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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
(AMENDMENT NO. 1)
Solicitation/Recommendation Statement under Section 14(d)(4) of the
Securities Exchange Act of 1934
REXALL SUNDOWN, INC.
(Name of Subject Company)
REXALL SUNDOWN, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
761648104
(CUSIP Number of Class of Securities)
------------------------
XXXXXXX XXXXXX, ESQ.
VICE PRESIDENT AND GENERAL COUNSEL
REXALL SUNDOWN, INC.
0000 XXXXXX XXXXX XXXXXXX, XX
XXXX XXXXX, XXXXXXX 00000
(000) 000-0000
(Name, Address and Telephone Number of Person Authorized to Receive Notice
and Communications on Behalf of the Person(s) Filing Statement)
------------------------
WITH A COPY TO:
XXXX XXXXXXXXX, ESQ.
XXXXXXXXX XXXXXXX, P.A.
0000 XXXXXXXX XXXXXX
XXXXX, XXXXXXX 00000
(000) 000-0000
/ / Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
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INTRODUCTION
This Amendment No. 1 to the Solicitation/Recommendation Statement on
Schedule 14D-9 initially filed with the Securities and Exchange Commission on
May 5, 2000 (as amended, the "Schedule 14D-9") of Rexall Sundown, Inc., a
Florida corporation ("Company"), relates to the offer by Nutricia Investment
Corp., a Florida corporation (the "Purchaser") and an indirect wholly owned
subsidiary of Koninklijko Numico N.V., a company incorporated under the laws of
the Netherlands ("Numico"), to purchase all of the outstanding shares of Common
Stock (as defined below) of the Company, pursuant to an Agreement and Plan of
Merger dated as of April 30, 2000, among the Company, Numico and the Purchaser
(the "Merger Agreement") for a purchase price of $24.00 per share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated May 5, 2000, and in the
related Letter of Transmittal. This Schedule 14D-9 is being filed on behalf of
the Company. Capitalized terms not defined herein have the meanings set forth in
the Schedule 14D-9 filed on May 5, 2000.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
Item 4(b)(i) of the Schedule 14D-9 is hereby amended and supplemented to
include the following immediately prior to the last paragraph thereof:
"On May 17, 2000, the waiting period under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976 expired. No further approvals or
clearances relating to antitrust laws are required in connection with the
Offer or Merger.
On May 22, 2000, the Board met and was briefed by counsel and Company
management as to the status of the litigation captioned XXXXXXXX
XXXXXXXXXXX V. XXXX XXXXXXXX, ET AL, Case No. CL00-4284AO pending before
the Circuit Court of the 15th Judicial Circuit, in and for Palm Beach
County, Florida (the 'Litigation') and the proposed settlement thereof on
the terms set forth in Item 8 hereof, including, among other things,
amendments to the Merger Agreement (the 'Amendment') providing for:
(a) the reduction of the Termination Fee set forth in the Merger
Agreement from U.S. $65 million to U.S. $50 million and the reduction of
the maximum transaction expense reimbursement payable by the Company to
Numico in connection with a termination of the Merger Agreement from
U.S. $14 million to U.S. $10 million; and (b) notwithstanding the fact
that the Florida Business Corporation Act (the 'FBCA') might not provide
dissenters' rights to shareholders of the Company in connection with the
Merger, granting all shareholders complying with the procedural
requirements of Section 607.1320 of the FBCA such dissenters' rights.
Management also reported to the Board that since the May 1, 2000
public announcement of the signing of the Merger Agreement, there had
been no expression of interest, offer or proposal to acquire all or more
than 15% of the Company's businesses, assets or capital shares whether by
merger, consolidation, other business combination, purchase of assets,
reorganization, tender or exchange offer or otherwise.
At such meeting, the Board unanimously approved the Amendment, a copy
of which is filed as Exhibit (e)(14) to the Schedule 14D-9 and is
incorporated herein by reference, subject to the approval by the parties
of the conditional settlement of the Litigation, as described in Item 8
below.
On May 25, 2000, following the approval by the parties of the
conditional settlement of the Litigation, as described in Item 8 below,
the Company, the Purchaser and Numico executed the Amendment."
ITEM 5. PERSON/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
The second paragraph of this item is amended to read in its entirety as
follows:
"Pursuant to the Xxxxxx Xxxxxxx Engagement Letter, the Company has
agreed to pay Xxxxxx Xxxxxxx a transaction fee, based on the aggregate
value of the transaction, of approximately $10,750,000. This fee is
payable only upon the closing of the Offer. The payment of the fee does
not depend on whether Xxxxxx Xxxxxxx delivers its fairness opinion and no
additional fee is payable to Xxxxxx Xxxxxxx in respect of such fairness
opinion."
ITEM 8. ADDITIONAL INFORMATION.
Item 8 of the Schedule 14D-9 is hereby amended and supplemented as
follows:
The following paragraphs are added to Item 8(d):
"On May 16, 2000, the Court denied without prejudice plaintiff's
motion to conduct expedited discovery in anticipation of seeking to
enjoin preliminarily consummation of the Merger. On May 19, 2000,
plaintiff renewed his motion for expedited discovery and filed a motion
to enjoin preliminarily the Company and the Company's directors from
proceeding to consummate the Merger.
Plaintiff filed, on May 22, 2000, an amended complaint adding the
Purchaser as a defendant and alleging that the Purchaser is aiding and
abetting the alleged breaches of fiduciary duties by the Company's
directors. The Company and the Company's directors served, on May 22,
2000, a motion to dismiss the complaint based on the legal insufficiency
of plaintiff's allegations. On May 24, 2000, the Company and the
Company's directors served a motion to dismiss plaintiff's amended
complaint based on the legal insufficiency of plaintiff's allegations.
On May 25, 2000, the parties to the Litigation entered into a
Memorandum of Understanding (a copy of which is attached hereto as
Exhibit (e)(15) and incorporated herein by reference) providing for the
settlement and dismissal with prejudice of the Litigation. Pursuant to
the Memorandum of Understanding, the defendants to the Litigation have
agreed, in order to avoid the burden and expense of further litigation
and to put to rest all claims arising out of or relating in any way to
the Offer or the Merger, that the Company will (i) mail to the Company's
shareholders an amendment to the Schedule 14D-9 that will contain certain
supplemental disclosures and (ii) issue a press release announcing that
the parties to the Litigation have reached a settlement in principle
subject to the approval of the Circuit Court of the 15th Judicial
Circuit, in and for Palm Beach County, Florida. The Memorandum of
Understanding is subject to a number of conditions, including, without
limitation (i) the completion by plaintiff of discovery; (ii) the
execution of a formal settlement agreement; (iii) the consummation of the
Offer; and (iv) the final approval by the Court of the settlement. The
principal terms of the Memorandum of Understanding are as follows:
1. The Merger Agreement will be amended as set forth in Item 4
hereof; and
2. The Company will amend the Schedule 14D-9, as more fully set
forth herein (a) to disclose that there have been no inquiries by
third parties to the Company since the announcement of the Merger
Agreement on May 1, 2000 with respect to any expression of
interest, offer or proposal to acquire all or more than 15% of
the Company's businesses, assets or capital shares, whether by
merger, consolidation, other business combination, purchase of
assets, reorganization, tender or exchange offer or otherwise;
(b) to provide the assumptions underlying the Company's financial
projections set forth in Section 8 of Exhibit (a)(1) to the
Schedule TO filed by Numico and Nutricia with the Securities and
Exchange Commission on May 5,
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2000; and (c) to state that the receipt by Xxxxxx Xxxxxxx of its
transaction fee is not dependent on the issuance of a fairness
opinion regarding the Offer and the Merger.
Notwithstanding the fact that appraisal rights may not be available
in connection with the Merger under the FBCA, the parties to the Merger
Agreement have agreed to make appraisal rights available to all
shareholders complying with the procedural requirements of the FBCA. Set
forth below is a summary of the principal provisions of the FBCA dealing
with the rights and remedies of dissenters to a merger. This summary is
not a complete description and should be read in conjunction with the
full text of Sections 607.1301, 607.1302 and 607.1320 of the FBCA, a copy
of which is attached hereto as Annex B and incorporated herein by
reference.
Under the Merger Agreement as amended by the Amendment thereto (the
'Amended Merger Agreement'), each registered owner of shares of the
Company's Common Stock has the right under Sections 607.1301, 607.1302
and 607.1320 of the FBCA to object to the Merger and demand in writing to
be paid in cash the Fair Value (as hereinafter defined) of such shares.
Such provisions must be strictly complied with or the dissenters' rights
may be lost.
'Fair Value,' with respect to a dissenters' shares, means the value
of the shares as of the close of business on the day prior to (i) the
date on which the Merger is approved by the Company's shareholders,
(ii) the date on which the Company receives written consents from the
requisite number of shareholders to approve the Merger, or (iii) in the
case the Merger is completed without a shareholder vote or written
consent pursuant to Section 607.1104 of the FBCA, the date prior to the
day on which a plan of merger is mailed to each shareholder of the
Company (any such date, the 'Shareholders' Authorization Date'),
excluding any appreciation or depreciation in anticipation of the Merger
unless such exclusion would be inequitable. The FBCA permits a
shareholder to dissent as to less than all the shares registered in his
or her name. In that event, the dissenter's rights shall be determined as
if the shares as to which he or she has dissented and his or her other
shares were registered in the names of different shareholders.
Unless all the procedures prescribed by the FBCA are followed by a
Company shareholder who wishes to dissent from the Merger, the
shareholder will be bound by the terms of the Amended Merger Agreement.
To properly assert dissenters' rights at any meeting of the Company's
shareholders called to approve the Merger, a shareholder must
(i) deliver to the Company before the vote is taken written notice of the
shareholder's intent to demand payment for his or her shares if the
Merger is effectuated, and (ii) not vote his or her shares in favor of
the Merger. A proxy or vote against the Merger does not constitute such a
notice of intent to demand payment. Each written notice of intent to
demand payment should be sent to Rexall Sundown, Inc., 0000 Xxxxxx Xxxxx
Xxxxxxx, XX, Xxxx Xxxxx, Xxxxxxx 00000, Attention: General Counsel. If
the Merger is to be effectuated by written consent without a meeting,
then the Company shall deliver a copy of Sections 607.1301, 607.1302 and
607.1320 of the FBCA to each shareholder simultaneously with any request
for written consent or, if no such request is made, within 10 days after
the date the Company receives written consents from the requisite number
of shareholders necessary to approve the Merger.
Within 10 days after the Shareholders' Authorization Date, the
Company must give written notice of such approval to each shareholder who
filed a notice of intent to demand payment for shares in the case where
the Merger is approved at a meeting of shareholders, or, in any other
case, to each shareholder excepting those who voted for or consented in
writing to the Merger. Within 20 days after receipt of such notice, any
shareholder who elects to dissent must file with the Company a notice of
election, stating the shareholder's name,
3
address, the number of shares as to which the dissent is made, and a
demand for payment of the fair value of such shares. The certificates
representing the dissenting shares must be deposited with the Company
simultaneously with filing the election to dissent. Any Company
shareholder failing to timely file an election to dissent will be bound
by the terms of the Amended Merger Agreement. Upon filing such election
to dissent, the shareholder will thereafter be entitled only to payment
as provided in the Amended Merger Agreement and under the FBCA and will
not be entitled to vote or to exercise any other rights of a shareholder.
Once filed, an election to dissent may be withdrawn only under limited
circumstances as described more fully in Section 607.1320 of the FBCA.
Within 10 days after such 20 day period or 10 days after the Merger
is effectuated, whichever is later, the Company must make to each
dissenting shareholder a written offer to pay an amount the Company
estimates to be the Fair Value of such dissenting shares. Such offer must
be accompanied by the Company's balance sheet as of the latest available
date and its related profit and loss statements. If the Company's offer
is accepted by the shareholder within 30 days, payment for the dissenting
shares must be made within 90 days after the date of such written offer
or the Effective Time, whichever is later. Upon payment of the agreed
value, the dissenting shareholder shall cease to have any interest in
such shares.
If the Company fails to make such offer within the period specified
or if it makes the offer and the dissenting shareholder fails to accept
it within 30 days, then an action may be filed in any court of competent
jurisdiction in Palm Beach County, Florida requesting that the Fair Value
of such shares be determined. All dissenting shareholders who are proper
parties to the proceeding are entitled to judgment against the Company
for the amount of the Fair Value of their shares. The court may, if it so
elects, appoint one or more appraisers to receive evidence and recommend
a decision on the question of Fair Value. The Company must pay each
dissenting shareholder the amount found to be due him or her within
10 days after the final determination of the proceedings. The judgment
may, at the discretion of the court, include a fair rate of interest. The
costs and expenses of the proceeding shall be determined by the court and
shall be assessed against the Company, except that all or any part of
such costs and expenses may be apportioned and assessed as the court
deems equitable against any or all of the dissenting shareholders who are
parties to the proceeding, to whom the Company made an offer to pay for
the shares, if the court finds that the action of such shareholders in
failing to accept such offer was arbitrary, vexatious, or not in good
faith. SHAREHOLDERS WISHING TO DISSENT SHOULD CONSULT THEIR OWN COUNSEL.
As a result of the settlement, plaintiff will not pursue his motion
to enjoin preliminarily the consummation of the Merger. The settlement
contemplated by the Memorandum of Understanding is subject to numerous
conditions, including consummation of the Offer, the completion of
confirmatory discovery, the execution of a stipulation of settlement and
Court approval."
A new subsection (g) is added as follows:
"(g) PROJECTIONS.
The Company does not, as a matter of course, make public forecasts or
projections as to its future financial performance. However, in
connection with the negotiations between Numico and the Company, the
Company made available to Numico and its representatives certain
nonpublic information (the 'Projections') regarding the Company's
projected operating performance. The Projections were included in the
Offer to Purchase and are also set forth below. The Projections indicated
that for the fiscal year ending August 31, 2000 and for the calendar
years ending December 31, 2000, 2001 and 2002, the Company's net revenue,
4
earnings before interest and income taxes ('EBIT'), earnings before
interest, income taxes, depreciation and amortization ('EBITDA') and net
earnings were projected to be:
REXALL SUNDOWN, INC.
CERTAIN PROJECTIONS OF FUTURE OPERATING RESULTS
(IN THOUSANDS)
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 income................... 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 foregoing projections are based upon certain assumptions,
including the following:
(i) Assumptions for the fiscal year ending August 31, 2000:
PROJECTED
ACTUAL FOR SIX PROJECTED SIX FISCAL
MONTHS ENDED MONTHS ENDING YEAR ENDING
FEBRUARY 29, 2000 MET-RX(1) WORLDWIDE(2) AUGUST 31, 2000(3) AUGUST 31, 2000
----------------- ----------- ------------ ------------------- ----------------
(IN THOUSANDS)
Net revenue.......... $318,427 $54,700 $28,700 $345,673 $747,500
EBIT................. 46,869 7,848 6,087 68,592 129,396
EBITDA............... 55,588 9,466 7,359 77,690 150,103
Net income........... 28,662 2,501 2,116 41,108 74,387
------------------------
(1) Represents estimated increase attributable to the January 7, 2000
acquisition of MET-Rx Nutrition, Inc. ('MET-Rx').
(2) Represents estimated increase attributable to the March 23, 2000
acquisition of Worldwide Sport Nutritional Supplements Inc.
('Worldwide').
(3) Represents actual results for the six months ended February 29, 2000,
increased by the organic sales growth in the second half of fiscal
year 2000 as compared to the first half of fiscal year 2000 and cost
savings initiatives expected to be realized during the second half of
fiscal year 2000. The operations of the SDV Vitamins mail order
division, which was sold in March 2000, and the Xxxxxxxx division, which
the Company is currently attempting to sell, have been eliminated.
(ii) Assumptions for the calendar year ending December 31, 2000:
1. Projections for the September 2000 through December 2000 period have
been added to the fiscal year 2000 projections and the actual
results for the September through December 1999 period have been
eliminated.
2. Projections for September 2000 through December 2000 are assumed to
be four times the projected average monthly results during the
fourth quarter of the Company's fiscal year 2000 less approximately
$10.5 million in revenue and associated profits to account for
seasonality (as the Company's fourth quarter is generally stronger
than the first quarter of the subsequent fiscal year).
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(iii) Assumptions for the calendar year ending December 31, 2001:
1. The calendar year 2000 projections in (ii) above have been adjusted
to account for (A) inclusion of a full year of estimated MET-Rx
integration savings and (B) inclusion of a full year of estimated
Worldwide results.
2. A 15% growth rate in net revenues and EBITDA from the 2000
projections, as adjusted as described above.
(iv) Assumptions for the calendar year ending December 31, 2002:
A 15% growth rate in net revenues and EBITDA from the 2001
projections.
THE PROJECTIONS WERE PREPARED SOLELY FOR INTERNAL USE AND NOT WITH A
VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE WITH THE PUBLISHED GUIDELINES OF
THE SEC OR THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
REGARDING PROJECTIONS. THE PROJECTIONS AND ASSUMPTIONS ARE INCLUDED IN
THIS SCHEDULE 14D-9 SOLELY BECAUSE THE PLAINTIFF IN THE LITIGATION
DEMANDED THE DISCLOSURE OF SUCH INFORMATION AS PART OF THE SETTLEMENT OF
THE LITIGATION AS DISCUSSED ABOVE. THE PROJECTIONS WERE NOT PREPARED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND WERE NOT
PREPARED WITH THE ASSISTANCE OF, AUDITED OR REVIEWED BY, ANY INDEPENDENT
ACCOUNTING FIRM, NOR DID ANY SUCH FIRM PERFORM ANY OTHER SERVICES WITH
RESPECT THERETO. THE PROJECTIONS ARE BASED ON VARIOUS ASSUMPTIONS
INCLUDING THOSE STATED HEREIN AND MAY ALSO BE AFFECTED BY A VARIETY OF
FACTORS RELATING TO THE BUSINESSES OF THE COMPANY, INDUSTRY PERFORMANCE,
GENERAL BUSINESS AND ECONOMIC CONDITIONS AND OTHER MATTERS, WHICH ARE
INHERENTLY SUBJECT TO SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES, MANY
OF WHICH ARE BEYOND THE COMPANY'S CONTROL. THE ASSUMPTIONS INVOLVE
JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS, FUTURE ECONOMIC AND
COMPETITIVE CONDITIONS, INFLATION RATES AND FUTURE BUSINESS CONDITIONS.
ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE ASSUMPTIONS MADE IN
PREPARING THE PROJECTIONS WILL PROVE ACCURATE, AND ACTUAL RESULTS MAY BE
MATERIALLY GREATER OR LESS THAN THOSE CONTAINED IN THE PROJECTIONS. THE
INCLUSION OF THE PROJECTIONS AND ASSUMPTIONS HEREIN SHOULD NOT BE
REGARDED AS AN INDICATION THAT THE COMPANY, NUMICO, THE PURCHASER OR
THEIR RESPECTIVE AFFILIATES OR REPRESENTATIVES CONSIDERED OR CONSIDER THE
PROJECTIONS OR ASSUMPTIONS TO BE A RELIABLE PREDICTION OF FUTURE EVENTS,
AND THE PROJECTIONS AND ASSUMPTIONS SHOULD NOT BE RELIED UPON AS SUCH.
NONE OF THE COMPANY, NUMICO, THE PURCHASER OR ANY OF THEIR RESPECTIVE
AFFILIATES ASSUMES ANY RESPONSIBILITY FOR THE VALIDITY, REASONABLENESS,
ACCURACY OR COMPLETENESS OF THE PROJECTIONS OR ASSUMPTIONS. NONE OF
NUMICO, THE PURCHASER OR THE COMPANY IS UNDER ANY OBLIGATION TO OR HAS
ANY INTENTION TO UPDATE THE PROJECTIONS OR ASSUMPTIONS AT ANY FUTURE
TIME."
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ITEM 9. EXHIBITS.(1)
*+ (a)(1) Offer to Purchase dated May 5, 2000.
*+ (a)(2) Letter of Transmittal.
* (a)(3) Letter to Shareholders of the Company dated May 5, 2000.
+ (a)(4) Press Release of the Company, dated May 1, 2000.
+ (a)(5) Form of Summary Advertisement dated May 5, 2000.
(a)(6) Form of Press Release of the Company dated May 25, 2000.
* (a)(7) Letter to Shareholders of the Company dated May 25, 2000.
+ (e)(1) Agreement and Plan of Merger dated as of April 30, 2000.
+ (e)(2) Shareholder Agreement, dated April 30, 2000.
* (e)(3) Opinion of Xxxxxx Xxxxxxx & Co. Incorporated.
+ (e)(4) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Xxxxx XxXxxxxx.
+ (e)(5) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Xxxxx Xxxxxx.
+ (e)(6) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Xxxxxxx Xxxxxx.
+ (e)(7) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Xxxxxx Xxxxx.
+ (e)(8) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Xxxxxxx Xxxxxx.
+ (e)(9) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Xxxx XxXxxxxx.
+ (e)(10) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Xxxxxxxx Palin.
+ (e)(11) Employment Agreement, dated as of April 30, 2000, among
Numico, the Company and Xxxxxxxxx Xxxx.
+ (e)(12) Benefits Letter, dated April 30, 2000, by and between Numico
and the Company.
+ (e)(13) Confidentiality Agreement, dated March 22, 2000, by and
between Numico and the Company.
(e)(14) Amendment to Agreement and Plan of Merger dated as of
May 25, 2000.
(e)(15) Memorandum of Understanding dated May 25, 2000.
------------------------
* Included in materials delivered to shareholders of the Company.
+ Filed as an exhibit to the Purchaser's Tender Offer Statement on Schedule TO
dated May 5, 2000, and incorporated herein by reference.
(1) All exhibits previously filed except for Exhibits (a)(6), (a)(7), (e)(14)
and (e)(15).
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
REXALL SUNDOWN, INC.
By: /s/ XXXXX XXXXXXXX
-----------------------------------------
Name: Xxxxx XxXxxxxx
Title: PRESIDENT AND CHIEF EXECUTIVE
OFFICER
May 25, 2000
8
ANNEX B
DISSENTERS' RIGHTS PROVISIONS
OF THE FLORIDA BUSINESS CORPORATIONS ACT
607.1301 DISSENTERS' RIGHTS; DEFINITIONS.
The following definitions apply to SectionSection 607.1302 and 607.1320:
(1) "Corporation" means the issuer of the shares held by a dissenting
shareholder before the corporate action or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(2) "Fair value," with respect to a dissenter's shares, means the value of the
shares as of the close of business on the day prior to the shareholders'
authorization date, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.
(3) "Shareholders' authorization date" means the date on which the shareholders'
vote authorizing the proposed action was taken, the date on which the
corporation received written consents without a meeting from the requisite
number of shareholders in order to authorize the action, or, in the case of
a merger pursuant to Section 607.1104, the day prior to the date on which a
copy of the plan of merger was mailed to each shareholder of record of the
subsidiary corporation.
607.1302 RIGHT OF SHAREHOLDERS TO DISSENT.
(1) Any shareholder of a corporation has the right to dissent from, and
obtain payment of the fair value of his or her shares in the event of, any of
the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party;
1. If the shareholder is entitled to vote on the merger, or
2. If the corporation is a subsidiary that is merged with its parent
under Section 607.1104, and the shareholders would have been entitled to
vote on action taken, except for the applicability of Section 607.1104;
(b) Consummation of a sale or exchange of all, or substantially all, of the
property of the corporation, other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange
pursuant to Section 607.1202, including a sale in dissolution but not including
a sale pursuant to court order or a sale for cash pursuant to a plan by which
all or substantially all of the net proceeds of the sale will be distributed to
the shareholders within 1 year after the date of sale;
(c) As provided in Section 607.0902(11), the approval of a control-share
acquisition;
(d) Consummation of a plan of share exchange to which the corporation is a
party as the corporation the shares of which will be acquired, if the
shareholder is entitled to vote on the plan;
(e) Any amendment of the articles of incorporation if the shareholder is
entitled to vote on the amendment and if such amendment would adversely affect
such shareholder by:
1. Altering or abolishing any preemptive rights attached to any of
his or her shares;
2. Altering or abolishing the voting rights pertaining to any of his
or her shares, except as such rights may be affected by the voting rights
of new shares then being authorized of any existing or new class or
series of shares;
B-1
3. Effecting an exchange, cancellation, or reclassification of any
of his or her shares, when such exchange, cancellation, or
reclassification would alter or abolish the shareholder's voting rights
or alter his or her percentage of equity in the corporation, or effecting
a reduction or cancellation of accrued dividends or other arrearages in
respect to such shares;
4. Reducing the stated redemption price of any of the shareholder's
redeemable shares, altering or abolishing any provision relating to any
sinking fund for the redemption or purchase of any of his or her shares,
or making any of his or her shares subject to redemption when they are
not otherwise redeemable;
5. Making noncumulative, in whole or in part, dividends of any of
the shareholder's preferred shares which had theretofore been cumulative;
6. Reducing the stated dividend preference of any of the
shareholder's preferred shares; or
7. Reducing any stated preferential amount payable on any of the
shareholder's preferred shares upon voluntary or involuntary liquidation;
or
(f) Any corporate action taken, to the extent the articles of
incorporation provide that a voting or nonvoting shareholder is entitled to
dissent and obtain payment for his or her shares.
(2) A shareholder dissenting from any amendment specified in paragraph
(1)(e) has the right to dissent only as to those of his or her shares which
are adversely affected by the amendment.
(3) A shareholder may dissent as to less than all the shares registered
in his or her name. In that event, the shareholder's rights shall be
determined as if the shares as to which he or she has dissented and his or
her other shares were registered in the names of different shareholders.
(4) Unless the articles of incorporation otherwise provide, this section
does not apply with respect to a plan of merger or share exchange or a
proposed sale or exchange of property, to the holders of shares of any class
or series which, on the record date fixed to determine the shareholders
entitled to vote at the meeting of shareholders at which such action is to
be acted upon or to consent to any such action without a meeting, were
either registered on a national securities exchange or designated as a
national market system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc., or held of record by not
fewer than 2,000 shareholders.
(5) A shareholder entitled to dissent and obtain payment for his or her
shares under this section may not challenge the corporate action creating
his or her entitlement unless the action is unlawful or fraudulent with
respect to the shareholder or the corporation.
607.1320 PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS.
(1) (a) If a proposed corporate action creating dissenters' rights under
Section 607.1302 is submitted to a vote at a shareholders' meeting, the meeting
notice shall state that shareholders are or may be entitled to assert
dissenters' rights and be accompanied by a copy of SectionSection 607.1301,
607.1302 and 607.1320. A shareholder who wishes to assert dissenters' rights
shall:
1. Deliver to the corporation before the vote is taken written notice
of the shareholder's intent to demand payment for his or her shares if the
proposed action is effectuated, and
2. Not vote his or her shares in favor of the proposed action. A proxy
or vote against the proposed action does not constitute such a notice of
intent to demand payment.
(b) If proposed corporate action creating dissenters' rights under
Section 607.1302 is effectuated by written consent without a meeting, the
corporation shall deliver a copy of SectionSection 607.1301, 607.1302 and
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607.1320 to each shareholder simultaneously with any request for the
shareholder's written consent or, if such a request is not made, within 10 days
after the date the corporation received written consents without a meeting from
the requisite number of shareholders necessary to authorize the action.
(2) Within 10 days after the shareholders' authorization date, the
corporation shall give written notice of such authorization or consent or
adoption of the plan of merger, as the case may be, to each shareholder who
filed a notice of intent to demand payment for his or her shares pursuant to
paragraph (1)(a) or, in the case of action authorized by written consent, to
each shareholder, excepting any who voted for, or consented in writing to, the
proposed action.
(3) Within 20 days after the giving of notice to him or her, any shareholder
who elects to dissent shall file with the corporation a notice of such election,
stating the shareholder's name and address, the number, classes, and series of
shares as to which he or she dissents, and a demand for payment of the fair
value of his or her shares. Any shareholder failing to file such election to
dissent within the period set forth shall be bound by the terms of the proposed
corporate action. Any shareholder filing an election to dissent shall deposit
his or her certificates for certificated shares with the corporation
simultaneously with the filing of the election to dissent. The corporation may
restrict the transfer of uncertificated shares from the date the shareholder's
election to dissent is filed with the corporation.
(4) Upon filing a notice of election to dissent, the shareholder shall
thereafter be entitled only to payment as provided in this section and shall not
be entitled to vote or to exercise any other rights of a shareholder. A notice
of election may be withdrawn in writing by the shareholder at any time before an
offer is made by the corporation, as provided in subsection (5), to pay for his
or her shares. After such offer, no such notice of election may be withdrawn
unless the corporation consents thereto. However, the right of such shareholder
to be paid the fair value of his or her shares shall cease, and the shareholder
shall be reinstated to have all his or her rights as a shareholder as of the
filing of his or her notice of election, including any intervening preemptive
rights and the right to payment of any intervening dividend or other
distribution or, if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu thereof, at the
election of the corporation, the fair value thereof in cash as determined by the
board as of the time of such expiration or completion, but without prejudice
otherwise to any corporate proceedings that may have been taken in the interim,
if:
(a) Such demand is withdrawn as provided in this section;
(b) The proposed corporate action is abandoned or rescinded or the
shareholders revoke the authority to effect such action;
(c) No demand or petition for the determination of fair value by a court
has been made or filed within the time provided in this section; or
(d) A court of competent jurisdiction determines that such shareholder
is not entitled to the relief provided by this section.
(5) Within 10 days after the expiration of the period in which shareholders
may file their notices of election to dissent, or within 10 days after such
corporate action is effected, whichever is later (but in no case later than 90
days from the shareholders' authorization date), the corporation shall make a
written offer to each dissenting shareholder who has made demand as provided in
this section to pay an amount the corporation estimates to be the fair value for
such shares. If the corporate action has not been consummated before the
expiration of the 90-day period after the shareholders' authorization date, the
offer may be made conditional upon the consummation of such action. Such notice
and offer shall be accompanied by:
(6) A balance sheet of the corporation, the shares of which the dissenting
shareholder holds, as of the latest available date and not more than 12 months
prior to the making of such offer; and
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(7) A profit and loss statement of such corporation for the 12-month period
ended on the date of such balance sheet or, if the corporation was not in
existence throughout such 12-month period, for the portion thereof during which
it was in existence.
(8) If within 30 days after the making of such offer any shareholder accepts
the same, payment for his or her shares shall be made within 90 days after the
making of such offer or the consummation of the proposed action, whichever is
later. Upon payment of the agreed value, the dissenting shareholder shall cease
to have any interest in such shares.
(9) If the corporation fails to make such offer within the period specified
therefor in subsection (5) or if it makes the offer and any dissenting
shareholder or shareholders fail to accept the same within the period of 30 days
thereafter, then the corporation, within 30 days after receipt of written demand
from any dissenting shareholder given within 60 days after the date on which
such corporate action was effected, shall, or at its election at any time within
such period of 60 days may, file an action in any court of competent
jurisdiction in the county in this state where the registered office of the
corporation is located requesting that the fair value of such shares be
determined. The court shall also determine whether each dissenting shareholder,
as to whom the corporation requests the court to make such determination, is
entitled to receive payment for his or her shares. If the corporation fails to
institute the proceeding as herein provided, any dissenting shareholder may do
so in the name of the corporation. All dissenting shareholders (whether or not
residents of this state), other than shareholders who have agreed with the
corporation as to the value of their shares, shall be made parties to the
proceeding as an action against their shares. The corporation shall serve a copy
of the initial pleading in such proceeding upon each dissenting shareholder who
is a resident of this state in the manner provided by law for the service of a
summons and complaint and upon each nonresident dissenting shareholder either by
registered or certified mail and publication or in such other manner as is
permitted by law. The jurisdiction of the court is plenary and exclusive. All
shareholders who are proper parties to the proceeding are entitled to judgment
against the corporation for the amount of the fair value of their shares. The
court may, if it so elects, appoint one or more persons as appraisers to receive
evidence and recommend a decision on the question of fair value. The appraisers
shall have such power and authority as is specified in the order of their
appointment or an amendment thereof. The corporation shall pay each dissenting
shareholder the amount found to be due him or her within 10 days after final
determination of the proceedings. Upon payment of the judgment, the dissenting
shareholder shall cease to have any interest in such shares.
(10) The judgment may, at the discretion of the court, include a fair rate
of interest, to be determined by the court.
(11) The costs and expenses of any such proceeding shall be determined by
the court and shall be assessed against the corporation, but all or any part of
such costs and expenses may be apportioned and assessed as the court deems
equitable against any or all of the dissenting shareholders who are parties to
the proceeding, to whom the corporation has made an offer to pay for the shares,
if the court finds that the action of such shareholders in failing to accept
such offer was arbitrary, vexatious, or not in good faith. Such expenses shall
include reasonable compensation for, and reasonable expenses of, the appraisers,
but shall exclude the fees and expenses of counsel for, and experts employed by,
any party. If the fair value of the shares, as determined, materially exceeds
the amount which the corporation offered to pay therefor or if no offer was
made, the court in its discretion may award to any shareholder who is a party to
the proceeding such sum as the court determines to be reasonable compensation to
any attorney or expert employed by the shareholder in the proceeding.
(12) Shares acquired by a corporation pursuant to payment of the agreed
value thereof or pursuant to payment of the judgment entered therefor, as
provided in this section, may be held and disposed of by such corporation as
authorized but unissued shares of the corporation, except that, in the case of a
merger, they may be held and disposed of as the plan of merger otherwise
provides. The shares of the surviving corporation into which the shares of such
dissenting shareholders would have been converted had they assented to the
merger shall have the status of authorized but unissued shares of the surviving
corporation.
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