall constitute the written consent of the Company for Parent and or its affiliates to take any of the actions proscribed by Sections 7(i), (ii), (iii), (iv) and (v) of the Confidentiality Agreement. (b) Except as otherwise expressly set forth herein, this Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. 8.6 GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL. (a) This Agreement shall be governed and construed in accordance with the laws of the State of Delaware, without regard to the laws that might be applicable under conflicts of laws principles; provided, that the matters affecting the validity of the corporate action taken by the Company, Parent or Merger Sub relating to the Merger shall be governed by the laws of the State of Florida. (b) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any Delaware State court, or Federal court of the United States of America, sitting in Delaware, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the agreements delivered in connection herewith or the transactions contemplated hereby or thereby or for recognition or enforcement of any judgment relating thereto, and each of the parties hereby irrevocably and unconditionally (i) agrees not to commence any such action or proceeding except in such courts; (ii) agrees that any claim in respect of any such action or proceeding may be heard and determined in such Delaware State court or, to the extent permitted by law, in such Federal court; (iii) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such action or proceeding in any such Delaware State or Federal court; and (iv) waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such Delaware State or Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 8.2. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law. 43 (c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS; (ii) IT MAKES SUCH WAIVERS VOLUNTARILY; AND (iii) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.6(c). 8.7 SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible. Any provision of this Agreement held invalid or unenforceable only in part, degree or certain jurisdictions will remain in full force and effect to the extent not held invalid or unenforceable. To the extent permitted by applicable law, each party waives any provision of law which renders any provision of this Agreement invalid, illegal or unenforceable in any respect. 8.8 ASSIGNMENT. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto, in whole or in part (whether by operation of law or otherwise), without the prior written consent of the other parties, and any attempt to make any such assignment without such consent shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective permitted successors and assigns. 8.9 ENFORCEMENT. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms. It is accordingly agreed that the parties shall be entitled to specific performance of the terms hereof, this being in addition to any other remedy to which they are entitled at law or in equity. 8.10 DEFINITIONS. As used in this Agreement unless the context requires otherwise: (a) "affiliate" means any person directly or indirectly controlling, controlled by or under common control with such other person at the time at which the determination of affiliation is being made. The term "control" (including, with correlative meanings, the term "controlled by" 44 or "under common control with"), as applied to any person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such person, whether through the ownership of voting securities or other ownership interest, by contract or otherwise. (b) "Board" means the Board of Directors of any specified Person (and with respect to Parent means its Supervisory Board) and any properly serving and acting committees thereof. (c) "Business Day" means any day on which banks are not required or authorized to close in the City of New York. (d) "Code" means the Internal Revenue Code of 1986, as amended or replaced and as in effect from time to time. (e) "Company Equity Plans" means (i) the Company's Amended and Restated 1993 Employee Stock Incentive Plan, the Company's Amended and Restated 1993 Non-Employee Director Stock Option Plan, the Company's Amended and Restated 1994 Non-Employee Director Stock Option Plan, and the Company's 1996 Rexall Showcase International Distributor Stock Option Plan (collectively, the "Company Stock Options Plans") and (ii) the Company's Amended and Restated 1993 Employee Stock Purchase Plan and the Company's 1996 Rexall Showcase International Distributor Stock Purchase Plan (the "Company Stock Purchase Plans"). (f) "Company Material Contracts" means (a) all contracts listed as an exhibit to the Company SEC Reports; (b) any other agreement within the meaning set forth in item 601(b)(10) of Regulation S-K of Title 17, Part 229 of the Code of Federal Regulations; and (c) such agreements listed on Sections 3.1(k)(i) and 3.1(k)(iii) of the Company Disclosure Schedule). (g) "Intellectual Property" shall mean patents, copyrights, trademarks (registered and unregistered), service marks, brand names, trade names, and registrations in any jurisdiction of, and applications in any jurisdiction to register the foregoing, technology, know-how, software, and tangible or intangible proprietary information or materials that are used in the business of the Company and its Subsidiaries as currently conducted and any other trade secrets related thereto. (h) "Material Adverse Effect" means, with respect to any Person, any adverse change, circumstance, development, event or effect that, individually or in the aggregate with all other adverse changes, circumstances, developments, events and effects, is or could reasonably be expected to be materially adverse to the business, operations, properties, assets, liabilities, condition (financial or otherwise), results of operations or prospects of such entity and its Subsidiaries taken as a whole, or on the ability of such Person to perform its obligations under this Agreement or on the ability of such Person to consummate the Merger and the other transactions contemplated hereby without material delay other than any change or effect attributable to the economy in general. (i) "Organizational Documents" means, with respect to any entity, the certificate of incorporation, the articles of incorporation, bylaws or other similar governing documents of such entity. 45 (j) "Person" means an individual, corporation, partnership, limited liability company association, trust, unincorporated organization, entity or group (as defined in Section 13(d)(3) the Exchange Act). (k) "Subsidiary" when used with respect to any Person means any corporation or other organization, whether incorporated or unincorporated, (i) of which such Person or any other Subsidiary of such Person is a general partner (excluding partnerships, the general partnership interests of which held by such Person or any of its Subsidiaries of such Person do not have a majority of the voting and economic interests in such partnership) or (ii) at least a majority of the securities or other interests of which having by their terms ordinary voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries. (l) (i) "Tax" (including, with correlative meaning, the terms "Taxes" and "Taxable") means all federal, state, local and foreign income, profits, franchise, gross receipts, environmental, customs duty, capital stock, severance, stamp, payroll, sales, employment, unemployment disability, use, property, withholding, excise, production, value added, occupancy and other taxes, duties or assessments of any nature whatsoever, together with all interest, penalties, fines and additions to tax imposed with respect to such amounts and any interest in respect of such penalties and additions to tax, and (ii) "Tax Return" means all returns and reports (including elections, claims, declarations, disclosures, schedules, estimates, computations and information returns) required to be supplied to a Tax authority in any jurisdiction relating to Taxes. (m) "the other party" means, with respect to the Company, Parent and means, with respect to Parent, the Company. 8.11 PERFORMANCE BY MERGER SUB. Subject to the terms hereof, Parent hereby agrees to cause Merger Sub to, and to take all reasonable steps to enable it to, comply with its obligations hereunder and under the Offer and to cause Merger Sub to consummate the Merger as contemplated herein and whenever this Agreement requires Merger Sub to take any action, such requirement shall be deemed to include an undertaking of Parent to cause Merger Sub to take such action. 8.12 DISCLOSURE SCHEDULES. Notwithstanding anything to the contrary set forth in the Company's Disclosure Schedule, any matter disclosed in any subsection of the Company's Disclosure Schedule shall be deemed disclosed only for the purposes of the specific subsections of this Agreement to which such subsection relates. *** 46 IN WITNESS WHEREOF, Parent, the Company and Merger Sub have caused this Agreement to be signed by their respective officers thereunto duly authorized, all as of April 30, 2000. KONINKLIJKE NUMICO N.V. By: /s/ Julitte van der Ven --------------------------------- Name: Julitte van der Ven Title: Attorney-in-Fact NUTRICIA INVESTMENT CORP. By: /s/ Julitte van der Ven ------------------------------------ Name: Julitte van der Ven Title: President REXALL SUNDOWN, INC. By: /s/ Damon DeSantis --------------------------------- Name: Damon DeSantis Title: President and CEO ANNEX A CONDITIONS TO THE OFFER Notwithstanding any other provision of the Offer, and subject to the terms and conditions of the Agreement, Merger Sub shall not be obligated to accept for payment any shares of Company Common Stock until all Required Regulatory Approvals shall have been obtained, made or satisfied including until the expiration of any waiting periods applicable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") and Merger Sub shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC (including Rule 14e-1(c) promulgated under the Exchange Act) pay for, and may delay the acceptance for payment of or payment for, any shares of Company Common Stock tendered in the Offer and (subject to the terms and conditions of the Agreement, including Section 1.1(b)) may amend, extend or terminate the Offer if, (i) immediately prior to the expiration of the Offer (as extended in accordance with the Agreement) the Minimum Condition shall not have been satisfied or (ii) prior to the time of acceptance of any shares of Company Common Stock pursuant to the Offer any of the following shall occur: (a) there shall be threatened or pending any action, litigation or proceeding (hereinafter, an "Action") by any Governmental Entity or other Person: (i) challenging the acquisition by Parent or Merger Sub of shares of Company Common Stock or seeking to restrain or prohibit the consummation of the Offer or the Merger; (ii) seeking to prohibit or impose any material limitation (including any hold separate obligation) on Parent's, Merger Sub's or any of their respective affiliates' ownership or operation of all or any material portion of the business or assets of the Company and its Subsidiaries taken as a whole or Parent and its Subsidiaries taken as a whole; or (iii) seeking to impose material limitations on the ability of Parent or Merger Sub effectively to acquire or hold, or to exercise full rights of ownership of, the shares of Company Common Stock including the right to vote the shares of Company Common Stock purchased by them on an equal basis with all other shares of Company Common Stock on all matters properly presented to the shareholders of the Company; or (b) any statute, rule, regulation, order or injunction shall be enacted, promulgated, entered, enforced or deemed to or become applicable to the Agreement, the Offer, the Merger or the Shareholder Agreement, or any other action shall have been taken, by any court or other Governmental Entity, that could reasonably be expected to result in any of the effects of, or have any of the consequences sought to be obtained or achieved in, any Action referred to in clauses (i) through (iii) of paragraph (a) above; or (c) (i) the representations and warranties of the Company contained in Section 3.1(b) of the Agreement shall not be true and correct in all material respects as of the date of the Agreement and (except to the extent such representations and warranties speak as of an earlier date) as of the consummation of the Offer as though made on and as of such date; (ii) the representations and warranties of the Company set forth in the Agreement (other than those set forth in Section 3.1(b) of the Agreement), (x) to the extent qualified by Material Adverse Effect shall not be true and correct and (y) to the extent not qualified by Material Adverse Effect shall not be true and correct, except that this clause (y) shall be deemed satisfied so long as any failures of such representations and warranties to be true and correct, taken together, do not have a Material Adverse Effect on the Company, in the case of each of clause (x) and (y) as of the date of the Agreement and (except to the extent such representations and warranties speak as of an earlier date) as of the consummation of the Offer as though made on and as of such date; (iii) the Company shall have breached or failed to comply in any material respect with any of its material obligations, covenants or agreements under the Agreement; or (iv) any change or event shall have occurred that has, or could reasonably be expected to have, a Material Adverse Effect on the Company; or (d) there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on the New York Stock Exchange or the American Stock Exchange; (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, the European Union or the United Kingdom; (iii) any material limitation (whether or not mandatory) by any Governmental Entity on the extension of credit by banks or other lending institutions; (iv) a suspension of, or limitation on, the currency exchange markets or the imposition of, or material changes in, any currency or exchange control laws in the United States or abroad; (v) a commencement of a war or armed hostilities or other national or international calamity directly or indirectly involving the United States or the Netherlands which could reasonably be expected to have a Material Adverse Effect on the Parent or Company or prevent (or materially delay) the consummation of the Offer; or (vi) in the case of any of the foregoing existing at the time of the commencement of the Offer, a material acceleration or a worsening thereof; or (e) (i) if the holders of shares of Company Common Stock which are the subject of the Shareholder Agreement shall have either (A) failed to tender into the Offer (and not withdrawn) a majority of the oustanding shares of Company Common Stock or (B) in any material respect, failed to vote, failed to act by consent or have interfered with or have frustrated the exercise of the rights confered upon the holders of proxies identified and set forth in Section 6(a) of the Shareholder Agreement, or (ii) any of the representations and warranties of any such party set forth in the Shareholder Agreement shall not be true in any material respect, in each case, when made or at any time prior to the consummation of the Offer as if made at and as of such time, or (iii) the Shareholder Agreement shall have been invalidated or terminated with respect to any shares of Company Common Stock subject thereto; or (f) the Board of Directors of the Company (or any special committee thereof) shall have withdrawn or materially modified in any manner adverse to Parent or Merger Sub its approval or recommendation of the Offer, the Merger or this Agreement; or (g) the Company shall have entered into or shall have publicly announced its intention to enter into, an agreement or agreement in principle with respect to any Acquisition Proposal; or (h) the Agreement or the Shareholder Agreement shall have been terminated in accordance with its terms. The conditions set forth in clauses (a) through (h) are for the sole benefit of Parent and Merger Sub and may be asserted by Parent and Merger Sub regardless of the circumstances giving A-2 rise to such condition and may be waived by Parent and Merger Sub in whole or in part at any time and from time to time, by express and specific action to that effect, in their sole discretion. The failure by Parent or Merger Sub at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right, the waiver of any such right with respect to particular facts and other circumstances shall not be deemed a waiver with respect to any other facts and circumstances, and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time. The capitalized terms used in this Annex A shall have the meanings set forth in the Agreement to which it is annexed. A-3 SCHEDULE 5.7 8.1 INDEMNIFICATION OF OFFICERS AND DIRECTORS (a) The Corporation (and any successor to the Corporation by merger or otherwise) shall indemnify each person (including the heirs, personal representatives, executors, administrators and estate of the person) who was or is a party, or is threatened to be made a party, or was or is a witness, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and any appeal therefrom (collectively, a "Proceeding"), against all liability (including judgments, settlements, penalties and fines) and reasonable costs, charges and expenses (including attorneys' fees) asserted against him or incurred by him by reason of the fact that the person is or was a director or officer of the Corporation (each an "Indemnified Person"). (b) Notwithstanding the foregoing, except with respect to the indemnification specified in the third sentence of subsection (d) of this Section, the Corporation shall not indemnify an Indemnified Person in connection with a Proceeding (or part thereof) initiated by such Indemnified Person. (c) Reasonable costs, charges and expenses (including attorneys' fees) incurred by an Indemnified Person in defending a Proceeding may and, in connection with a transaction involving a Change in Control of the Corporation or a potential Change in Control of the Corporation shall, be paid by the Corporation in advance of the final disposition of the Proceeding, upon receipt of an undertaking reasonably satisfactory to the Board (the "Undertaking") by the Indemnified Person to repay all amounts so advanced if it is ultimately determined that such person is not entitled to be indemnified by the Corporation as authorized in this Section. A person to whom costs, charges and expenses are advanced pursuant to this Section shall not be obligated to repay pursuant to the Undertaking until the final determination of (A) the pending Proceeding in a court of competent jurisdiction concerning the right of that person to be indemnified or (B) the obligation of the person to repay pursuant to the Undertaking. For purposes hereof, a "Change in Control" shall mean a merger, sale of all or substantially all of the assets, or acquisition of more than 40% of the voting stock of the Corporation, by a tender offer, stock purchase or otherwise. (d) Any indemnification or advance under this Section shall be made as promptly as practicable after delivery of the written request of the Indemnified Person. The right to indemnification or advances as granted by this Section shall be enforceable by an Indemnified Person in any court of competent jurisdiction if the Corporation denies the request under this Section in whole or in part, or if no disposition of the request is made as promptly as practicable after delivery of the request. The requesting person's reasonable costs and expenses incurred in connection with successfully establishing his right to indemnification shall also be indemnified by the Corporation. (e) The indemnification provided by this Section shall not be deemed exclusive of any other rights to which an Indemnified Person may now or thereafter be entitled under any by-law, statute, agreement, vote of shareholders or disinterested directors or recommendation of counsel or otherwise. All rights to indemnification and advances under this Section shall be deemed to be a contract between the Corporation and each Indemnified Person who is an Indemnified Person at any time while this Section is in effect. Any repeal or modification of this Section shall not in any way diminish the rights to indemnification of such indemnified Person or the obligations of the Corporation arising hereunder for claims relating to matters occurring prior to the repeal or modification. (f) If this Section or any portion is invalidated or held to be unenforceable on any ground by a court of competent jurisdiction, the Corporation shall nevertheless indemnify each Indemnified Person to the fullest extent permitted by all applicable portions of this Section that have not been invalidated or adjudicated unenforceable, and as permitted by applicable law. EX-3 4 EXHIBIT 3 SHAREHOLDER AGREEMENT dated as of April 30, 2000, among KONINKLIJKE NUMICO N.V. ("Parent"), a company incorporated under the laws of the Netherlands, NUTRICIA INVESTMENT CORP., a Florida corporation and an indirect wholly owned subsidiary of Parent ("Merger Sub"), REXALL SUNDOWN, INC., a Florida corporation (the "Company"), and the persons listed on Exhibit A hereto (each a "Seller" and/or "Shareholder"). WHEREAS, Parent, Merger Sub and the Company propose to enter into an Agreement and Plan of Merger dated as of the date hereof (as the same may be amended or supplemented, the "Merger Agreement") providing for (i) the making of a cash tender offer (as such offer may be amended from time to time as permitted under the Merger Agreement, the "Offer") by Merger Sub for all the outstanding shares of common stock, par value $.01 per share, of the Company ("Company Common Stock"') and (ii) the merger of Merger Sub with and into the Company (the "Merger"); WHEREAS, each Seller and Shareholder is the record or beneficial owner of the number of shares of Company Common Stock set forth opposite such Seller's and Shareholder's name on Exhibit A hereto; such shares of Company Common Stock, as such shares may be adjusted by stock dividend, stock split, recapitalization, combination or exchange of shares, merger, consolidation, reorganization or other change or transaction of or by the Company, together with shares of Company Common Stock that may be acquired after the date hereof by such Seller or Shareholder, including shares of Company Common Stock issuable upon the exercise of options or warrants to purchase Company Common Stock (as the same may be adjusted as aforesaid), being collectively referred to herein as the "Shares"; WHEREAS, the Sellers and Shareholders hold in the aggregate 32,269,053 Shares which represent 50.44% of the votes of all outstanding shares of the Company's Common Stock; and WHEREAS, as a condition to their willingness to enter into the Merger Agreement, Parent and Merger Sub have requested that the Sellers and Shareholders enter into this Agreement. NOW, THEREFORE, to induce Parent and Merger Sub to enter into, and in consideration of their entering into, the Merger Agreement, and in consideration of the promises and the representations, warranties and agreements contained herein, the parties agree as follows: 1. Grant of Stock Option/Agreement to Tender. (a) The Sellers and the Shareholders, severally and not jointly, hereby grant to Merger Sub pursuant to the terms hereof, an irrevocable option (the "Option") to purchase the number of Shares specified in Exhibit A in the third column and any additional Shares acquired by such Seller or Shareholder in any capacity (whether by exercise of options, warrants or rights, the conversion or exchange of convertible or exchangeable securities or by means of a purchase, dividend, distribution or otherwise) at a purchase price of $24.00 Share (the "Purchase Price"); provided, however, that in the event that the consideration per share of Company Common Stock payable pursuant to the Offer, the Merger or any alternative transaction between the Company and Parent shall be increased above the Purchase Price, such increased consideration (a "Higher Purchase Price"), then with respect to Shares purchased pursuant to the Option from the Exempt Sellers (as defined in Section 4(e) hereof) , the Purchase Price shall be increased to such Higher Purchase Price; and provided, further, that in the event that Merger Sub exercises this Option and subsequently, the Company consummates a transaction constituting an Acquisition Proposal (as defined in the Merger Agreement) involving a consideration per share which exceeds the Purchase Price (a "Third Party Higher Purchase Price") and the Parent or Merger Sub sells or disposes such Shares within one year after the termination of the Merger Agreement, the Parent shall promptly pay to the Exempt Sellers and amount equal to the product of the number of shares purchased from such Exempt Sellers pursuant to the Option multiplied by the amount by which the Third Party Higher Purchase Price exceeds the Purchase Price. For purposes of this Section 1(a), non-cash consideration shall be valued at its fair market value pursuant to Section 4(f)(iii) (b) Option Exercise Period. The Option may be exercised by Merger Sub, in whole or in part, at any time or from time to time and as to each, any or all Sellers and Shareholders as determined by Merger Sub, during the period commencing on the earlier of (i) 5:00 p.m. on the second Business Day after the Offer commences, or (ii) 5:00 p.m. on May 10, 2000, and ending on the date which is the 30th Business Day following the termination of this Agreement; provided, however, that the Option may not be exercised by Merger Sub following the termination of the Merger Agreement pursuant to Section 7.1(a); by the Company pursuant to Sections 7.1(b), 7.1(f) or 7.1(g) of the Merger Agreement; or a termination of the Merger Agreement by Parent or Merger Sub pursuant to Section 7.1(b) provided that the Company would also have been entitled to terminate the Merger Agreement pursuant to Section 7.1(b) (c) In the event Merger Sub wishes to exercise the Option for all or some of the Shares, Merger Sub shall send a written notice (the "Exercise Notice") to the Sellers and Shareholders specifying the total number of Shares it wishes to purchase pursuant to such exercise and the place, the date (not less than one nor more than 20 Business Days from the date of the Exercise Notice) and the time for the closing of such purchase, provided that such date and time may be earlier than one day after the Exercise Notice if reasonably practicable. Each closing of a purchase of Shares pursuant to this Section 1(b) (a "Closing") shall take place at the place, on the date and at the time designated by Merger Sub in its Exercise Notice. Parent or Merger Sub shall not be under any obligation to deliver any Exercise Notice and may allow the Option to terminate without purchasing any Shares hereunder. (d) At a Closing, (i) the Sellers or Shareholders shall deliver to Merger Sub (in accordance with Merger Sub's instructions) a certificate or certificates (the "Certificates") representing all of the Shares specified in the Exercise Notice, duly endorsed or accompanied by stock powers duly executed in blank, with all necessary stock transfer stamps affixed, and (ii) Merger Sub shall deliver to each Seller or Shareholder by wire transfer in immediately available funds to an account designated by such Seller or Shareholder, in an amount equal to (A) the number of such Shares being purchased at such Closing from such person multiplied by (B) the Purchase Price. (e) [Intentionally Omitted] (f) The Closing shall be subject to the satisfaction of each of the following conditions: -2- (i) no temporary restraining order, preliminary or permanent injunction or other order issued by a court or other Governmental Entity (as defined in the Merger Agreement) of competent jurisdiction shall be in effect and have the effect of making the Option illegal or otherwise prohibiting consummation of the Option; (ii) any waiting period applicable to the consummation of the purchase and sale of the Shares pursuant to the exercise of the Option under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the "HSR Act") shall have expired or been terminated; and (iii) all actions by or in respect of, and any filing with, any governmental body, agency, official, or authority required to permit the consummation of the purchase and sale of the Shares pursuant to the exercise of the Option shall have been obtained or made and shall be in full force and effect. (g) Each of the Sellers shall tender validly (or cause the record owner of such Shares to tender validly), pursuant to and in accordance with the Offer, all of the respective Shares indicated on Exhibit A to be tendered by such person not later than the close of business on the third Business Day after the Offer commences, and each of the Shareholders hereby agrees to tender validly (or cause the record owner of such shares to tender validly), thereafter pursuant to and in accordance with the Offer not later than the close of business on the third Business Day after the Offer commences, any of such Shareholder's Shares not tendered by a Seller. Each Seller and Shareholder agrees not to withdraw such Seller's and Shareholder's Shares without the written consent of Parent. Each Seller or Shareholder shall deliver to the depositary (the "Depositary") designated in the Offer (i) a letter of transmittal with respect to such Shares tendered by it complying with the terms of the Offer together with instructions directing the Depositary to make payment for such Shares directly to the Shareholder, or to or for the benefit of one or more Sellers or Shareholders as designated by such Seller or Shareholder in such letter (but if such Shares are not accepted for payment or are withdrawn, are to be returned pursuant to the Offer, and are not subject to Section 1(i) of the Agreement to return such Shares to such Seller or Shareholder whereupon they shall continue to be held by such Seller or Shareholder subject to the terms and conditions of this Agreement), (ii) the Certificates and (iii) all other documents or instruments required to be delivered pursuant to the terms of the Offer (the "Offer Documents"). No tender pursuant to this Section l(g) will excuse any of the obligations of the Sellers or Shareholders hereunder. Notwithstanding the provisions of this Section 1(g), in the event any Shares are withdrawn from the Offer for any reason or are not purchased pursuant to the Offer, such Shares shall remain subject to the terms of this Agreement. Each Seller and Shareholder hereby agrees to permit Parent and Merger Sub to publish and disclose in the Offer Documents and, if approval of the shareholders of the Company is required under applicable law, in the Proxy Statement, including all documents and schedules filed with the Securities Exchange Commission ("SEC"), its identity and ownership of Company Common Stock and the nature of its commitments, arrangements and understandings under this Agreement. (h) To the extent that any Shares listed on Exhibit A have been pledged by a Seller or Shareholder as security for such Seller's or Shareholder's obligations under any credit or loan agreement (a "Third Party Loan Agreement") or to the extent that a certificate or certificates representing such Seller's or Shareholder's Shares indicated on Exhibit A are not currently in the possession of such Seller or Shareholder, such Seller or Shareholder agrees to (i) promptly execute -3- and deliver all instruments and take all other actions that may be necessary to comply with the provisions of this Section 1; (ii) take all actions that may be necessary to ensure that such Seller or Shareholder does not default under the terms of any Third Party Loan Agreement; and (iii) immediately notify Parent and Merger Sub of any notice of default or claim by the lender under any Third Party Loan Agreement. (i) In the event any Closing occurs on the date of the termination of the Offer, the Depositary shall delivery to Merger Sub the certificates representing the Shares subject to the exercise of the Option and Merger Sub shall make appropriate payment in accordance with the letter of transmittal delivered by the Seller or Shareholder. (j) The Company agrees to register immediately on the Company's stock records the transfer to Merger Sub of the Shares sold by any Seller or Shareholder upon the completion of the Offer or at the Closing. 2. Representations and Warranties of the Sellers and Shareholders. Each Seller and Shareholder hereby, severally and not jointly, represents and warrants to Parent and Merger Sub as follows as to such Seller or Shareholder: (a) Authority. Such Seller or Shareholder has all requisite power and authority to execute, and deliver and perform this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Seller or Shareholder. This Agreement has been duly and validly executed and delivered by the Seller or Shareholder and, assuming due authorization, execution and delivery by Parent and Merger Sub, constitutes a valid and binding obligation of the Seller or Shareholder enforceable against the Seller or Shareholder in accordance with its terms (except insofar as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally, or by principles governing the availability of equitable remedies). Except for the expiration or termination of the waiting period under the HSR Act, and informational filings with the SEC, neither the execution, delivery or performance of this Agreement by the Seller or Shareholder nor the consummation by the Seller or Shareholder of the transactions contemplated hereby will require any filing with, or permit, authorization, consent or approval of, any United States Federal, state or local government or any court, tribunal, administrative agency or commission or other domestic governmental or regulatory authority or agency (a "Governmental Entity"). (b) Conflicting Instruments; No Transfer. Except as provided in the written agreements set forth on Schedule 2 hereto, neither the execution, delivery or performance of this Agreement by the Seller or Shareholder nor the consummation by the Seller or Shareholder of the transactions contemplated hereby will result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default under, be in conflict with, or give rise to any right of termination, amendment, cancellation or acceleration under, or result in the creation of any pledge, claim, lien, charge, encumbrance or security interest of any kind or nature whatsoever (a "Lien") upon any of the properties or assets of the Seller or Shareholder under, any of the terms, conditions or provisions of any contract, agreement, commitment, understanding or other instrument, or any judgment, injunction, order, decree, law, regulation or arrangement to which the Shareholder is a party or by which the Seller or Shareholder or any of the Seller's or Shareholder's properties or -4- assets, including the Seller's or Shareholder's Shares, may be bound, except for any breach, violation, conflict, default, conflict or Lien which, individually or in the aggregate, would not prevent, impair, affect or delay the Seller's or Shareholder's ability to sell, or to deliver his, her or its proxy for, the Shares according to the terms of this Agreement and to approve the Merger Agreement and the transactions contemplated thereby. (c) The Shares. Except as provided in the written agreements set forth on Schedule 2 hereto, the Seller's or Shareholder's Shares indicated on Exhibit A are owned of record or beneficially (both as to voting and dispositive power) by such person and at all times during the term hereof will be, held of record or beneficially (both as to voting and dispositive power) by such person and such person has good and marketable title to such Shares and will deliver such Shares, free and clear of any Liens, proxies, voting trusts or agreements, understandings or arrangements, except for any such Liens or proxies arising hereunder. Any and all proxies, voting trusts or similar agreements, understandings or arrangements between or among parties hereto other than Parent or Merger Sub are hereby terminated. The Sellers or Shareholders own of record or beneficially no shares of Company Common Stock other than such Shares. (d) Brokers. Other than set forth in the Merger Agreement, no broker, investment banker, financial advisor or other persons is or will be entitled to any broker's finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement. (e) Merger Agreement. The Seller or Shareholder understands and acknowledges that Parent is entering into, and causing Merger Sub to enter into, the Merger Agreement in reliance upon the Seller's or Shareholder's execution and delivery of this Agreement. (f) The Seller or Shareholder is not in default under any Third Party Loan Agreement. (g) The Seller or Shareholder is not a party to any contract, agreement, commitment, understanding or other instrument with respect to any of the Shares other than those agreements listed on Schedules 2 and 4 hereto. 3. Representations and Warranties of Parent and Merger Sub. Parent and Merger Sub hereby jointly and severally represent and warrant to the Sellers and Shareholders as follows: (a) Authority. Parent and Merger Sub have the requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by Parent and Merger Sub and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of Parent and Merger Sub. This Agreement has been duly and validly executed and delivered by Parent and Merger Sub and constitutes a legal, valid and binding obligation of Parent and Merger Sub enforceable in accordance with its terms (except insofar as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally, or by principles governing the availability of equitable remedies). -5- (b) Securities Act. The Shares will be acquired in compliance with, and Merger Sub will not offer to sell or otherwise dispose of any Shares so acquired by it in violation of the registration requirements of, the Securities Act of 1933, as amended. (c) Financing. Parent will have the funds necessary to consummate the Offer and the Merger pursuant to the terms contemplated by the Merger Agreement and will provide such funds to Merger Sub at or prior to the consummation of the Offer and the Merger, as applicable. 4. Covenants of the Sellers and Shareholders. Each Seller and Shareholder, severally and not jointly, agrees as follows: (a) Until the Option is no longer exercisable, the Seller or Shareholder shall not, except as contemplated by the terms of this Agreement, (i) offer to sell, sell, transfer, pledge, hypothecate, grant a security interest in, encumber, assign or otherwise dispose of, or enter into any contract, option or other arrangement (including any profit sharing arrangement) or understanding with respect to the sale, transfer, pledge, hypothecation, grant of a security interest in, encumbrance, assignment or other disposition of, the Shares (including any options or warrants to purchase Company Common Stock) to any person other than Merger Sub or Merger Sub's designee, except the agreements as set forth on Schedule 4 hereto, (ii) enter into any voting arrangement, whether by proxy, voting agreement, voting trust, power-of-attorney or otherwise, with respect to the Shares or (iii) take any other action that would in any way restrict, limit or interfere with the performance of his, her or its obligations hereunder or the transactions contemplated hereby. (b) Until the Merger is consummated or the Merger Agreement is terminated, the Seller or Shareholder shall not, nor shall the Seller or Shareholder permit any investment banker, financial advisor, attorney, accountant or other representative or agent of the Seller or Shareholder to, directly or indirectly (i) solicit, initiate or encourage (including by way of furnishing nonpublic information), or take any other action designed or reasonably likely to facilitate, any inquiries or the making of any proposal which constitutes any Acquisition Proposal (as defined in the Merger Agreement) or (ii) participate in any discussions or negotiations regarding any Acquisition Proposal. Without limiting the foregoing, it is understood that any violation of the restrictions set forth in the preceding sentence by an investment banker, financial advisor, attorney, accountant or other representative or agent of the Seller or Shareholder shall be deemed to be a violation of this Section 4(b) by the Seller or Shareholder. Actions taken by a Seller in his or her capacity as an officer or director of the Company will not be a violation of this Agreement, provided such actions are permitted by the Merger Agreement. (c) Each Seller and Shareholder agrees to notify promptly and to provide all details to Parent if such Seller or Shareholder, or to such Seller's or Shareholder's knowledge, the Company shall be approached or solicited directly or indirectly by any person with respect to an Acquisition Proposal, to the extent the Company has not provided such details to the Parent. (d) At any meeting of shareholders of the Company called to vote upon the Merger and the Merger Agreement or at any adjournment thereof or in any other circumstances upon which a vote, consent or other approval (including by written consent) with respect to the Merger and the Merger Agreement is sought, each Seller and Shareholder shall, including by initiating a solicitation of written consents if requested by Parent, vote (or cause to be voted) such Sellers and -6- Shareholder's Shares in favor of the Merger, the adoption by the Company of the Merger Agreement and the approval of the other transactions contemplated by the Merger Agreement. At any meeting of shareholders of the Company or at any adjournment thereof or in any other circumstances upon which the Seller's and Shareholder's vote, consent or other approval is sought, such Seller and Shareholder shall vote (or cause to be voted) such Seller's and Shareholder's Shares against (i) any merger agreement or merger (other than the Merger Agreement and the Merger), consolidation, combination, sale of substantial assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by the Company or any other Acquisition Proposal (collectively, "Alternative Transactions") or (ii) any amendment of the Company's Articles of Incorporation or By-laws or other proposal or transaction involving the Company or any of its subsidiaries, which amendment or other proposal or transaction would in any manner impede, frustrate, prevent or nullify the Merger, the Merger Agreement or any of the other transactions contemplated by the Merger Agreement (collectively, "Frustrating Transactions"). (e) If Parent shall for any reason have increased the price per Share payable in the Offer over the Purchase Price (and Parent accepts Shares for payment pursuant to the Offer), then, immediately following Parent's payment for the Shares pursuant to the Offer, each Seller or Shareholder shall pay to Parent on demand an amount in cash equal to the product of (x) the number of such Seller's or Shareholder's Shares and Shares subject to options identified on Exhibit A hereto and (y) the excess of (A) the per share cash consideration received by the Seller or Shareholder as a result of the Offer, as amended, over (B) the Purchase Price. This Section 4(e) shall not apply to Christian Nast, Nickolas Palin, Geary Cotton, Patricia Cotton, Richard Goudis, Richard Werber, Gerry Holly, Stephen Frabitore, and David Schofield (the "Exempt Sellers"). (f) (i) In the event that the Merger Agreement shall have been terminated and Merger Sub would be entitled to purchase each Seller's or Shareholder's Shares pursuant to Section 1(b), Merger Sub may elect, by notice given in the manner set forth in Section 1(c), in lieu of purchasing such Seller's or Shareholder's Shares, to receive from such Seller or Shareholder, and each Seller and Shareholder hereby agrees to pay to Merger Sub on demand, an amount equal to eighty percent (80%) of all profit (determined in accordance with Section 4(f)(ii)) of such Seller or Shareholder from the consummation of: (a) any Acquisition Proposal (as defined in the Merger Agreement) with a person that makes an Acquisition Proposal during the period commencing on the date hereof and terminating on the termination of the Merger Agreement (a "Prior Person") that is consummated within one year of such termination; or (b) any Acquisition Proposal that is consummated pursuant to a definitive agreement entered into within 6 months after the termination of the Merger Agreement with a person other than a Prior Person. This Section 4(f)(i) shall not apply to the Exempt Sellers. (ii) For the purposes of this Section 4(f), the profit of any Seller or Shareholder from any Acquisition Proposal shall equal (A) the aggregate consideration received by such Seller or Shareholder pursuant to such Acquisition Proposal as to all Shares and Shares subject to options identified on Exhibit A hereto, valuing any non-cash consideration at its fair market value on the date of such consummation, plus (B) the value of all Shares and Shares subject to options of such Seller or Shareholder disposed of after the termination of the Merger Agreement and prior to the date of such consummation (which shall be the aggregate consideration received by such Seller or Shareholder in connection with the disposition of such Shares and Shares subject to options (valuing any non-cash consideration at its fair market value on the date of disposition), less (C) the -7- product of (x) the number of Shares and the Shares subject to options identified on Exhibit A hereto as to each Seller or Shareholder and (y) the Purchase Price. (iii) For the purposes of this Section 4(f), the fair market value of any non-cash consideration consisting of: (A) securities listed on a national securities exchange or traded on the NASDAQ National Market shall be equal to the average closing price per share of such security as reported on such exchange or NASDAQ National Market for the five trading days before and the five trading days after the date of determination; and (B) consideration which is other than securities of the form specified in clause (A) of this Section 4(f)(iii) shall be determined by Parent in good faith after consulting with a nationally recognized independent investment banking firm. (iv) Any payment of profit under this Section 4(f) shall be paid by wire transfer of same day funds to an account designated by Parent on (i) the first Business Day after Seller's or Shareholder's receipt of any cash consideration, and (ii) the third Business Day after the delivery of notice by Parent to Seller or Shareholder of the value of any non-cash consideration identified pursuant to Section 4(f)(iii). If all or a portion of the consideration received for the Shares by the Seller or Shareholder is in the form of non-cash consideration, the Seller or Shareholder shall pay to Parent the profit on such portion by either, at Parent's election, (A) transferring to Parent the Parent's pro rata share of such non-cash consideration or (B) selling such non-cash consideration (which sale shall be effected as soon as practicable and the allocable portion of the proceeds of which shall be paid to Parent immediately following the settlement of such sale). (v) Notwithstanding anything to the contrary contained herein, this Section 4(f) shall not be construed to require any Seller or Shareholder to make a payment to Merger Sub of an amount which would result in such Seller or Shareholder retaining in respect of (x) each Share set forth on Exhibit A and disposed of other than to Parent or Merger Sub less than the sum of (i) $24.00 plus (ii) 20% of all consideration received in respect of such Share in excess of $24.00 and (y) each Share subject to Option set forth in Exhibit A and disposed of other than to Parent or Merger Sub less than the sum of (i) $24.00 minus the exercise price of the option to which such Share is subject (the "Difference") plus (ii) 20% of all consideration received in respect of such Share subject to option in excess of the Difference, in each case such consideration received other than cash to be valued at fair market value in a manner described in this Section 4(f). (g) Prior to the close of business on the third Business Day after the Offer commences, each Seller and Shareholder with any Shares or options to acquire Shares which are subject to the written agreements identified on Schedule 2 hereto shall supply written evidence reasonably satisfactory to Merger Sub that the parties to such agreements have made suitable arrangements for the tender, sale and purchase of the Shares pursuant to the Offer and in accordance with this Agreement. 5. Additional Agreements Sellers and Shareholders. -8- (a) Each Seller listed on Exhibit A with an asterisk next to his, her or its name (each, a "Designated Seller") owns validly issued and outstanding options to acquire a number of shares of Company Common Stock as set forth opposite his name on Exhibit A attached hereto. Each Designated Seller hereby agrees with Parent that, if so requested by Parent at any time and from time to time when Parent reasonably believes the number of outstanding Shares owned of record by the Sellers and Shareholders in the aggregate is less than a majority of the total issued and outstanding shares of Company Common Stock on a fully diluted basis, each such Designated Seller will immediately upon receipt of such notice exercise such number of options as are sufficient, after giving effect to the exercises, to ensure that the number of outstanding Shares owned of record by the Sellers and Shareholders in the aggregate continue at all times to represent a majority of the total issued and outstanding shares of Company Common Stock on a fully diluted basis. At the request of a Designated Seller, the Parent will loan to such Designated Seller the exercise price of such options. Such loans shall be on terms and conditions acceptable to the Parent, which shall include but not be limited to a note, a loan agreement and a pledge of the shares being purchased upon such exercise to secure all amounts due in connection with such loan upon reasonable commercial terms for a comparable loan transaction. Any shares of Company Common Stock received by the Designated Seller upon any such exercise shall automatically at such time become "Shares" for all purposes hereunder. The Company agrees to take immediately all actions required (i) to issue to the Designated Seller the certificates representing the Shares issuable upon exercise of the options, and (ii) following the exercise of the options, to allow the Designated Seller to complete the Closing in accordance with this Agreement. (b) Each Seller and Shareholder listed on Exhibit A with a "NC" next to his, her or its name (each a "Key Shareholder") covenants that he, she or it shall not, for a period of five (5) years from and after the date of consummation of the Merger, except on behalf of the Company, directly or indirectly, within the United States of America and those countries in which the Company maintains, owns facilities or conducts multi-level marketing activities which the parties hereto acknowledge to be the geographic area in which the Company conducts business, (i) provide or perform services which are in competition with the Company's Business, either on his, her or its own behalf or on behalf of any other person, whether as an employee, officer, director, shareholder, partner, proprietor, agent, consultant, independent contractor, lender or otherwise or (ii) have a financial interest in or be in any way connected with or affiliated with any person which is in competition with the Company's Business. Nothing contained herein shall preclude a Key Shareholder from having a passive investment in less than one percent (1 %) of the outstanding capital stock of any publicly traded company. Each Key Shareholder acknowledges that he, she or it is a shareholder of the Company and has been (or in the case of any Key Shareholder which is an entity, the parties controlling such entity have been) in a position of responsibility with the Company. The Key Shareholders hereby acknowledge and agree that (i) the covenants in this Section 5(b) are a material inducement to Parent to enter into the Merger Agreement; (ii) the Company's Business is of a limited and unusual nature and the scope of the Company's Business is sufficiently broad so that these restrictions shall apply throughout the United States and any other country in which the Company maintains, owns facilities, or conducts multi-level marketing activities; and (iii) the territory is reasonable under the circumstances. (c) For the purposes of Section 5(b), "Company's Business" means the development, manufacture, or retail or wholesale distribution of vitamin and mineral supplements, -9- other nutritional supplements and consumer health products, including vitamins in both multivitamin and single-entity formulas, minerals, herbals, weight management products, homeopathic remedies, sports nutrition products and personal care products, as conducted by the Company in the United States and any other country in which the Company maintains, owns or facilities, or conducts multi-level marketing activities, on and after the date of Merger. (d) Not later than 5 Business Days after the Offer commences, each Shareholder or Seller whose shares are not held of record will either (i) cause the record holder to be bound by the terms of this Agreement or (ii) shall become the record holder of such shares. The Company agrees to take immediately all such actions as may be required to register on its stock transfer records any transfers of Shares by a Seller or Shareholder in accordance with this Section 5(d). 6. Grant of Irrevocable Proxy; Appointment of Proxy. (a) Each Seller and Shareholder hereby irrevocably grants to, and appoints, William E. Watts, Greg Horn and Julitte van der Ven and any other individual who shall hereafter be designated by Parent, and each of them (a "Proxy Holder"), such Seller's or Shareholder's proxy and attorney-in-fact (with full power of substitution), for and in the name, place and stead of such Seller or Shareholder, to vote such Seller's and Shareholder's Shares, or grant a consent or approval in respect of such Shares, at any meeting of shareholders of the Company or at any adjournment thereof or in any other circumstances upon which their vote, consent or other approval is sought, in favor of the Merger, the adoption by the Company of the Merger Agreement and the approval of the other transactions contemplated by the Merger Agreement and against any Alternative Transaction or Frustrating Transaction. Unless this Agreement is properly terminated, the Company agrees to recognize and give effect immediately to any vote, consent or approval exercised or expressed by a Proxy Holder. (b) Each Seller and Shareholder represents that any proxies heretofore given in respect of such Seller's or Shareholder's Shares are not irrevocable, and that any such proxies are hereby revoked. (c) Each Seller and Shareholder hereby affirms that the irrevocable proxy set forth in this Section 6 is given in connection with the execution of the Merger Agreement, and that such irrevocable proxy is given to secure the performance of the duties of such Shareholder under this Agreement. Such Shareholder hereby further affirms that the irrevocable proxy is coupled with an interest and may under no circumstances be revoked, subject to Section 9. Such Seller or Shareholder hereby ratifies and confirms all that such irrevocable proxy may lawfully do or cause to be done by virtue hereof. Such irrevocable proxy is executed and intended to be irrevocable in accordance with the provisions of Section 607.0722 of the Florida Business Corporation Act. Such irrevocable proxy shall be valid until the later to occur of (i) eleven (11) months from the date hereof or (ii) the termination of this Agreement pursuant to Section 9. 7. Further Assurances. Each Seller or Shareholder will, from time to time prior to the Closing and without further consideration, execute and deliver, or cause to be executed and delivered, such additional or further transfers, assignments, endorsements, consents and other instruments as Parent or Merger Sub may request for the purpose of effectively carrying out the transactions contemplated by this Agreement and to vest the power to vote such Shareholder's Shares -10- as contemplated by Section 6. Parent and Merger Sub jointly and severally agree to use commercially reasonable efforts to take, or cause to be taken, all actions necessary to comply promptly with all legal requirements that may be imposed with respect to the transactions contemplated by this Agreement (including legal requirements of the HSR Act). 8. Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties without the prior written consent of the other parties, except that Merger Sub may assign, in its sole discretion, any or all of its rights, interests and obligations hereunder to Parent or to any direct or indirect wholly owned subsidiary of Parent. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. Each Seller and Shareholder agrees that this Agreement and the obligations of such Seller or Shareholder hereunder shall attach to such Seller's or Shareholder's Shares and shall be binding upon any person or entity to which legal or beneficial ownership of such Shares shall pass, whether by operation of law or otherwise, including without limitation such Seller's or Shareholder's heirs, guardians, administrators or successors. 9. Termination. This Agreement, and all rights and obligations of the parties hereunder, shall terminate upon the earliest of (a) the date upon which the Merger Agreement is terminated pursuant to Article VII thereof and (b) the effective time of the Merger. Notwithstanding the foregoing, Sections 1(a), 1(b) (to the extent set forth therein), 1(c)- (f) and 1(h) - (j), 2, 3(a) - (b), 4(a), 4(c) (for as long as the Option is exercisable), 4 (e), 4(f) (to the extent set forth therein), 7, 8, 9, 10 (for as long as the Option is exercisable) and 11-18 shall survive any termination of this Agreement. 10. Stop Transfer. The Company agrees with, and covenants to, Parent and Merger Sub that the Company shall not register the transfer of any certificate representing any Shareholder's Shares unless such transfer is made in accordance with the terms of this Agreement. The Company and each Shareholder and Seller agree that upon Parent's request all stock certificates representing Shares subject to this Agreement shall be immediately and conspicuously marked with a legend to reflect the restrictions set forth in this Agreement. 11. General Provisions. (a) Expenses. Except as expressly set forth herein, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses. (b) Amendments. This Agreement may not be amended, modified or supplemented except by an instrument in writing signed by each of the parties hereto. (c) Notice. All notices and other communications hereunder shall be in writing and shall be deemed duly given (a) on the date of delivery if delivered personally; (b) on the first Business Day following the date of dispatch if delivered by a nationally recognized next-day courier service; or (c) if sent by facsimile transmission, with a copy mailed on the same day in the manner provided in (a) or (b) above, when transmitted and receipt is confirmed by telephone. All notices -11- and other communications hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice. (i) if to Parent or Merger Sub to Koninklijke Numico N.V. Rokkeveenseweg 49 2712 PJ Zoetermeer The Netherlands Facsimile: 011-31-79-353-9671 Attention: Julitte van der Ven, General Counsel with a copy to: Guy E. Snyder William J. Bettman Vedder, Price, Kaufman & Kammholz 222 North LaSalle Street Chicago, IL 60601 Facsimile: 312-609-5005 and (ii) if to a Seller or Shareholder, to the address set forth under the name of such Seller or Shareholder on Exhibit A hereto with a copy to: Charles E. Muller II Muller & Lipson, P.A. 9350 South Dixie Highway Suite 1550 Miami, FL 33156 Facsimile: 305-670-6769 and Richard Werber Rexall Sundown, Inc. 6111 Broken Sound Parkway, N.W. Boca Raton, FL 33487 Facsimile: 561-999-4729 (iii) if to the Company, to, Rexall Sundown, Inc. 6111 Broken Sound Parkway, NW -12- Boca Raton, Florida 33487 Facsimile: (561) 999-4729 Attention: Richard Werber, Vice President and General Counsel with a copy to: Greenberg Traurig, P.A. 1221 Brickell Avenue Miami, Florida 33131 Facsimile: (305) 579-0717 Attention: Paul Berkowitz Ira Rosner (d) All representations, warranties, covenants, agreements and conditions of this Agreement applicable to the Sellers and Shareholders are several and not joint. (e) Interpretation. When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Wherever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". (f) Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. (g) Entire Agreement; No Third-Party Beneficiaries. This Agreement and the Merger Agreement (including the documents and instruments referred to herein and therein) (i) constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof and (ii) are not intended to confer upon any person other than the parties hereto any rights or remedies hereunder. (h) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to the laws that might be applicable under the conflicts of laws principles thereof; provided, however, that the matters affecting the validity of the corporate action taken by the Company relating to the transfer of the Shares and all of the provisions of this Agreement relating to the voting of the Shares shall be governed by and construed in accordance with the laws of the State of Florida. (i) Waiver of Appraisal Rights. To the extent applicable, each Seller and Shareholder hereby waives any rights of appraisal or rights to dissent from the Merger that such Seller or Shareholder may have on the terms set forth in the Merger Agreement. (j) Publicity. Except as otherwise required by law (including Rule 14d-9 promulgated under the Securities Exchange Act of 1934), court process or the rules of the NASDAQ -13- National Market (with respect to the Company), a national or foreign securities exchange or as contemplated or provided in the Merger Agreement, for so long as this Agreement is in effect, none of the Company, each of Sellers and Shareholders or Parent shall, nor shall Parent or the Company permit any of its subsidiaries to, issue or cause the publication of any press release or other public announcement with respect to the transactions contemplated by this Agreement or the Merger Agreement without the consent of the other parties. 12. Shareholder Capacity. No person executing this Agreement who is or becomes during the term hereof a director or officer of the Company makes any agreement or understanding herein in his or her capacity as such director or officer. Each Seller and Shareholder signs solely in his or her capacity as the record and beneficial owner of, or the trustee of a trust whose beneficiaries are the beneficial owners of, such Seller's and Shareholder's Shares and nothing herein shall limit or affect any actions taken by a Seller or Shareholder in its capacity as an officer or director of the Company to the extent specifically permitted by the Merger Agreement. 13. Jurisdiction; Consent to Service of Process. (a) Each of the parties to this Agreement hereby irrevocably and unconditionally submits, for himself, herself or itself and its property, to the jurisdiction and venue of any Delaware State court, or any Federal court of the United States of American sitting in the District of Delaware and any appellate court from any such court, in any suit, action or proceeding arising out of or relating to this Agreement, and each of the parties hereto hereby irrevocably and unconditionally agrees that all clams in respect of any such suit, action or proceeding may be heard and determined in such Delaware State court, or, to the extent permitted by law, by removal or otherwise, in such Federal court. It shall be a condition precedent to each party's right to bring any such suit, action or proceeding that such suit, action or proceeding, in the first instance, be brought in such Delaware State court or, to the extent permitted by law, by removal or otherwise, in such Federal court. If such Delaware State court, or such Federal court refuses to accept jurisdiction with respect thereto, such suit, action or proceeding may be brought in any other court with jurisdiction. No party to this Agreement may move to (i) transfer any such suit, action or proceeding from such Delaware State court (other than to remove to such Federal court), or from such Federal court sitting in any such suit, action or proceeding brought in such Delaware State court, or any Federal court with a suit, action or proceeding in another jurisdiction or district or (iii) dismiss any such suit, action or proceeding brought in such Delaware State court, or any Federal court sitting in the District of Delaware for the purpose of bringing the same in another jurisdiction. Each party agrees that a final judgment in any such suit, action or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by law. Each party irrevocably consents to service of process by registered or certified mail. (b) Each party to this Agreement hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any Delaware State court, or any Federal court sitting in the District of Delaware. Each party hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such suit, action or proceeding in any such court and further waives the right to object, with respect to such suit, action or proceeding, that such court does not have jurisdiction over such party. -14- 14. Performance by Merger Sub. Parent covenants and agrees for the benefit of the Sellers and Shareholders that it shall cause Merger Sub to perform in full each obligation of Merger Sub set forth in this Agreement. 15. Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with its specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court of the United States located in the State of Delaware or any Delaware State court, this being in addition to any other remedy to which they are entitled at law or in equity. In addition, each of the parties hereto waives any right to trial by jury with respect to any claim or proceeding related to or arising out of this Agreement or any of the transactions contemplated hereby. 16. Remedies Cumulative. All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. 17. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby may be consummated as originally contemplated to the fullest extent possible. 18. Survival. All representations and warranties contained herein shall survive for one (1) year after the termination hereof. 19. Approval by the Board of Directors of the Company. Notwithstanding anything in this Agreement, all the rights and obligations of the parties set forth in this Agreement are subject to the approval of this Agreement by the Board of Directors of the Company. Such approval shall include the approval of this Agreement for purposes of Sections 607.0901 and 607.0902 of the Florida Business Corporation Act. 20. Charitable Gifts. Notwithstanding any other provision of this Agreement, Carl DeSantis is permitted at any time to transfer record ownership of an aggregate of up to 300,000 outstanding Shares to non-profit institutions designated by Carl DeSantis provided that, immediately prior to such transfer, Carl DeSantis exercises sufficient options on shares of Company Common Stock to become the record owner of such additional outstanding Shares so as to maintain the voting interest in the Company's outstanding Common Stock currently held by Carl DeSantis (the "Newly Issued Shares"). Carl DeSantis and the Company shall provide such information and documents as may be reasonably requested by Merger Sub regarding the transfer of the Shares, the exercise of the -15- options, and the issuance and absence of Liens against the Newly Issued Shares. All such Newly Issued Shares shall be subject to this Agreement in all respects. If Carl DeSantis needs to borrow the funds necessary to exercise the options and pledge additional shares to secure such loan, (the "Option Loan"), such pledge will not violate the terms of the Agreement so long as simultaneously with such pledge the Shares pledged are immediately tendered in accordance with the Offer. The Option Loan shall be deemed a Third Party Loan. [SIGNATURE PAGE TO FOLLOW] -16- IN WITNESS WHEREOF, each of Parent and Merger Sub has caused this Agreement to be signed by its officer thereunto duly authorized and each such Shareholder has signed this Agreement, all as of the dated first written above. KONINKLIJKE NUMICO N.V. By: /s/ Julitte van der Ven ------------------------------- Name: Julitte van der Ven ----------------------------- Title: Attorney-in-fact ---------------------------- NUTRICIA INVESTMENT CORP. By: /s/ Julitte van der Ven ------------------------------- Name: Julitte van der Ven ----------------------------- Title: President ---------------------------- ENTITY SHAREHOLDERS: CDD PARTNERS, LTD. By: CDD Management, Inc. General Partner By: /s/ Carl DeSantis ------------------------------- Carl DeSantis, President TRIPLE D INVESTMENTS, L.L.C. By: /s/ Damon DeSantis ------------------------------- Damon DeSantis, as trustee of the Sylvia DeSantis Irrevocable Life Insurance Trust, a member By: /s/ Dean DeSantis ------------------------------- Dean DeSantis, as trustee of the Sylvia DeSantis Irrevocable Life Insurance Trust, a member By: /s/ Deborah DeSantis ------------------------------- Deborah DeSantis, as trustee of the Sylvia DeSantis Irrevocable Life Insurance Trust, a member -17- SYLVIA DESANTIS REVOCABLE TRUST By: /s/ Sylvia DeSantis ------------------------------- Sylvia DeSantis, Trustee SYLVIA DESANTIS IRREVOCABLE LIFE INSURANCE TRUST By: /s/ Damon DeSantis ------------------------------- Damon DeSantis, Trustee By: /s/ Dean DeSantis ------------------------------- Dean DeSantis, Trustee By: /s/ Deborah DeSantis ------------------------------- Deborah DeSantis, Trustee INDIVIDUAL SHAREHOLDERS: /s/ Carl DeSantis ---------------------------------- Carl DeSantis /s/ Damon DeSantis ---------------------------------- Damon DeSantis /s/ Cynthia DeSantis ---------------------------------- Cynthia DeSantis, as Custodian /s/ Dean DeSantis ---------------------------------- Dean DeSantis /s/ Laura DeSantis ---------------------------------- Laura DeSantis -18- /s/ Deborah DeSantis ---------------------------------- Deborah DeSantis /s/ Geary Cotton ---------------------------------- Geary Cotton /s/ Patricia Cotton ---------------------------------- Patricia Cotton /s/ Stephen Frabitore ---------------------------------- Stephen Frabitore /s/ Richard Goudis ---------------------------------- Richard Goudis /s/ Gerry Holly ---------------------------------- Gerry Holly /s/ Christian Nast ---------------------------------- Christian Nast /s/ Nickolas Palin ---------------------------------- Nickolas Palin /s/ David Schofield ---------------------------------- David Schofield /s/ Richard Werber ---------------------------------- Richard Werber -19- ACKNOWLEDGED AND AGREED TO AS TO SECTION 10 AS OF THE DATE FIRST WRITTEN ABOVE REXALL SUNDOWN, INC. By: /s/ Damon DeSantis --------------------------------- Name: Damon DeSantis ------------------------------- Title: CEO ------------------------------ EXHIBIT A
- ------------------------------------------------------------------------------------------------------------- NUMBER OF RECORD AND NUMBER OF SHARES SHARES TO BE NAME AND ADDRESS OF SELLER BENEFICIAL SHARES UNDERLYING OPTIONS TENDERED* - ------------------------------------------------------------------------------------------------------------- NC CARL DESANTIS* 165,000 897,500 7,703,889 3223 N. OCEAN BOULEVARD GULFSTREAM, FLORIDA 33483 - ------------------------------------------------------------------------------------------------------------- NC DAMON DESANTIS* 240,599 902,000 9,667,658 12121 NW 11TH STREET PLANTATION, FLORIDA 33323 - ------------------------------------------------------------------------------------------------------------- NC CYNTHIA DESANTIS 31,114 0 31,114 CUST 12121 NW 11TH STREET PLANTATION, FLORIDA 33323 - ------------------------------------------------------------------------------------------------------------- NC DEAN DESANTIS* 89,550 465,000 7,571,609 7600 HYANNIS LANE PARKLAND, FLORIDA 33067 - ------------------------------------------------------------------------------------------------------------- NC LAURA DESANTIS 19,546 0 19,546 7600 HYANNIS LANE PARKLAND, FLORIDA 33067 - ------------------------------------------------------------------------------------------------------------- NC DEAN DESANTIS & DAMON 6,090 0 6,090 DESANTIS & DEBORAH DESANTIS TTEES OF THE SYLVIA DESANTIS IRREVOCABLE LIFE INSURANCE TRUST - ------------------------------------------------------------------------------------------------------------- NC SYLVIA DESANTIS AS TTEE UNDER 337,750 0 337,750 THE SYLVIA DESANTIS REVOCABLE TRUST DTD 10/30/9 - ------------------------------------------------------------------------------------------------------------- NC TRIPLE D INVESTMENTS, LLC 13,158,042 0 1,316,000 9350 S. DIXIE HIGHWAY SUITE 1550 MIAMI, FLORIDA 33156 - ------------------------------------------------------------------------------------------------------------- NC DEBORAH DESANTIS* 128,425 226,500 4,075,773 7539 ISLA VERDE WAY DELRAY BEACH, FLORIDA 33446 - ------------------------------------------------------------------------------------------------------------- CHRISTIAN A. NAST* 30,229 692,000 30,229 2917 S. OCEAN BOULEVARD PH 1103 HIGHLAND BEACH, FLORIDA 33487 - ------------------------------------------------------------------------------------------------------------- NICKOLAS PALIN* 6,000 775,334 6,000 3600 OCEAN BOULEVARD #801 SOUTH PALM BEACH, FLORIDA 33480 - ------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------- NUMBER OF RECORD AND NUMBER OF SHARES SHARES TO BE NAME AND ADDRESS OF SELLER BENEFICIAL SHARES UNDERLYING OPTIONS TENDERED* - ------------------------------------------------------------------------------------------------------------- GEARY COTTON* 234,254 817,500 234,254 615 IDLEWYLD DRIVE FORT LAUDERDALE, FLORIDA 33301 - ------------------------------------------------------------------------------------------------------------- PATRICIA COTTON 12,242 0 12,242 615 IDLEWYLD DRIVE FORT LAUDERDALE, FLORIDA 33301 - ------------------------------------------------------------------------------------------------------------- RICHARD GOUDIS* 1,169 330,000 1,169 4777 NW 25TH WAY BOCA RATON, FLORIDA 33434 - ------------------------------------------------------------------------------------------------------------- RICHARD WERBER* 150,962 662,650 150,962 3279 NW 62ND STREET BOCA RATON, FLORIDA 33496 - ------------------------------------------------------------------------------------------------------------- GERRY HOLLY* 0 370,000 0 2115 S. OCEAN BOULEVARD DELRAY BEACH, FLORIDA - ------------------------------------------------------------------------------------------------------------- STEPHEN FRABITORE* 2,500 420,820 2,500 8210 FALLS LANE PARKLAND, FLORIDA 33067 - ------------------------------------------------------------------------------------------------------------- DAVID SCHOFIELD* 2,268 312,500 2,268 10453 RIO LINDO DELRAY BEACH, FLORIDA 33446 - ------------------------------------------------------------------------------------------------------------- NC CDD PARTNERS, LTD. 17,653,313 0 1,100,000 12770 COIT ROAD, #850 DALLAS, TEXAS 75251 - ------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------- TOTAL 32,269,053 6,871,804 32,269,053 - ------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------
*REPRESENTS THE NUMBER OF CURRENTLY OUTSTANDING SHARES TO BE TENDERED INTO THE OFFER BY SUCH SELLER. THIS NUMBER IS SUBJECT TO INCREASE UPON THE EXERCISE OF ANY OPTIONS AS TO SHARES IN ACCORDANCE WITH THIS AGREEMENT.
- ---------------------------------------------------------------------------- NUMBER OF RECORD AND NAME AND ADDRESS OF SHAREHOLDER BENEFICIAL SHARES* - ---------------------------------------------------------------------------- NC CDD PARTNERS, LTD. 17,653,313 12770 COIT ROAD, #850 DALLAS, TEXAS 75251 - ---------------------------------------------------------------------------- NC TRIPLE D INVESTMENTS, LLC 13,158,042 9350 S. DIXIE HIGHWAY SUITE 1550 MIAMI, FLORIDA 33156 - ----------------------------------------------------------------------------
*REPRESENTS THE NUMBER OF CURRENTLY OUTSTANDING SHARES TO BE TENDERED INTO THE OFFER IN ACCORDANCE WITH THIS AGREEMENT. SCHEDULE 2 1. Shares owned by CDD Partners, Ltd. are pledged pursuant to the following agreements: A. Bank of America, N.A., as successor to Nationsbank, N.A. (i) The Amended and Restated Loan Agreement dated October 27 1999 between Bank of America, N.A., CDD Partners, Ltd. and Carl DeSantis (ii) The Amended and Restated Promissory Notes dated October 27, 1999 from each of CDD Partners, Ltd. and Carl DeSantis to Bank of America, N.A. (iii) The Pledge Agreement dated June 18, 1999 between Nationsbank, N.A. and CDD Partners, Ltd. B. Colonial Bank (i) Revolving Credit Agreement dated November 17, 1999 between Carl DeSantis, CDD Partners, Ltd. and Colonial Bank (ii) Revolving Promissory Note dated November 17, 1999 from Carl DeSantis to Colonial Bank (iii) Pledge Agreement dated November 17, 1999 between CDD Partners, Ltd. and Colonial Bank (iv) Pledge Agreement dated November 17, 1999 between Carl DeSantis and Colonial Bank C. Raymond James Credit Corporation (i) Loan Agreement dated February 24, 2000 between Raymond James Credit Corporation and CDD Partners, Ltd. (ii) Demand Promissory Note dated February 24, 2000 from CDD Partners, Ltd. (iii) Pledge and Security Agreement dated February 24, 2000 between Raymond James Credit Corporation and CDD Partners, Ltd. 2. Certain Shares of Rexall Sundown, Inc. Common Stock are held as security for margin loans pursuant to customary broker margin account agreements at Raymond James and other brokerage firms. SCHEDULE 4 Securities Loan Agreement between CDD Partners, Ltd. and Carl DeSantis dated as of April 30, 2000. Securities Loan Agreement between CDD Partners, Ltd. and Dean DeSantis dated as of April 30, 2000. Securities Loan Agreement between CDD Partners, Ltd. and Damon DeSantis dated as of April 30, 2000. Securities Loan Agreement between Triple D Investment, L.L.C. and Dean DeSantis dated as of April 30, 2000. Securities Loan Agreement between Triple D Investments, L.L. C. and Damon DeSantis dated as of April 30, 2000. Securities Loan Agreement between Triple D Investments, L.L.C. and Deborah DeSantis dated as of April 30, 2000. All such Securities Loan Agreements to be in the form attached hereto. EX-4 5 EXHIBIT 4 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 TABLE OF CONTENTS 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
i 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 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 you can withdraw them at any time after such time until we accept shares for payment. This right to withdraw will not apply to any subsequent offering period. See Section 1--"Terms of the Offer" and Section 4--"Rights of Withdrawal" in this Offer to Purchase. HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES? To withdraw shares, you must deliver a written notice of withdrawal, or a copy of one, with the required information to Wilmington Trust Company, the depositary for the offer, while you still have the right to withdraw the shares. See Section 4--"Rights of Withdrawal" in this Offer to Purchase. WHAT DOES THE REXALL SUNDOWN BOARD OF DIRECTORS THINK OF THE OFFER? We are making the offer pursuant to a merger agreement among us, Numico and Rexall Sundown. The board of directors of Rexall Sundown unanimously approved the merger agreement, our tender offer and the proposed merger of us with and into Rexall Sundown. Following the proposed merger, Rexall Sundown will be the surviving corporation and an indirect wholly owned subsidiary of Numico. The board of directors of Rexall Sundown has determined that the terms of the offer and the merger are fair to, and in the best interests of, the shareholders of Rexall Sundown and recommends that you tender your shares in the offer. See the "Introduction" to this Offer to Purchase. HAVE ANY SHAREHOLDERS AGREED TO TENDER THEIR SHARES? Yes. Shareholders who own shares representing approximately 50.3% of the outstanding common stock of Rexall Sundown (which is subject to increase upon the exercise of any outstanding options) have agreed to tender their shares in the offer. See Section 11--"Purpose of the Offer; Plans for the Company; the Merger Agreement; Other Agreements--SHAREHOLDER AGREEMENT," in this Offer to Purchase. IF A MAJORITY OF THE SHARES ARE TENDERED AND ACCEPTED FOR PAYMENT, WILL REXALL SUNDOWN CONTINUE AS A PUBLIC COMPANY? No. Following the purchase of shares in the offer, we expect to consummate the merger, and, following the merger, Rexall Sundown will no longer be publicly owned. Even if the merger does not take place, if we purchase all of the tendered shares, there may be so few remaining shareholders and publicly held shares that (a) Rexall Sundown shares will no longer meet the published guidelines of the Nasdaq National Market for continued listing and may be delisted from the Nasdaq National Market, (b) there may not be a public trading market for Rexall Sundown shares and (c) Rexall Sundown may cease being required to comply with the SEC rules relating to publicly held companies. See Section 7--"Effect of the Offer on the Market for the Shares; Stock Quotation; Exchange Act Registration; Margin Regulations" in this Offer to Purchase. WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL OF REXALL SUNDOWN SHARES ARE NOT TENDERED IN THE OFFER? Yes. If we accept for payment and pay for at least a majority of the outstanding shares of Rexall Sundown, Nutricia Investment Corp. will be merged with and into Rexall Sundown. If that merger takes place, Numico will own indirectly all of the shares of Rexall Sundown and all remaining shareholders of Rexall Sundown (other than Numico or its subsidiaries, including Nutricia Investment Corp.) will receive $24.00 per share in cash. See the "Introduction" to this Offer to Purchase. IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES? If the merger described above takes place, shareholders not tendering in the offer will receive the same amount of cash per share that they would have received had they tendered their shares in the offer. Therefore, if the merger takes place, the only difference to you between tendering your shares iv and not tendering your shares is that you will be paid earlier if you tender your shares. However, if the merger does not take place, the number of Rexall Sundown shareholders and shares of Rexall Sundown which are still in the hands of the public may be so small that there no longer will be an active public trading market (or, possibly, there may not be any public trading market) for the shares. Also, as described above, Rexall Sundown may cease making filings with the SEC or otherwise being required to comply with the SEC rules relating to publicly held companies. See the "Introduction" and Section 7--"Effect of the Offer on the Market for the Shares; Stock Quotation; Exchange Act Registration; Margin Regulations" of this Offer to Purchase. WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE? On April 28, 2000, the last trading day before we announced the tender offer and the possible subsequent merger, the closing price of Rexall Sundown shares reported on the Nasdaq National Market was $19.25 per share. Between December 31, 1999 and April 28, 2000, the closing price of Rexall Sundown shares ranged between $9.9375 and $19.25 per share. We advise you to obtain a recent quotation for shares of Rexall Sundown in deciding whether to tender your shares. See Section 6--"Price Range of the Shares; Dividends" in this Offer to Purchase. WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER? You can call Innisfree M&A Incorporated at (888) 750-5834 (toll free) or (212) 750-5833 (call collect) or Salomon Smith Barney Inc. at (877) 755-4456 (toll free). Innisfree M&A Incorporated is acting as the information agent and Salomon Smith Barney Inc. is acting as the dealer manager for our tender offer. See the back cover of this Offer to Purchase. v 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. vi 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. vii 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 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 2 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 3 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 4 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 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 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 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 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.
CLOSING PRICE ------------------- FISCAL YEAR ENDED AUGUST 31, HIGH LOW - ---------------------------- -------- -------- 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
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 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 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 REXALL SUNDOWN, INC. SELECTED CONSOLIDATED FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE DATA)
SIX MONTHS ENDED FISCAL YEAR ENDED --------------------------- ----------------------- FEBRUARY 29, FEBRUARY 28, AUGUST 31, AUGUST 31, 2000 1999 1999 1998 ------------ ------------ ---------- ---------- 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
- ------------------------ (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 REXALL SUNDOWN, INC. CERTAIN PROJECTIONS OF FUTURE OPERATING RESULTS (IN THOUSANDS)
YEAR ENDING DECEMBER 31, FISCAL YEAR ENDING -------------------------------- AUGUST 31, 2000 2000 2001 2002 ------------------ -------- -------- ---------- 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
The Projections reflect the Company's forecast of its consolidated net revenue, EBIT, EBITDA and net earnings on a stand-alone basis and without reflecting any potential synergies from the consummation of the Offer and the Merger. THE PROJECTIONS WERE PREPARED SOLELY FOR INTERNAL USE AND NOT WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH THE PUBLISHED GUIDELINES OF THE SEC OR THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS AND WERE NOT PREPARED WITH THE ASSISTANCE OF, OR REVIEWED BY, INDEPENDENT ACCOUNTANTS. THE PROJECTIONS ARE INCLUDED IN THIS OFFER TO PURCHASE SOLELY BECAUSE SUCH INFORMATION WAS FURNISHED TO NUMICO AND THE PURCHASER BY THE COMPANY. THE PROJECTIONS WERE NOT PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND WERE NOT AUDITED OR REVIEWED BY ANY INDEPENDENT ACCOUNTING FIRM, NOR DID ANY SUCH FIRM PERFORM ANY OTHER SERVICES WITH RESPECT THERETO. THE PROJECTIONS ARE BASED ON A VARIETY OF ASSUMPTIONS RELATING TO THE BUSINESSES OF THE COMPANY, INDUSTRY PERFORMANCE, GENERAL BUSINESS AND ECONOMIC CONDITIONS AND OTHER MATTERS, WHICH ARE INHERENTLY SUBJECT TO SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL. THESE ASSUMPTIONS INVOLVE JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS, FUTURE ECONOMIC AND COMPETITIVE CONDITIONS, INFLATION RATES AND FUTURE BUSINESS CONDITIONS. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE ASSUMPTIONS MADE IN PREPARING THE PROJECTIONS WILL PROVE ACCURATE, AND ACTUAL RESULTS MAY BE MATERIALLY GREATER OR LESS THAN THOSE CONTAINED IN THE PROJECTIONS. THE INCLUSION OF THE PROJECTIONS HEREIN SHOULD NOT BE REGARDED AS AN INDICATION THAT THE COMPANY, NUMICO, THE PURCHASER OR THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES CONSIDERED OR CONSIDER THE PROJECTIONS TO BE A RELIABLE PREDICTION OF FUTURE EVENTS, AND THE PROJECTIONS SHOULD NOT BE RELIED UPON AS SUCH. NONE OF NUMICO, THE PURCHASER OR ANY OF THEIR RESPECTIVE AFFILIATES ASSUMES ANY RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS, ACCURACY OR COMPLETENESS OF THE PROJECTIONS. NONE OF NUMICO, THE PURCHASER OR THE COMPANY IS UNDER ANY OBLIGATION TO OR HAS ANY INTENTION TO UPDATE THE PROJECTIONS AT ANY FUTURE TIME. 13 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 14 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 15 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. 16 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, 17 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. 18 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. 19 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. 20 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 21 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. 22 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 23 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 24 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. 25 (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 26 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 27 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 28 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. 29 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 30 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 31 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 32 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 33 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. 34 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 35 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 36 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 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 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 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 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 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 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.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT NAME AND FIVE-YEAR EMPLOYMENT HISTORY - ---- ---------------------------------------------------------- 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.
A-1
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT NAME AND FIVE-YEAR EMPLOYMENT HISTORY - ---- ---------------------------------------------------------- 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.
A-2 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.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT NAME AND FIVE-YEAR EMPLOYMENT HISTORY - ---- ---------------------------------------------------------- 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.").
A-3 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.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT NAME AND FIVE-YEAR EMPLOYMENT HISTORY - ---- ---------------------------------------------------------- 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.
A-4 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: 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
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 -----END PRIVACY-ENHANCED MESSAGE-----