-----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, PT+Q0Ev1wb82+736vF2XVD8dbBxNdqGSl5LrUZLxVicHgfporjd325BBYVB33QPK eGxfVwT9ubLvAOdCNZX2Tw== 0001042910-98-000315.txt : 19980424 0001042910-98-000315.hdr.sgml : 19980424 ACCESSION NUMBER: 0001042910-98-000315 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19980422 SROS: NONE FILER: 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: S-3 SEC ACT: SEC FILE NUMBER: 333-50745 FILM NUMBER: 98599083 BUSINESS ADDRESS: STREET 1: 851 BROKEN SOUND PARKWAY N W CITY: BOCA RATON STATE: FL ZIP: 33487 BUSINESS PHONE: 5612419400 MAIL ADDRESS: STREET 1: 851 BROKEN SOUND PARKWAY NW CITY: BOCA RATON STATE: FL ZIP: 33487 S-3 1 REGISTRATION STATEMENT As filed with the Securities and Exchange Commission on April 22, 1998 Registration No. 333 - ____ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------- REXALL SUNDOWN, INC. (Exact Name of Registrant as Specified in its Charter) -------------- Florida 59-1688986 (State or Other Jurisdiction (I.R.S. Employer of Incorporation or Organization) Identification No.) 851 Broken Sound Parkway, NW Boca Raton, Florida 33487 (561) 241-9400 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) ---------------- Richard Werber, Esq. Vice President, General Counsel and Secretary Rexall Sundown, Inc. 851 Broken Sound Parkway, NW Boca Raton, Florida 33487 (561) 241-9400 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) ---------------- Copies of communications to: Paul Berkowitz, Esq. Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A 1221 Brickell Avenue Miami, Florida 33131 (305) 579-0500 ------------------ Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. ------------------- If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. |_| If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 (the "Securities Act"), other than securities offered only in connection with dividend or interest reinvestment plans, check the following box.|X| If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |_| _______________ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. |-| --------------- If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. |_| CALCULATION OF REGISTRATION FEE
Proposed Proposed Amount Maximum Offering Maximum Aggregate Amount of Title of Shares to be Price Per Share (1) Offering Price (1) Registration to be Registered Registered Fee Common Stock, $.01 par value 1,442,308 $34.40625 $49,624,410.00 $14,640.00
(1) Estimated solely for the purpose of calculating the registration fee, pursuant to Rule 457, on the basis of the average high and low sales prices of the Company's Common Stock on April 21, 1998, as reported by the Nasdaq National Market. - --------------------- The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. - -------------------------------------------------------------------------------- SUBJECT TO COMPLETION, DATED ____________, 1998 PROSPECTUS Information Contained Herein Is Subject To Completion Or Amendment. A Registration Statement Relating To These Securities Has Been Filed With The Securities And Exchange Commission. These Securities May Not Be Sold Nor May Offers To Buy Be Accepted Prior To The Time The Registration Statement Becomes Effective. This Prospectus Shall Not Constitute An Offer To Sell Or The Solicitation Of An Offer To Buy Nor Shall There Be Any Sale Of These Securities In Any State In Which Such Offer, Solicitation Or Sale Would Be Unlawful Prior To Registration Or Qualification Under The Securities Laws Of Any Such State. 1,442,308 Shares REXALL SUNDOWN, INC. Common Stock This Prospectus relates to an aggregate of 1,442,308 shares (the "Shares") of common stock, par value $.01 per share (the "Common Stock") of Rexall Sundown, Inc., a Florida corporation (the "Company"), which may be offered, from time to time by certain shareholders of the Company (the "Selling Shareholders"). The Company is registering the Shares on behalf of the Selling Shareholders but the registration of the Shares does not necessarily mean that any of the Shares will be offered or sold by the Selling Shareholders. See "Selling Shareholders." The Company will not receive any of the proceeds from the sale of Shares by the Selling Shareholders. The Company's Common Stock is quoted on the Nasdaq National Market under the symbol "RXSD." On April 21, 1998, the closing sale price of the Common Stock as reported by the Nasdaq National Market was $34.063 per share. The Company has been advised by the Selling Shareholders that they may sell all or a portion of the Shares offered hereby from time to time on the Nasdaq National Market or in the over-the-counter market in negotiated transactions, directly or through broker-dealers or otherwise, and that such Shares will be sold at market prices prevailing at the time of such sales or at negotiated prices. Such broker-dealers may receive compensation in the form of underwriting discounts, concessions or commissions from the Selling Shareholders and/or purchasers of the Shares for whom they may act as agent (which compensation may be in excess of customary commissions). To the extent required, the specific Shares to be sold, the respective purchase prices and public offering prices, names of such agent, dealer or underwriter, and any applicable commissions or discounts with respect to a particular offer, will be set forth in an accompanying Prospectus Supplement or, if appropriate, a post-effective amendment to the Registration Statement of which this Prospectus is a part. In connection with such sales, the Selling Shareholders and any broker-dealers participating in such sales may be deemed to be underwriters as that term is defined under the Securities Act of 1933, as amended (the "Securities Act"). Neither the Company nor the Selling Shareholders can presently estimate the amount of commissions or discounts, if any, that will be paid by the Selling Shareholders on account of sales of the Shares from time to time. In addition, the Company has agreed to indemnify the Selling Shareholders against certain liabilities, including liabilities under the Securities Act. See "Plan of Distribution." The Company will pay all the expenses incurred in registering the Shares, other than underwriting and brokerage commissions, discounts and fees. The Company will pay all counsel fees and expenses incurred by the Selling Shareholders in connection with the offering hereby up to $20,000. The Shares are being registered at the request of the Selling Shareholders pursuant to a Registration Rights Agreement between the Selling Shareholders and the Company entered into in connection with the acquisition of Richardson Labs, Inc. by the Company in January 1998. See "Risk Factors" beginning on Page 4 for a discussion of certain factors that should be considered by prospective investors of the Shares offered hereby. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is ___________, 1998 1 AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information filed by the Company may be inspected and copied (at prescribed rates) at the public reference facilities maintained by the Commission at 450 Fifth Street, NW, Room 1024, Washington, D.C. 20549 and at the following regional offices of the Commission: 7 World Trade Center, Suite 1300, New York, New York 10048; 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and 3475 Lenox Road, NE, Suite 1000, Atlanta, Georgia 30326. In addition, such reports, proxy statements and other information can be obtained from the Commission's web site at http://www.sec.gov. Quotations relating to the Company's Common Stock appear on the Nasdaq National Market. Such reports, proxy statements and other information concerning the Company can also be inspected at the offices of the National Association of Securities Dealers, Inc., 1735 K Street, NW, Washington, D.C. 20006. The Company has filed with the Commission a Registration Statement on Form S-3 (the "Registration Statement") under the Securities Act, with respect to the shares of Common Stock offered hereby. This Prospectus, which is a part of the Registration Statement, does not contain all the information set forth in, or annexed as exhibits to, such Registration Statement, certain portions of which have been omitted pursuant to rules and regulations of the Commission. For further information with respect to the Company and the shares of Common Stock offered hereby, reference is hereby made to such Registration Statement, including the exhibits thereto. Copies of such Registration Statement, including exhibits, may be obtained from the aforementioned public reference facilities of the Commission upon payment of the prescribed fees, examined at no charge at such facilities or downloaded at no charge from the Commission's web site listed above. Statements contained herein concerning any document filed as an exhibit are not necessarily complete and, in each instance, reference is made to the copy of such document filed as an exhibit to the Registration Statement. Each such statement is qualified in its entirety by such reference. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by the Company with the Commission under the Exchange Act are incorporated in and made a part of this Prospectus by reference: (a) the Company's Annual Report on Form 10-K for the fiscal year August 31, 1997; (b) the Company's Current Report on Form 8-K dated February 11, 1998, as amended on Form 8-K/A dated March 13, 1998; (c) the Company's Proxy Statement dated December 29, 1997; (d) the Company's Quarterly Reports on Form 10-Q for the fiscal quarters ended November 30, 1997 and February 28, 1998; and (e) the description of the Common Stock contained in the Company's Registration Statement on Form 8-A dated June 7, 1993 (Registration No. 0-21884). All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and prior to the termination of this offering shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein, or in any other subsequently filed documents, which also are incorporated or deemed to be incorporated by reference herein, modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. 2 This Prospectus incorporates documents by reference which are not presented herein or delivered herewith. The Company hereby undertakes to provide, without charge, to each person, including any beneficial owner, to whom a copy of this Prospectus is delivered, on the written or oral request of such person, a copy of any or all of the information incorporated herein by reference. Exhibits to any of such documents, however, will not be provided unless such exhibits are specifically incorporated by reference into such documents. The requests should be addressed to the Company's principal executive offices: Attn: Secretary, 851 Broken Sound Parkway, NW, Boca Raton, Florida 33487, telephone number (561) 241-9400. THE COMPANY General Rexall Sundown, Inc. (the "Company") develops, manufactures, markets and sells vitamins, nutritional supplements and consumer health products through three channels of distribution: sales to retailers, direct sales through independent distributors and mail order. The Company offers a broad product line of approximately 1,300 products consisting of approximately 1,900 stock keeping units ("SKUs"), including vitamins in both multivitamin and single-entity formulas, minerals, herbals, homeopathic remedies, weight management products, skin care products and over-the-counter ("OTC") pharmaceuticals. The Company was incorporated in the State of Florida in 1976. The Company's principal executive offices are located at 851 Broken Sound Parkway, NW, Boca Raton, Florida 33487, and its telephone number is (561) 241-9400. As used herein, the "Company" means Rexall Sundown, Inc. and its subsidiaries, except where the context indicates otherwise. Recent Developments On January 29, 1998, the Company consummated a merger with Richardson Labs, Inc. ("Richardson"), located at 3475 Commercial Court, Meridian, Idaho 83642, whereby the Company issued 2,884,616 shares of Common Stock, to Richardson's stockholders in exchange for all of the outstanding shares of common stock of Richardson. Richardson develops, markets and sells a broad line of dietary supplements consisting of approximately 100 SKUs primarily in diet and weight management, women's and children's health and sports nutrition. Distribution of its products occurs through the mass market, including mass merchandisers, drug stores and grocery stores and specialty stores, including health food retailers, natural product supermarkets and vitamin stores. The transaction was accounted for as a pooling of interests and, accordingly, the Company's financial statements will include the financial position and results of operations of Richardson for all periods presented. Net sales and pro forma income (includes a pro forma adjustment for income taxes 3 related to the Subchapter S status of Richardson) of the Company, Richardson and the combined companies for the year ended August 31, 1997, 1996 and 1995 are as follows:
Fiscal year ended August 31, ---------------------------------------------------- 1997 1996 1995 ---- ---- ---- Net sales: Rexall Sundown $ 263,369 $ 187,040 $ 148,734 Richardson 27,254 28,978 19,803 ---------- ---------- ---------- Combined $ 290,623 $ 216,018 $ 168,537 ========== ========== ========== Pro forma income from continuing operations: Rexall Sundown $ 35,061 $ 20,293 $ 12,338 Richardson 2,115 2,760 10 ----------- ----------- ----------- Combined $ 37,176 $ 23,053 $ 12,348 =========== =========== =========== Diluted income per share from continuing operations: Historical as previously reported $ 0.52 $ 0.33 $ 0.21 ============= ============= ============= Pro forma with Richardson $ 0.53 $ 0.36 $ 0.20 ============= ============= ============= Weighted average common shares outstanding: Basic 68,572 63,108 61,558 ============= ============= ============= Diluted 70,792 64,337 61,879 ============= ============= =============
RISK FACTORS The Shares offered hereby involve a high degree of risk, including the risks described below. Prospective investors should carefully consider the specific factors set forth below, as well as the other information contained in this Prospectus, before deciding to invest in the Common Stock offered hereby. This Prospectus contains certain "forward-looking statements" within the meaning of section 27A of the Securities Act of 1933, as amended (the "Securities Act"), which represent the Company's expectations or beliefs, including, but not limited to, statements concerning industry performance, the Company's operations, economic performance, financial condition, growth and acquisition strategies and margins and growth in sales of the Company's products. For this purpose, any statements contained in this Prospectus that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intend," "estimate" or "continue" or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, certain of which are beyond the Company's control, and actual results may differ materially depending on a variety of important factors, including those described below under this "Risk Factors" section and elsewhere in this Prospectus. Uncertainty Related to Acquisitions The Company intends to continue to pursue the acquisition of complementary products, product lines or businesses. Acquisitions involve a number of risks that could adversely affect the Company's operating results, including the diversion of management's attention, the assimilation of operations and personnel of the acquired companies, the amortization of acquired 4 intangible assets and the potential loss of key employees of the acquired companies. There can be no assurance that the Company will consummate future acquisitions on satisfactory terms, if at all, that adequate financing will be available on terms acceptable to the Company, if at all, that any acquired products, product lines or businesses will be successfully integrated or that such products, product lines or businesses will ultimately have a positive impact on the Company, its financial condition or results of operations. Government Regulation The manufacturing, processing, formulation, packaging, labeling and advertising of the Company's products are subject to regulation by one or more federal agencies, including the United States Food and Drug Administration ("FDA"), the Federal Trade Commission ("FTC"), the Consumer Product Safety Commission, the United States Department of Agriculture, the United States Postal Service, the United States Environmental Protection Agency and the Occupational Safety and Health Administration. These activities are also regulated by various agencies of the states and localities in which the Company's products are sold. In particular, the FDA regulates the safety, labeling and distribution of dietary supplements, including vitamins, minerals, herbs, food, OTC and prescription drugs and cosmetics. The regulations that are promulgated by the FDA relating to the manufacturing process are known as Current Good Manufacturing Practices ("CGMPs"), and are different for drug and food products. In addition, the FTC has overlapping jurisdiction with the FDA to regulate the labeling, promotion and advertising of vitamins, OTC drugs, cosmetics and foods. The Dietary Supplement Health and Education Act of 1994 ("DSHEA") was enacted on October 25, 1994. DSHEA amends the Federal Food, Drug and Cosmetic Act by defining dietary supplements which include vitamins, minerals, nutritional supplements and herbs, as a new category of food separate from conventional food. DSHEA provides a regulatory framework to ensure safe, quality dietary supplements and the dissemination of accurate information about such products. Under DSHEA, the FDA is generally prohibited from regulating the active ingredients in dietary supplements as drugs unless product claims, such as claims that a product may heal, mitigate, cure or prevent an illness, disease or malady, trigger drug status. DSHEA provides for specific nutritional labeling requirements for dietary supplements and FDA's final regulations require that all dietary supplements must be labeled in compliance with the regulations by no later than March 23, 1999. DSHEA permits substantiated, truthful and non-misleading statements of nutritional support to be made in labeling, such as statements describing general well-being resulting from consumption of a dietary ingredient or the role of a nutrient or dietary ingredient in affecting or maintaining a structure or function of the body. The Company anticipates that the FDA will finalize CGMPs which are specific to dietary supplements and require at least some of the quality control provisions contained in the CGMPs for drugs. The Company currently manufactures its vitamins and nutritional supplement products in compliance with the applicable food CGMPs. The FDA has finalized some of its regulations, including those relating to nutritional labeling requirements. The FDA also has under development additional regulations to implement DSHEA. Final labeling regulations require expanded or different labeling for the Company's vitamin and nutritional products. The Company cannot determine what effect such regulations, when fully implemented, will have on its business in the future. Such regulations could, among other things, require the recall, reformulation or discontinuance of certain products, additional recordkeeping, warnings, notification procedures and expanded documentation of the properties of certain products and scientific substantiation regarding ingredients, product claims, safety or efficacy. Failure to comply with applicable FDA requirements can result in sanctions being imposed on the Company or the manufacturers of its products, including, warning letters, fines, product recalls and seizures. Governmental regulations in foreign countries where the Company plans to commence or expand sales may prevent or delay entry into a market or prevent or delay the introduction, or require the reformulation, of certain of the Company's products. The Company's network marketing subsidiary, Rexall Showcase International, Inc. ("Rexall Showcase"), is subject to regulation under various international, state and local laws which include provisions regulating, among other things, the operation of direct sales programs. In addition, many 5 countries currently have laws that would restrict or prohibit direct sales companies, such as Rexall Showcase, from conducting business therein. In addition, the Company cannot predict whether new domestic or foreign legislation regulating its activities will be enacted. Such new legislation could have a material adverse effect on the Company. Managing and Maintaining Growth The Company is currently experiencing a period of rapid growth and expansion which has placed, and could continue to place, a significant strain on the Company's management, customer service and support operations, sales and administrative personnel and other resources. In order to serve the needs of its existing and future customers, the Company has substantially increased and will continue to increase its workforce, which requires the Company to attract, train, motivate and manage qualified employees. The Company's ability to manage its planned growth requires the Company to continue to expand its operating, management, information and financial systems, all of which may significantly increase its operating expenses. If the Company fails to achieve its growth as planned or is unsuccessful in managing its anticipated growth, there could be a material adverse effect on the Company. In addition, the Company's retail customers are not generally bound to purchase products from the Company for any significant length of time. Although the Company has entered into agreements with certain of its retail customers, these agreements can generally be canceled on short notice without cause and with minimal or no liability to such customers. The loss of a significant customer or a number of customers, or a significant reduction in purchase volume by or financial difficulty of such customers, for any reason, could have a material adverse effect on the Company. Effect of Adverse Publicity The Company's products consist of vitamins, minerals, herbs and other ingredients that the Company regards as safe when taken as suggested by the Company and that various scientific studies have suggested may involve health benefits. While the Company conducts extensive quality control testing on its products, the Company generally does not conduct or sponsor clinical studies relating to the benefits of its products. The Company is highly dependent upon consumers' perception of the overall integrity of its business, as well as the safety and quality of its products and similar products distributed by other companies which may not adhere to the same quality standards as the Company. The Company could be adversely affected if any of the Company's products or any similar products distributed by other companies should prove or be asserted to be harmful to consumers or should scientific studies provide unfavorable findings regarding the effectiveness of the Company's products. Rexall Showcase's ability to attract and retain independent distributors could be adversely affected by negative publicity relating to it or to other direct sales organizations or by the announcement by any governmental agency of investigatory proceedings regarding the business practices of Rexall Showcase or other direct sales organizations. Reliance on Independent Distributors of Rexall Showcase Rexall Showcase's sales are directly dependent upon the efforts of its independent distributors, and any growth in sales volume will require an increase in the productivity or the number of such distributors. As is typical in the direct sales industry, there is turnover in distributors from year to year, which requires the sponsoring and training of new distributors by existing distributors in order to maintain the size of the distributor network. The Company experiences seasonal decreases in distributor sponsoring and product sales due to summer and winter holiday periods. Other factors such as general economic conditions and negative publicity relating to Rexall Showcase or other direct sales organizations could also adversely affect the ability of Rexall Showcase to maintain or expand its distributor network. The loss of a key distributor or group of distributors could adversely affect sales of Rexall Showcase products and impair Rexall Showcase's ability to attract new distributors. 6 Centralized Location of Manufacturing Operations; Availability of Raw Materials The Company currently manufactures and packages substantially all of its products at its manufacturing facilities in Boca Raton and Deerfield Beach, Florida, and, until the opening of its distribution facility in Sparks, Nevada, distributed all of its products from its two distribution facilities in Boca Raton. In addition, as part of the Company's recent acquisition of Richardson, the Company also has a packaging and distribution facility in Meridian, Idaho. Accordingly, any event resulting in the slowdown or stoppage of the Company's manufacturing operations or distribution facilities in southern Florida could have a material adverse effect on the Company. The Company maintains business interruption insurance. There can be no assurance, however, that such insurance will continue to be available at a reasonable cost or, if available, will be adequate to cover any losses that may be incurred from an interruption in the Company's manufacturing and distribution operations. Most of the raw materials in the Company's products are obtained from third-party suppliers. Although the Company believes that all of its sources for raw materials are reliable, any interruption of such supply could have a material adverse effect on the Company. Risks Associated with International Operations An element of the Company's future growth strategy is to increase the distribution and sale of the Company's products into international markets. The Company's existing and planned international operations are subject to political and economic uncertainties, including, among other things, inflation, risk of renegotiation or modification of existing agreements or arrangements with governmental authorities, transportation, tariffs, export controls, government regulation, trademark availability and registration issues, currency exchange rate fluctuations, foreign exchange restrictions which limit the repatriation of investments and earnings therefrom, changes in taxation, hostilities or confiscation of property. Changes related to these matters could have a material adverse effect on the Company. Competition The market for the sale of vitamins and nutritional supplements is highly competitive. Competition is based principally upon price, quality of products and marketing support. There are numerous companies in the vitamin and nutritional supplement industry selling products to retailers, including mass merchandisers, drug store chains, independent drug stores, supermarkets and health food stores. Most of these companies are privately held and the Company is unable to precisely assess the size of such competitors. No company is believed to control more than 10% of this market. The market for OTC pharmaceuticals and health and beauty care products is also highly competitive. Competition is based principally upon price, quality of products, customer service and marketing support. The Rexall brand competes with nationally advertised brand name products and private label products. Although Rexall Showcase competes with other health and nutritional food companies, the Company believes its primary competition stems from other direct sales companies. The Company competes in the recruitment of independent sales people with other direct sales organizations whose product lines may or may not compete with the Company's products. Certain of the Company's competitors are substantially larger than the Company and have greater financial resources. Product Liability Claims As a marketer of vitamin and nutritional supplements and other products that are ingested by consumers or applied to their bodies, the Company may be subjected to various product liability claims, including, among others, that its products contain contaminants or include inadequate instructions as to use or inadequate warnings concerning side effects and interactions with other 7 substances. While such claims to date have not been material to the Company and the Company maintains product liability insurance, there can be no assurance that product liability claims and the resultant adverse publicity will not have a material adverse effect on the Company. Potential Year 2000 Issues The Company has initiated a Company-wide task force to review and evaluate the Year 2000 issue as it relates to its internal computer systems and third party computer systems as well as those of its vendors. The Company expects to incur internal staff costs as well as consulting and other expenses related to these issues. In addition, the appropriate course of action may include a replacement or an upgrade of certain systems or equipment. The Company believes the cost of such remedial corrective actions will not be material to the Company's financial position, results of operations or cashflows. The task force is also working with the Company's vendors who are at various stages in analyzing this issue; there can be no assurance that the systems of other companies on which the Company's systems rely or interface with will also be timely converted. The Company will continue to evaluate the appropriate courses of corrective action as needed. Concentration of Ownership; Certain Anti-takeover Considerations The Company's directors and executive officers and certain of its affiliates beneficially own approximately 52% of the outstanding Common Stock, substantially all of which are beneficially owned or controlled by Carl DeSantis, Dean DeSantis and Damon DeSantis. Accordingly, these shareholders will continue to have the ability to elect all of the directors of the Company and to thereby direct or substantially influence the management, policies and business operations of the Company and will have the power to control the outcome of any matters submitted to a vote of the Company's shareholders. The Company's Board of Directors has the authority to approve the issuance of 5,000,000 shares of preferred stock and to fix the rights, preferences, privileges and restrictions, including voting rights, of those shares without any further vote or action by the Company's shareholders. The rights of the holders of Common Stock will be subject to, and may be adversely affected by, the rights of holders of any preferred stock that may be issued in the future. Certain provisions of Florida law, as well as the issuance of preferred stock, could delay or inhibit the removal of incumbent directors and could delay, defer, make more difficult or prevent a merger, tender offer or proxy contest, or any change in control involving the Company, as well as the removal of management, even if such events would be beneficial to the interests of the Company's shareholders, and may limit the price certain investors may be willing to pay in the future for shares of Common Stock. Volatility of Stock Price The Company's stock price has experienced significant volatility over the past several years. Moreover, the stock market has from time to time experienced extreme price and volume fluctuations which may be unrelated to the operating performance of particular companies. Market conditions in the vitamin and nutritional supplement industry and factors such as announcements of new products by the Company, its competitors or third parties, and changes in earnings estimates by analysts may have a significant effect on the price of the Common Stock. USE OF PROCEEDS The Company will not receive any of the proceeds from the sale of the Shares being offered by the Selling Shareholders hereunder. Expenses expected to be incurred by the Company in connection with this offering are estimated at approximately $30,000. See "Selling Shareholders." 8 SELLING SHAREHOLDERS All of the Shares offered hereby were acquired by the Selling Shareholders in connection with the sale of their ownership interest in Richardson to the Company. The following table sets forth certain information with respect to the beneficial ownership of the Common Stock by the Selling Shareholders.
Number of Number of Shares Ownership of Shares of Name and Address of Shares Owned Offered Hereby Common Stock After Selling Shareholder (1) Prior to Offering Offering (2) - -------------------- ----------------- ------------ Shares Percentage Shares Percentage ------ ---------- ------ ---------- Abraham & Sons, LLC (3) 2,163,462 3.0% 721,154 1,442,308 2.0% Priddy Brothers Holdings, Inc. (3)(4) 721,154 1.0% 721,154 0 * - -------------------------------- * Less than 1%.
(1) The address of Abraham & Sons, LLC and Priddy Brothers Holdings, Inc. is 3475 Commercial Court, Meridian, Idaho 83642. (2) Assumes all Shares registered hereby are sold. Since the Selling Shareholders may sell all, some or none of their Shares, no actual estimate can be made of the aggregate number of Shares that are to be offered hereby or the number or percentage of Shares that each Selling Shareholder will own upon completion of the offering to which this Prospectus relates. (3) Abraham & Sons, LLC is a limited liability company that is wholly-owned by a charitable trust that is controlled by Ed Priddy, the Executive Vice President, Chief Operating Officer and Chief Financial Officer of Richardson, Mark Priddy, the Executive Vice President and Chief Executive Officer of Richardson and John Priddy, the President of Richardson. Each of Ed, Mark and John Priddy is a Vice President of the Company and John Priddy is also a Director of the Company. (4) Ed Priddy, Mark Priddy and John Priddy are the sole stockholders of Priddy Brothers Holdings, Inc. with each owning one-third of the outstanding shares thereof. PLAN OF DISTRIBUTION The Selling Shareholders have advised the Company that they may from time to time sell all or part of the Shares in one or more transactions in the over-the-counter market or on the Nasdaq National Market, in negotiated transactions, or a combination of such methods of sale, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. The Selling Shareholders may effect such transactions by selling the Shares to or through broker-dealers, and such broker-dealers may receive compensation in the form of underwriting discounts, concessions or commissions from the Selling Shareholders and/or purchasers of the Shares from whom they may act as agent (which compensation may be in excess of customary commissions). In connection with such sales, the Selling Shareholders and any broker-dealers or agents participating in such sales may be deemed to be underwriters as that term is defined under the Securities Act. Neither the Company nor the Selling Shareholders can presently estimate the amount of commissions or discounts, if any, that will be paid by the Selling Shareholders on account of their sale of Common Stock from time to time. Under the securities laws of certain states, the Shares may be sold in such states only through registered or licensed brokers or dealers. In addition, in certain states the Shares may not be sold unless the Shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is satisfied. 9 The Company will pay all of the expenses, estimated to be approximately $30,000 (which includes all counsel fees and expenses of the Selling Shareholders in connection with the offering hereby), incident to the registration, offer and sale of the Shares to the public hereunder other than commissions, fees and discounts of underwriters, brokers, dealers and agents. The Company has agreed to indemnify the Selling Shareholders and any underwriters against certain liabilities, including liabilities under the Securities Act. The Selling Shareholders have also agreed to indemnify the Company, its directors, officers, agents and representatives against certain liabilities, including liabilities under the Securities Act. The Company will not receive any of the proceeds from the sale of any of the Shares by the Selling Shareholders. The Company has advised the Selling Shareholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of Shares in the market and to the activities of the Selling Shareholders and their affiliates. In addition, the Company will make copies of this Prospectus available to the Selling Shareholders and has informed them of the need for delivery of copies of this Prospectus to purchasers at or prior to the time of any sale of the Shares offered hereby. The Selling Shareholders may indemnify any broker-dealer that participates in transactions involving the sale of the Shares against certain liabilities, including liabilities arising under the Securities Act. At the time a particular offer of Shares is made, if required, a Prospectus Supplement will be distributed that will set forth the number of Shares being offered and the terms of the offering, including the name of any underwriter, dealer or agent, the purchase price paid by any underwriter, any discount commission and other item constituting compensation, any discount, commission or concession allowed or reallowed or paid to any dealer, and the proposed selling price to the public. The Company has agreed with the Selling Shareholders to use its best efforts to keep the Registration Statement of which this Prospectus constitutes a part effective for a period of time equal to the earlier of the disposition of the Shares or such time as all of the Shares constituting consideration for Richardson may be sold in one transaction under Rule 144 of the Securities Act. The Company intends to de-register any of the Shares not sold by the Selling Shareholders at the end of such period; however, at such time any unsold Shares will be freely tradable subject to compliance with Rule 144. At the time a particular offer of Shares is made, to the extent required, a supplement to this Prospectus will be distributed which will identify and set forth the aggregate number of Shares being offered and the terms of the offering, including the name or names of any underwriters, dealers or agents, the purchase price paid by any underwriter for Shares purchased from the Selling Shareholders, any discounts, commissions and other items constituting compensation from the Selling Shareholders and/or the Company and any discounts, commissions or concessions allowed or reallowed or paid to dealers, including the proposed selling price to the public. Such supplement to this Prospectus and, if necessary, a post-effective amendment to the Registration Statement of which this Prospectus is a part, will be filed with the Commission to reflect the disclosure of additional information with respect to the distribution of the Shares. LEGAL MATTERS The validity of the shares of Common Stock being offered hereby is being passed upon for the Company by Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A., 1221 Brickell Avenue, Miami, Florida 33131. EXPERTS The financial statements of the Company incorporated in this Prospectus by reference to the Company's Annual Report on Form 10-K for the year ended August 31, 1997, have been incorporated herein in reliance upon the report of Coopers & Lybrand L.L.P., independent accountants, given on the authority of that firm as experts in accounting and auditing. 10 - ------------------------------------------------------------------------------- ----------------------------- No dealer, salesperson or any other person has been authorized to give any 1,442,308 Shares information or to make any representation not contained in this Prospectus in connection with this offering, and, if given or made, such information or representation must not be relied upon as having been authorized by the Company, the Selling Shareholders or the Underwriters. This Prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities Rexall Sundown, Inc. other than the registered securities to which it relates, or an offer to sell or solicitation of an offer to buy such securities in any jurisdiction where, or to any person to whom, it is unlawful to make such an offer or solicitation. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date hereof or that the information contained herein is correct as of any time subsequent to the date hereof. ------------------------------ TABLE OF CONTENTS PROSPECTUS Page ______________________________ Available Information...................................................................2 Incorporation Of Certain Documents By Reference...............................2 The Company.......................................................................3 Risk Factors.......................................................................4 April __, 1998 Use Of Proceeds......................................................................8 Selling Shareholders..................................................................9 Plan of Distribution..................................................................9 Legal Matters......................................................................10 Experts......................................................................10 - ------------------------------------------------------------------------------- -------------------------------
PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution. The Company will pay all of the expenses incurred in connection with the offering described in this registration statement. Such expenses are estimated to be as follows: Securities and Exchange Commission registration fee...................$14,640.00 Legal fees and expenses...............................................$ 5,000.00 Accounting fees and expenses..........................................$ 7,500.00 Miscellaneous.........................................................$ 2,860.00 Total............................................................$30,000.00 Item 15. Indemnification of Directors and Officers. ------------------------------------------ The Company has authority under the Florida Business Corporation Act to indemnify its directors and officers to the extent provided for in such statute. The Company's Amended and Restated Articles of Incorporation require the Company to indemnify the Company's directors, officers, employees and agents. Insofar as indemnification for liabilities under the Securities Act may be permitted to directors, officers or persons controlling the Company, pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. The Company also maintains directors' and officers' liability insurance. Item 16. Exhibits -------- Exhibit Number Description - ------- ----------- 5.1 Opinion of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. 23.1 Consent of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. (contained in Exhibit 5.1 hereto) 23.2 Consent of Coopers & Lybrand L.L.P. 24.1 Power of Attorney (Reference is made to page II-3 of this Registration Statement. Item 17. Undertakings. ------------- (a) The undersigned Registrant hereby undertakes that: (1) It will include any additional or changed material information on the plan of distribution. (2) For determining liability under the Securities Act, each post-effective amendment shall be treated as a new registration statement of the securities offered, and the offering of such securities at that time to be the initial bona fide offering. (3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering. II-1 (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-2 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Boca Raton, State of Florida, on this 21st day of April, 1998. REXALL SUNDOWN, INC. By: /s/ Christian Nast --------------------------------------- Christian Nast, Chief Executive Officer and Director POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Carl DeSantis, Christian Nast and Geary Cotton, and each of them, his true and lawful attorney-in- fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments, including post-effective amendments, to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date /s/ Carl DeSantis Chairman of the Board April 21, 1998 - ---------------------------------------------- Carl DeSantis /s/Christian Nast Director and Chief Executive Officer April 21, 1998 - ---------------------------------------------- Christian Nast /s/Damon DeSantis Director and President April 21, 1998 - ---------------------------------------------- Damon DeSantis /s/ Geary Cotton Vice President - Finance, Chief April 21, 1998 - ---------------------------------------------- Financial Officer, Treasurer and Chief Geary Cotton Accounting Officer /s/ Nickolas Palin Director and President - April 21, 1998 - ---------------------------------------------- Sundown Vitamins Nickolas Palin /s/ Dean DeSantis Director April 21, 1998 - ---------------------------------------------- Dean DeSantis II-3 /s/ John Priddy Director and President of April 21, 1998 - ---------------------------------------------- Richardson Labs, Inc. John Priddy /s/ Stanley Leedy Director April 21, 1998 - ---------------------------------------------- Stanley Leedy ________________________________ Director April __, 1998 Raymond Monteleone /s/ Melvin Stith Director April 21, 1998 - ---------------------------------------------- Melvin Stith
II-4 EXHIBIT INDEX Number Description 5.1 Opinion of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. 23.1 Consent of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. (contained in Exhibit 5.1 hereto) 23.2 Consent of Coopers & Lybrand L.L.P. 24.1 Power of Attorney (Reference is made to page II-3 of this Registration Statement). EX-5.1 2 LEGAL OPINION Paul Berkowitz 305-579-0685 April 21, 1998 Rexall Sundown, Inc. 851 Broken Sound Parkway, N.W. Boca Raton, Florida 33487 Re: Registration Statement on Form S-3 ---------------------------------- Ladies and Gentlemen: We have acted as counsel to Rexall Sundown, Inc., a Florida corporation (the "Company"), in connection with the registration statement on Form S-3 (the "Registration Statement") being filed by the Company under the Securities Act of 1933, as amended, with respect to 1,442,308 shares (the "Shares") of the Company's common stock, par value $.01 per share (the "Common Stock"), offered by the Company and certain Selling Shareholders. In connection with the Registration Statement, we have examined, considered and relied upon the following documents (collectively, the "Documents"): the Registration Statement; the Company's Articles of Incorporation and Bylaws, as amended to date; records of corporate proceedings of the Company and such other documents and instruments and such matters of law as we have considered necessary or appropriate for the expression of the opinions contained herein. In rendering the opinions set forth below, we have assumed without investigation the genuineness of all signatures and the authenticity of all documents submitted to us as originals, the conformity to authentic original documents of all documents submitted to us as copies, and the veracity of the Documents. As to questions of fact material to the opinions expressed herein, we have relied upon documents, records and instruments furnished to us by the Company, without independently verifying the accuracy of such documents, records and instruments. Based upon the foregoing examinations, and subject to the qualifications set forth below, we are of the opinion that the Shares to be sold by the Selling Shareholders pursuant to the Registration Statement have been duly authorized and issued and are fully paid and non-assessable. Although we have acted as counsel to the Company in connection with certain other matters, our engagement is limited to matters about which we have been consulted. Consequently, there exist matters of a legal nature involving the Company in which we have not been consulted and have not represented the Company. This opinion letter is limited to the matters stated herein and no opinions may be implied or inferred beyond the matters expressly Rexall Sundown, Inc. April 21, 1998 Page 2 stated herein. The opinions expressed herein are given as of this date, and we assume no obligation to update or supplement our opinions to reflect any facts or circumstances that may come to our attention or any change in law that may occur or become effective at a later date. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us under the caption "Legal Matters" in the Prospectus contained in the Registration Statement. In giving such consent, we do not admit that we are included within the category of persons whose consent is required under Section 7 of the Act or the rules and regulations promulgated thereunder. Very truly yours, GREENBERG TRAURIG HOFFMAN LIPOFF ROSEN & QUENTEL, P.A. By:/s/ Paul Berkowitz ------------------------------------ Paul Berkowitz EX-23.2 3 CONSENT OF INDEPENDENT AUDITORS CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in this registration statement of Rexall Sundown, Inc. on Form S-3 of our report dated October 10, 1997, on our audits of the consolidated financial statements of Rexall Sundown, Inc. as of August 31, 1997 and 1996, and for the years ended August 31, 1997, 1996 and 1995, which report is included in the Company's Annual Report on Form 10-K for the year ended August 31, 1997. We also consent to the reference to our firm under the caption "Experts." Coopers & Lybrand L.L.P. Miami, Florida April 22, 1998 -----END PRIVACY-ENHANCED MESSAGE-----