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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 6
TO
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
----------------
GROW GROUP, INC.
(NAME OF SUBJECT COMPANY)
GROW GROUP, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $0.10 PER SHARE
(TITLE OF CLASS OF SECURITIES)
399820 10 9
(CUSIP NUMBER OF CLASS OF SECURITIES)
LLOYD FRANK, ESQ.
SECRETARY
GROW GROUP, INC.
200 PARK AVENUE
NEW YORK, N.Y. 10166
(212) 599-4400
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICE AND COMMUNICATION ON BEHALF OF THE PERSON(S) FILING STATEMENT).
With a Copy to:
DANIEL E. STOLLER, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK, N.Y. 10022
(212) 735-3000
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<PAGE>
This Amendment supplements and amends as Amendment No. 6 the
Solicitation/Recommendation Statement on Schedule 14D-9, originally filed on
May 4, 1995 (the "Schedule 14D-9"), by Grow Group, Inc., a New York corporation
(the "Company"), relating to the tender offer by GDEN Corporation, a New York
corporation (the "Purchaser") and an indirect wholly owned subsidiary of
Imperial Chemical Industries PLC, a corporation organized under the laws of
England ("Parent"), initially disclosed in a Tender Offer Statement on Schedule
14D-1, dated May 4, 1995, to purchase all outstanding shares of common stock,
par value $0.10 per share (the "Common Stock" or the "Shares"), of the Company
at a price of $18.10 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated May 4, 1995
and the related Letter of Transmittal. Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in the Schedule 14D-9.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
At a meeting of the Board of Directors held on May 15, 1995, the Company's
Board of Directors adopted a resolution directing that the management of the
Company need not disclose in any Schedule 14D-9 or amendment thereto, the
possible terms of any transaction or proposal or the parties thereto until an
agreement in principle is reached which relates to or would result in one or
more of the matters referred to in Item 7(a) of Schedule 14D-9 under the
Exchange Act, including any agreement in principle with respect to
modifications of the Merger Agreement, the Offer or the Sherwin-Williams Offer
(as defined below).
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
SHERWIN-WILLIAMS OFFER.
On May 16, 1995, the Company filed a Schedule 14D-9
Solicitation/Recommendation Statement pursuant to Section 14(d)(4) of the
Exchange Act with the Securities and Exchange Commission (the "Sherwin-Williams
Schedule 14D-9") in connection with the tender offer by GGI Acquisition, Inc. a
New York corporation and a wholly-owned subsidiary of The Sherwin-Williams
Company, an Ohio corporation, disclosed in a Tender Offer Statement on Schedule
14D-1, dated May 8, 1995, to purchase all outstanding Shares at a price of
$19.50 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated May 8, 1995, and the
related Letter of Transmittal (which together constitute the "Sherwin-Williams
Offer"). In the Sherwin-Williams Schedule 14D-9, the Board of Directors of the
Company expresses no opinion and remains neutral with respect to the Sherwin-
Williams Offer.
A copy of the Sherwin-Williams Schedule 14D-9 is filed herewith as Exhibit 26
and is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NO.
- -------
<S> <C>
26 Schedule 14D-9 Solicitation/Recommendation Statement pursuant to
Section 14(d)(4) of the Securities Exchange Act of 1934, dated May
16, 1995, with respect to the Sherwin-Williams Offer.
27 Press Release, dated May 16, 1995, issued by the Company.
</TABLE>
2
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SIGNATURE
After reasonable 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.
Dated: May 16, 1995
GROW GROUP, INC.
By /s/ Lloyd Frank
----------------------
Title: Secretary
3
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------- ----------- ------
<C> <S> <C>
26 Schedule 14D-9 Solicitation/Recommendation Statement pursuant
to Section 14(d)(4) of the Securities Exchange Act of 1934,
dated May 16, 1995, with respect to the Sherwin-Williams
Offer.
27 Press Release, dated May 16, 1995, issued by the Company.
</TABLE>
<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-9
(WITH RESPECT TO THE TENDER OFFER BY THE SHERWIN-WILLIAMS COMPANY)
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
----------------
GROW GROUP, INC.
(NAME OF SUBJECT COMPANY)
GROW GROUP, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $0.10 PER SHARE
(TITLE OF CLASS OF SECURITIES)
399820 10 9
(CUSIP NUMBER OF CLASS OF SECURITIES)
LLOYD FRANK, ESQ.
SECRETARY
GROW GROUP, INC.
200 PARK AVENUE
NEW YORK, N.Y. 10166
(212) 599-4400
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICE AND COMMUNICATION ON BEHALF OF THE PERSON(S) FILING STATEMENT).
With a Copy to:
DANIEL E. STOLLER, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK, N.Y. 10022
(212) 735-3000
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<PAGE>
ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Grow Group, Inc., a New York corporation
(the "Company"), and the address of the principal executive offices of the
Company is 200 Park Avenue, New York, New York 10166. The title of the class of
equity securities to which this statement relates is the common stock, par
value $0.10 per share (the "Common Stock" or the "Shares") of the Company
(including the related Common Stock Purchase Rights (the "Rights") issued
pursuant to the Rights Agreement, dated as of February 11, 1988, as amended and
restated as of August 7, 1992, and as further amended on April 30, 1995 (the
"Rights Agreement"), between the Company and The Bank of New York).
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the tender offer by GGI Acquisition, Inc. ("GGI"),
a New York corporation and a wholly-owned subsidiary of The Sherwin-Williams
Company, an Ohio corporation ("Sherwin-Williams"), disclosed in a Tender Offer
Statement on Schedule 14D-1, dated May 8, 1995 (the "Schedule 14D-1"), to
purchase all outstanding Shares at a price of $19.50 per Share, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated May 8, 1995 (the "Sherwin-Williams Offer to
Purchase"), and the related Letter of Transmittal (which together with the
Sherwin-Williams Offer to Purchase constitute the "Sherwin-Williams Offer").
As set forth in the Schedule 14D-1, the principal executive offices of
Sherwin-Williams and GGI are 101 Prospect Avenue, N.W., Cleveland, Ohio 44115.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person filing this
statement, are set forth in Item 1 above.
(b) Certain contracts, agreements, arrangements and understandings and actual
or potential conflicts of interest between the Company or its affiliates and
its executive officers, directors or affiliates are described below in this
Item 3 and under the heading "Item 3. Identity and Background" of the Company's
Schedule 14D-9 Solicitation/Recommendation Statement pursuant to Section
14(d)(4) of the Securities Exchange Act of 1934, dated May 4, 1995 (the "May 4
Schedule 14D-9"), and in the attached Schedule I thereto, mailed to the
Company's shareholders in response to the tender offer by GDEN Corporation, a
New York corporation ("GDEN") and an indirect wholly owned subsidiary of
Imperial Chemical Industries PLC, a corporation organized under the laws of
England ("ICI"), to purchase all outstanding Shares, at a price of $18.10 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in GDEN's Offer to Purchase, dated May 4, 1995 (the "GDEN Offer to
Purchase"), and the related Letter of Transmittal (which together with the GDEN
Offer to Purchase constitute the "ICI Offer"). A copy of the May 4 Schedule
14D-9 is filed as Exhibit 1 hereto and Item 3(b) and Schedule I thereto are
incorporated by reference herein in their entirety.
ESOP
Effective as of May 11, 1995, Messrs. Russell Banks, Lloyd Frank and Peter
Keane (each of whom is a director of the Company) resigned from their positions
as trustees of the Company's Employee Stock Ownership and Savings Plan ("ESOP")
and the Company appointed an independent financial institution as successor
trustee. Pursuant to the applicable documents governing the ESOP, the successor
trustee of the ESOP, who is required to act in accordance with its fiduciary
obligations under the Employee Retirement Income Security Act of 1974, as
amended, has the authority to determine whether to tender or otherwise dispose
of the Shares held in the ESOP.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) POSITION OF THE BOARD OF DIRECTORS
The Board of Directors has unanimously determined, in light of all the
relevant circumstances, to express no opinion and remain neutral at this time
with respect to the Sherwin-Williams Offer. The Board's position
1
<PAGE>
is subject to change as events unfold that may clarify whether a transaction
with Sherwin-Williams is or is not in the shareholders' best interest.
A form of letter to shareholders of the Company communicating the Board of
Directors' determination is filed as Exhibit 13 hereto, and is incorporated
herein by reference.
(b) BACKGROUND; REASONS FOR THE BOARD'S POSITION
Background. On January 26, 1995, the Company issued a press release stating,
among other things, that the Company's Board of Directors had unanimously
authorized Wertheim Schroder & Co., Incorporated, the Company's financial
advisor ("Wertheim Schroder"), to assist the Company in reviewing alternatives
to enhance shareholder value.
In early February 1995, Mr. John G. Breen, Chairman and Chief Executive
Officer of Sherwin-Williams, contacted Mr. Russell Banks, President and Chief
Executive Officer of the Company, and indicated that Sherwin-Williams would be
interested in considering a possible business combination with the Company. Mr.
Banks suggested that it would be appropriate for Mr. Breen or other
representatives of Sherwin-Williams to speak with representatives of Wertheim
Schroder.
On March 15, 1995, representatives of Sherwin-Williams contacted
representatives of the Company and indicated an interest in considering a
possible acquisition of the entire Company. The Company promptly sent Sherwin-
Williams a form of confidentiality agreement.
On March 17, 1995, a representative of Sherwin-Williams contacted Mr. Lloyd
Frank, an officer of the Company, to discuss the terms of the proposed
confidentiality agreement. Negotiation of the confidentiality agreement was
completed on March 30, 1995, and on that date the Company's legal counsel sent
a revised confidentiality agreement to Sherwin-Williams in form for execution.
On March 31, 1995, Sherwin-Williams sent the Company by Federal Express
executed copies of the confidentiality agreement for countersignature by the
Company.
On April 3, 1995, Mr. Banks had meetings in London with representatives of
ICI. The Company had been engaged in discussions with ICI since November 1994,
and during the period between February 7, 1995 and February 10, 1995,
representatives of ICI had conducted business and legal due diligence with
respect to the Company at the offices of Wertheim Schroder in New York.
Prior to the April 3, 1995 meetings in London between Mr. Banks and
representatives of ICI, ICI had indicated that it had valued the Company at a
price of $17.50 per Share, and was not prepared to improve its $17.50 per Share
valuation. At the April 3, 1995 meetings with Mr. Banks, ICI for the first time
indicated that it was prepared to consider the possibility of improving its
$17.50 per Share valuation if justified by further due diligence. As a result,
Mr. Banks agreed to permit ICI to conduct additional due diligence, including
on-site due diligence at locations outside of the Company's New York
headquarters.
On April 4, 1995, Mr. Banks returned to New York from London, and the Company
commenced preparations for ICI's due diligence review which was scheduled to
begin on April 10, 1995. During the period from April 10, 1995 through April
19, 1995, representatives of ICI conducted business and legal due diligence,
including on-site due diligence at various of the Company's plants and
facilities.
In view of the significant progress which had been made in discussions
between the Company and ICI at the meetings in London on April 3, 1995 and
thereafter, the Company determined not to execute the proposed confidentiality
agreement with Sherwin-Williams at that time. On or about April 17, 1995, Mr.
Breen telephoned Mr. Banks, and Mr. Banks advised Mr. Breen that the Company
would not enter into the proposed confidentiality agreement.
2
<PAGE>
On April 17, 1995, Mr. Conway G. Ivy, Vice President, Corporate Planning and
Development of Sherwin-Williams, sent the following letter to Mr. Frank, with
copies to Mr. Breen, Mr. Banks and the Company's financial advisor and outside
counsel:
April 17, 1995
VIA FEDERAL EXPRESS
Mr. Lloyd Frank, Esq.
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036-8735
Dear Mr. Frank:
The Sherwin-Williams Company hereby revokes its offer to enter into the
Confidentiality Agreement with Grow Group, Inc. dated March 30, 1995, which
was forwarded to you on March 31, 1995 via Federal Express.
After repeated attempts to obtain an executed copy from Grow Group, Inc.,
this offer is being revoked due to Grow Group, Inc.'s failure to accept and
execute the Confidentiality Agreement. In addition, it is our
understanding, based upon a telephone conversation earlier today between
Mr. Jack Breen and Mr. Russell Banks, that Grow Group, Inc. does not desire
to engage in discussions with, nor furnish confidential information to, The
Sherwin-Williams Company regarding a potential acquisition by us of Grow
Group, Inc.
Please return the four originally executed copies previously forwarded to
you.
Sincerely,
/s/ Conway G. Ivy
During the period from April 21, 1995 through April 27, 1995, representatives
of the Company and representatives of ICI engaged in discussions concerning (i)
the per Share price at which ICI would be prepared to make a proposal to
acquire the Company, (ii) ICI's request which was rejected by the Company for a
"lock-up" on the 4,025,841 Shares of the Company's common stock (constituting
approximately 25% of the Company's outstanding shares) owned by Corimon
S.A.C.A. ("Corimon"), and (iii) ICI's request for a termination fee in the
event the Company were to terminate a merger agreement with ICI (the "ICI
Merger Agreement") in order to accept a competing offer.
On the evening of April 24, 1995, counsel for ICI delivered to the Company
and its counsel a draft of the ICI Merger Agreement which had been prepared by
counsel to ICI.
Starting on April 28, 1995, Company representatives and ICI representatives
and their respective counsel and financial advisors negotiated the terms of the
ICI Merger Agreement and related matters. Such negotiations continued through
April 30, 1995.
On the afternoon of April 28, 1995, the Company, as a result of market
activity in the Shares, issued the following press release:
NEW YORK, NEW YORK, April 28, 1995 -- Grow Group, Inc. (NYSE:GRO), which
previously announced that it had authorized Wertheim Schroder & Co.
Incorporated to assist the Company in considering and reviewing
alternatives to enhance shareholder value, said today that it has entered
into negotiations with a third party concerning an acquisition of Grow. The
third party, which has substantially completed its due diligence review,
has proposed to acquire 100% of Grow's common stock and has indicated a
willingness to pay Grow's public stockholders $18.10 per share in cash. Any
such transaction would be subject to negotiation and execution of a
definitive agreement and approval of Grow's Board of
3
<PAGE>
Directors. There can be no assurance that any such agreement will be
reach[ed], or if an agreement is reached that any transaction will be
consummated.
Grow Group is a leading producer of specialty chemical coatings and
paints and household products. Grow operations include manufacturing
facilities, sales offices and licensees throughout the world.
On the night of April 28, 1995, Mr. Ivy sent the following letter to Mr.
Banks, with copies to members of the Company's Board of Directors, financial
advisor and outside counsel:
April 28, 1995
Mr. Russell Banks
President and Chief Executive Officer
Grow Group, Inc.
200 Park Avenue
New York, New York 10166
Dear Mr. Banks:
We at The Sherwin-Williams Company were troubled to learn from the press
release you issued today that you are in the process of negotiating a sale
of your company to another party. Our concern arises from the fact that,
despite Sherwin-Williams' repeated indications of serious interest in a
transaction with Grow Group, you apparently have decided to negotiate a
definitive agreement with another bidder without giving us access to the
information that would allow us to present our best possible proposal.
On March 17, 1995 we offered to enter into a confidentiality agreement
with Grow Group. After repeated delays on Grow Group's part to finalize
such agreement, we forwarded an executed copy of that agreement to Lloyd
Franks on March 31, 1995. However, that agreement was never executed by
Grow Group. On April 17, 1995, you informed us that Sherwin-Williams was to
be excluded from the bidding process. Consequently, by letter dated April
17, 1995, we had no alternative but to revoke our offer to enter into the
confidentiality agreement with Grow Group. Since that time and despite your
actions, our financial advisors have been in contact with Wertheim Schroder
and have expressed our continued interest in pursuing a transaction with
Grow Group.
Given our financial strength, financing will not represent any impediment
to the consummation of a transaction on an all-cash basis. In addition,
based upon our preliminary analysis, we are extremely confident that the
antitrust laws would not impede our ability to consummate a transaction
with Grow Group. This matter has been discussed at length with the members
of our senior management and with our Board of Directors. We have also
retained Lazard Freres & Co. and Rogers & Wells to provide financial and
legal counsel regarding this matter.
We urge you not to enter into or to agree to any merger or other
significant transaction or agreement, or to take any additional defensive
measures (including "no shop", break-up fee or similar arrangements) or
other actions, that would adversely affect the ability of your stockholders
to receive the maximum value for their shares.
We wish to obtain immediate access to the information which you have
refused to furnish to us. We are also prepared to enter into immediate
discussions with you and your directors, management and advisors about a
transaction with Sherwin-Williams. In Mr. Breen's absence, you may contact
me over the weekend either at my home at (216) 247-4936 or at my office
(216) 566-2102. If you are unable to contact me, you can contact Larry J.
Pitorak, Senior Vice President--Finance, Treasurer and Chief Financial
Officer, at (216) 729-3840 or (216) 566-2573.
We hope that you and your Board of Directors will give this matter prompt
and serious consideration.
Sincerely,
/s/ Conway G. Ivy
4
<PAGE>
Starting in the afternoon of April 30, 1995, the Company's Board of Directors
met to consider ICI's offer of $18.10 per Share. The terms of the proposed
transaction and related ICI Merger Agreement were presented to and reviewed by
the Company's Board of Directors. Wertheim Schroder and legal counsel made
presentations to the Board of Directors. Wertheim Schroder delivered its
opinion as to the fairness, from a financial point of view, of the $18.10 per
Share cash consideration offered by ICI to the public shareholders of the
Company. The full Board of Directors discussed the proposed ICI Merger
Agreement and related matters.
After discussion and further analysis, the Company's Board of Directors
unanimously decided to proceed with the sale of the Company and to accept ICI's
offer for the reasons described in Item 4(b) of the May 4 Schedule 14D-9,
previously furnished to the Company's shareholders in connection with the ICI
Offer. The Company's Board of Directors also unanimously approved the ICI
Merger Agreement and the transactions contemplated thereby and unanimously
recommended that shareholders accept the ICI Offer and tender their Shares
pursuant thereto. The Board of Directors unanimously (with the representatives
of Corimon abstaining) voted to waive the restrictions under Corimon's
standstill agreement with the Company to permit Corimon to enter into and
perform its obligations under an Option Agreement between Corimon and ICI (the
"Corimon Option Agreement"). See Item 6 below.
The Company and ICI entered into the ICI Merger Agreement on the night of
April 30, 1995.
Prior to the opening of business on May 1, 1995, the Company issued a press
release announcing that it had entered into the ICI Merger Agreement. Later in
the day on May 1, 1995, Mr. Arthur Broslat, a member of the Company's Board of
Directors, received two telephone calls from a representative of Sherwin-
Williams' financial advisor, and such representative indicated to Mr. Broslat
that Sherwin-Williams would seek to acquire the Company.
On May 4, 1995, GDEN commenced a tender offer to purchase all outstanding
Shares (and associated stock purchase rights) at a price of $18.10 per Share,
net to the seller in cash, upon the terms and subject to the conditions set
forth in the GDEN Offer to Purchase and the ICI Offer.
On May 8, 1995, Sherwin-Williams, through its wholly-owned subsidiary GGI,
commenced an unsolicited tender offer to purchase all outstanding Shares (and
associated stock purchase rights) at a price of $19.50 per Share, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Sherwin-Williams Offer to Purchase and the Sherwin-Williams Offer.
Also, on May 8, 1995, Sherwin-Williams commenced litigation against the
Company and the members of its Board of Directors, as described in Item 8 below
under the caption "Certain Litigation."
The Company's Board of Directors met on the night of May 9, 1995 to review
and discuss the Sherwin-Williams Offer. Representatives of Wertheim Schroder
and the Company's legal counsel attended the meeting.
On May 10, 1995, the Company issued a press release announcing that its Board
of Directors, at the meeting held on May 9, 1995, had authorized management of
the Company and the Company's legal and financial advisors to engage in
discussions and negotiations with, and disclose certain non-public information
concerning the Company to, Sherwin-Williams. Such actions were taken based on
the Board's determination of its fiduciary duties under applicable law as
advised by counsel and in accordance with applicable provisions of the ICI
Merger Agreement.
5
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On May 10, 1995, representatives of the Company met with representatives of
Sherwin-Williams to discuss the Sherwin-Williams Offer and, in particular,
issues relating to the conditionality of the Sherwin-Williams Offer. At that
meeting, Sherwin-Williams' representatives stated that Sherwin-Williams was
prepared to enter into a merger agreement with the Company at a price of $19.50
per Share without conducting a due diligence review of the Company, but that
Sherwin-Williams was requesting a due diligence review in order to be in a
position to consider increases in the price it would be prepared to pay to
acquire the Company. This was confirmed to the Company in a letter dated May
10, 1995 from a representative of Sherwin-Williams.
On May 11, 1995, Sherwin-Williams delivered to the Company and its counsel a
draft merger agreement proposed by counsel to Sherwin-Williams.
Also, on May 11, 1995, the Company's counsel and Sherwin-Williams' counsel
negotiated the terms of a Confidentiality Agreement, and the Confidentiality
Agreement was executed by Sherwin-Williams on the morning of May 12, 1995. See
Item 7 below for a description of the Confidentiality Agreement. Upon execution
of the Confidentiality Agreement, representatives of Sherwin-Williams commenced
business and legal due diligence with respect to the Company at the Company's
New York headquarters. On May 15, 1995, Sherwin-Williams extended its due
diligence to an on-site review at various of the Company's plants and
facilities.
On May 12, 1995, the Company's legal counsel sent a letter to Sherwin-
Williams' legal counsel suggesting that on May 13, 1995 representatives of the
Company and representatives of Sherwin-Williams discuss the draft merger
agreement furnished by Sherwin-Williams. The Company's legal counsel made the
same request to Sherwin-Williams' legal counsel by telephone later in the day
on May 12, 1995. Representatives of Sherwin-Williams did not respond to such
request and, accordingly, no discussions concerning the draft merger agreement
prepared by Sherwin-Williams have yet been held.
On May 15, 1995, the Company's Board of Directors met to consider the
Sherwin-Williams Offer. The terms of the Sherwin-Williams Offer, which had been
reviewed and discussed by the Board of Directors at its meeting on May 9, 1995,
were again reviewed and discussed. Representatives of Wertheim Schroder and the
Company's legal counsel attended the meeting and discussed the Sherwin-Williams
Offer with the directors.
After discussion and further analysis, the Company's Board of Directors
unanimously decided to express no opinion and remain neutral towards the
Sherwin-Williams Offer for the reasons described below.
Prior to the opening of business on May 16, 1995, the Company issued a press
release announcing the position of the Board of Directors with respect to the
Sherwin-Williams Offer.
Reasons for the Board's Position; Factors Considered by the Board. In
reaching its current conclusion with respect to the Sherwin-Williams Offer as
set forth in Item 4(a) above, the Board of Directors considered a number of
factors including:
1. the Board of Directors' determination made on May 8, 1995 that, in
furtherance of its fiduciary duties under applicable law as advised by counsel
and in accordance with the applicable provisions of the ICI Merger Agreement,
senior management of the Company and the Company's financial and legal advisors
should engage in discussions and negotiations with Sherwin-Williams; the Board
of Directors' belief that in light of all current circumstances and based upon
all reasonably available material information, until such discussions and
negotiations are completed and further events unfold, the Board should express
no opinion and remain neutral with respect to the Sherwin-Williams Offer;
2. the Board's belief that, under the circumstances, the best way to maximize
value for the Company's shareholders is to continue to recommend the ICI Offer
while at the same time continuing discussions and
6
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negotiations with Sherwin-Williams, and to urge both ICI and Sherwin-Williams
to improve their current offers; in this regard, the Board discussed the fact
that it could establish a formal competitive bidding process at a time of its
choosing if it concluded that such a process would be the best way to maximize
value for the Company's shareholders;
3. the Board's understanding, based on discussions between representatives of
the Company and representatives of ICI, that ICI has indicated a willingness to
increase the price offered in the ICI Offer to an amount in excess of $19.50
per Share, although no proposal has been made by ICI at this time;
4. the Board's view, based on advice of counsel that, although it is unlikely
that antitrust issues would prevent the consummation of the Sherwin-Williams
Offer, there may be greater antitrust risks associated with a merger between
the Company and Sherwin-Williams than with a merger between the Company and
ICI, such as a delay in consummation of the Sherwin-Williams Offer as a result
of a request for additional information by the Federal Trade Commission or a
possible required divestiture of certain operations;
5. the fact that entering into, or publicly announcing an intention to enter
into, an agreement or an agreement in principle in connection with an
acquisition of the Company by Sherwin-Williams, would, pursuant to the ICI
Merger Agreement, obligate the Company to promptly pay to ICI an amount in
immediately available funds equal to $8,000,000;
6. the fact that any withdrawal or material modification of the Board of
Directors' approval and recommendation of the ICI Offer and the ICI Merger
Agreement, other than as a result of ICI's breach of the Merger Agreement,
would, pursuant to the ICI Merger Agreement, obligate the Company to promptly
pay to ICI an amount in immediately available funds equal to $8,000,000;
7. the Board's view that it would not be in the best interests of the Company
or its shareholders to take any action that could cause the Company to become
obligated to pay the $8,000,000 "break-up" fee to ICI until such time that the
Company may determine to enter into a definitive agreement with a third party
relating to the acquisition of the Company, since the Company did not want to
be in a position of paying $8,000,000 and not securing a transaction which
would benefit the Company's shareholders;
8. the fact that although as presently stated the Sherwin-Williams Offer is
highly conditional, Sherwin-Williams has stated in the Sherwin-Williams Offer
that it is prepared to enter into a definitive merger agreement with the
Company on substantially the same terms and conditions as the ICI Merger
Agreement; in this regard, the Board noted that a merger agreement which was
acceptable to the Company had not been negotiated between the Company and
Sherwin-Williams and certain issues still needed to be resolved in connection
with the negotiation of such a merger agreement;
9. the fact that the Company and Sherwin-Williams entered into a
Confidentiality Agreement on May 12, 1995 pursuant to which, commencing May 12,
1995, the Company has disclosed to Sherwin-Williams certain non-public
information relating to the Company and afforded Sherwin-Williams access to the
properties, books and records of the Company and its subsidiaries (the
"Information"); and the fact that Sherwin-Williams has not completed its review
of the Information and that the Board of Directors does not know whether
Sherwin-Williams would, following completion of its review of such Information,
modify, improve or withdraw the Sherwin-Williams Offer;
10. the fact that Sherwin-Williams has stated that its review of the
Information, which has not been completed, may enable Sherwin-Williams to
consider increases in the price it would be prepared to pay to acquire the
Company; and
11. the Board of Directors' familiarity with the business of the Company, its
prospects, financial condition, results of operations, employees, customer
base, current business strategy and industry position.
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The Board of Directors did not assign relative weights to the factors or
determine that any factor was of particular importance. Rather, the Board of
Directors viewed their position as being based on the totality of the
information presented to it and considered by it.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
Wertheim Schroder was retained to assist the Company in considering and
reviewing alternatives to enhance shareholder value, including a sale of the
Company (a "Sale Transaction"). In addition, and at no additional expense,
Wertheim Schroder agreed to render a financial opinion letter with respect to
the consideration to be received in a Sale Transaction by the shareholders of
the Company. Wertheim Schroder rendered a fairness opinion to the Company's
Board of Directors in connection with the ICI Offer, a copy of which was
included in the May 4 Schedule 14D-9. The Company agreed to pay Wertheim
Schroder a fee of $50,000 on the date the letter agreement was signed and an
additional fee of 1% of the aggregate consideration (as defined in the letter
agreement with Wertheim Schroder) if the Company consummates a Sale
Transaction, against which the $50,000 fee will be credited; accordingly, if
the Sherwin-Williams Offer is consummated, the Company would be obligated to
pay Wertheim Schroder a fee of approximately $3.2 million. The Company has also
agreed to reimburse Wertheim Schroder for its out-of-pocket expenses, including
fees of its legal counsel and other advisors who may be retained with the
Company's consent and to indemnify Wertheim Schroder (and its officers,
directors, employees, controlling persons and agents) against certain
liabilities arising out of or in connection with Wertheim Schroder's
engagement. The terms of the Company's engagement of Wertheim Schroder are set
forth in a letter agreement dated April 27, 1995.
In addition, the Company has agreed to pay Wertheim Schroder its full
compensation in the event that within eighteen months after the termination of
their engagement, a Sale Transaction is consummated with a party with which
contact was made by Wertheim Schroder during its engagement.
Except as disclosed herein, neither the Company nor any person acting on its
behalf currently intends to employ, retain or compensate any other person to
make solicitations or recommendations to security holders on its behalf
concerning the Sherwin-Williams Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Except for the Corimon Option Agreement and as set forth in Schedule I
hereto, no transactions in the Shares have been effected during the past 60
days by the Company or, to the best of the Company's knowledge, by any
executive officer, director, affiliate or subsidiary of the Company.
CORIMON OPTION AGREEMENT
The following is a summary of the Option Agreement, dated as of April 30,
1995, among ICI, GDEN, Corimon Corporation, a Delaware corporation
("Stockholder"), and Corimon, S.A.C.A., a Venezuelan corporation ("Corimon")
(the "Corimon Option Agreement"). Such summary is qualified in its entirety by
reference to the text of the Corimon Option Agreement, a copy of which is filed
as Exhibit 3 hereto and is incorporated by reference.
Exercise of Option. Pursuant to the Corimon Option Agreement, Stockholder
granted to ICI an option (the "Option") to purchase 4,025,841 Shares
beneficially owned by Stockholder (the "Corimon Shares") at a purchase price of
$17.50 per Share (the "Corimon Purchase Price"). The Corimon Option Agreement
provides that the Option may be exercised by ICI in whole but not in part at
any time prior to the earlier of (i) November 5, 1995 and (ii) five business
days after August 31, 1995 (or if a Hart-Scott-Rodino authority requests
additional information ICI may elect under the ICI Merger Agreement to change
the August 31, 1995 date to no later than October 31, 1995); provided that ICI
may exercise the Option only if the "Corimon Minimum Condition" is satisfied.
For purposes of the Corimon Option Agreement, the "Corimon Minimum Condition"
shall have been satisfied only if (i) ICI has paid for or accepted for payment
all Shares properly
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tendered and not withdrawn pursuant to the ICI Offer (the "Tendered Shares") in
accordance with the terms of the ICI Offer and the ICI Merger Agreement and
(ii) the Tendered Shares plus the Corimon Shares constitute not less than a
majority of the outstanding Shares on a fully diluted basis. In the event the
consideration per Share paid by ICI pursuant to the ICI Offer or the ICI Merger
Agreement is increased, the Corimon Purchase Price shall be increased by an
amount equal to the amount of such increase.
The Corimon Option Agreement provides that Stockholder will not, and will not
agree to, sell, assign, transfer, tender or otherwise dispose of any Shares to
any person or group that has commenced a tender offer for, or proposed to
acquire, at least 50% of the outstanding Shares, except pursuant to, and at the
price per share payable in, such offer or proposal.
ICI may allow the Option to expire without purchasing the Shares thereunder;
provided however that once ICI has delivered to the Stockholder notice that ICI
will exercise the Option (the "Exercise Notice"), Buyer will be bound to effect
the purchase as described in such Exercise Notice; and provided further that if
the Corimon Minimum Condition is satisfied, ICI shall thereafter be bound to
exercise the Option within two business days following the date of such
satisfaction.
Conditions to the Stockholder's Obligations. The obligation of the
Stockholder to sell its Shares is subject to the following conditions: (i) all
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder applicable to
the exercise of the Option shall have expired or been terminated; and (ii)
there shall be no preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission having authority with respect
thereto, nor any statute, rule, regulation or order promulgated or enacted by
any such governmental authority, prohibiting or otherwise restraining the
exercise of the Option or the sale of the Corimon Shares pursuant thereto.
No Disposition or Encumbrance of Shares. Pursuant to the Corimon Option
Agreement, except for any Lien (as defined above) existing as of the date of
the ICI Merger Agreement, Stockholder will not offer or agree to, sell,
transfer, tender, assign, hypothecate or otherwise dispose of, or create or
permit to exist any security interest, lien, claim, pledge, option, right of
first refusal, agreement, limitation on Stockholder's voting or dispositive
rights, charge or other encumbrance of any nature whatsoever (collectively,
"Liens") with respect to the Corimon Shares. Stockholder agreed that it will
not tender the Shares into the ICI Offer unless directed to do so by ICI;
provided that if it is so directed by ICI, Stockholder will, to the extent
permitted by certain permitted Liens, properly tender or cause to be tendered
the Corimon Shares into the ICI Offer and, so long as the Option is
outstanding, not withdraw such Shares; and provided further that if the Corimon
Shares are purchased pursuant to the ICI Offer, Stockholder will pay, subject
to applicable law, to ICI a fee in cash equal to $.60 multiplied by the number
of such Shares.
No Solicitation of Transactions. Pursuant to the Corimon Option Agreement,
Stockholder and Corimon agree that they will not permit any affiliate to,
directly or indirectly, through any agent or representative or otherwise, (i)
take any action to solicit, initiate or encourage any Acquisition Proposal (as
defined below); (ii) except as may be required by Arthur Broslat, Philippe
Erard and Harold Bittle (the "Corimon Directors") in the exercise of their
fiduciary duties in their capacity as members of the Board of Directors of the
Company, engage in negotiations with, or disclose any nonpublic information
relating to the Company or any subsidiary of the Company or afford access to
the properties, books or records of the Company or any subsidiary of the
Company to, any person that may be considering making, or has made, an
Acquisition Proposal; or (iii) except as may be required by the Corimon
Directors in the exercise of their fiduciary duties in their capacity as
members of the Board of Directors of the Company, otherwise cooperate in any
way with, or assist or participate in or facilitate or encourage, any effort or
attempt by any person to do or seek any of the foregoing. Except as may be
required by the Corimon Directors in the exercise of their fiduciary duties in
their capacity as members of the Board of Directors of the Company, both
Stockholder and Corimon agree that they shall
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cease and cause to be terminated all existing discussions or negotiations in
which they or any of their agents or other representatives are or have been
engaged with any person with respect to any of the foregoing. The term
"Acquisition Proposal" means any offer or proposal for, or any indication of
interest in, a merger or other business combination involving the Company or
any subsidiary or the acquisition of any equity interest in, or a substantial
portion of the assets of, the Company or any subsidiary, other than the
transactions contemplated by the ICI Merger Agreement.
Stockholder and Corimon have agreed to notify ICI promptly after receipt of
any Acquisition Proposal or any indication that any person is considering
making an Acquisition Proposal or any request for nonpublic information
relating to the Company or any subsidiary of the Company or for access to the
properties, books or records of the Company or any subsidiary of the Company by
any Person that may be considering making, or has made, an Acquisition Proposal
and will keep ICI fully informed of the status and details of any such
Acquisition Proposal, indication or request.
Voting Agreement. Pursuant to the Corimon Option Agreement, Stockholder has
agreed that prior to the time, if any, that the ICI Merger Agreement is
terminated, at any meeting of the shareholders of the Company, however called,
and in any action by consent of the shareholders of the Company, Stockholder
will vote the Corimon Shares: (a) in favor of the ICI Merger, the ICI Merger
Agreement (as amended from time to time) or any of the transactions
contemplated by the ICI Merger Agreement; and (b) against any proposal for any
recapitalization, merger, sale of assets or other business combination between
the Company and any person (other than the ICI Merger) or any other action or
agreement that would result in a breach of any covenant, representation or
warranty or any other obligation or agreement of the Company under the ICI
Merger Agreement or which could result in any of the conditions to any party's
obligations under the ICI Merger Agreement not being fulfilled.
Certain Claims. The ICI Merger Agreement further provides that Corimon and
Stockholder will not assert that the Board of Directors of the Company has
breached its fiduciary duties to Corimon and Stockholder if, at any time prior
to the termination of the ICI Merger Agreement, the Board of Directors of the
Company refuses to accept or recommend an offer by a third party to acquire any
or all of the outstanding Shares for consideration not in excess of $18.10 per
share. Subject to the consummation of the ICI Offer, Corimon and Stockholder
agree to waive any claims they may have against the Company or any of its
officers or directors with respect to the ownership interest represented by the
Corimon Shares to the extent such claims (i) arise under any contract or
agreement with the Company or (ii) relate to an alleged breach of a fiduciary
duty.
(b) To the best knowledge of the Company, none of its executive officers,
directors, affiliates or subsidiaries presently intends to tender any Shares
which are owned beneficially or held of record by such person into the Sherwin-
Williams Offer. The foregoing does not include any Shares over which, or with
respect to which, any such executive officer, director affiliate or subsidiary
acts in a fiduciary or representative capacity or is subject to instructions
from a third party with respect to such tender.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except for the ICI Offer and the Company's efforts to urge both ICI and
Sherwin-Williams to improve their current offers and as set forth in this
Schedule 14D-9, the Company is not engaged in any negotiation in response to
the Sherwin-Williams Offer which relates to or would result in (i) an
extraordinary transaction, such as a merger or reorganization, involving the
Company or any subsidiary of the Company; (ii) a purchase, sale or transfer of
a material amount of assets by the Company or any subsidiary of the Company;
(iii) a tender offer for or other acquisition of securities by or of the
Company; or (iv) any material change in the present capitalization or dividend
policy of the Company.
(b) The response to Item 3(b) is incorporated herein by reference in its
entirety.
At the May 15, 1995 Board meeting, the Company's Board of Directors adopted a
resolution directing that the management of the Company need not disclose in
any Schedule 14D-9 or amendment thereto, the
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possible terms of any transaction or proposal or the parties thereto until an
agreement in principle is reached which relates to or would result in one or
more of the matters referred to in Item 7(a) of Schedule 14D-9 under the
Securities Exchange Act of 1934 (the "Exchange Act"), including any agreement
in principle with respect to modifications of the ICI Merger Agreement, the ICI
Offer or the Sherwin-Williams Offer.
CONFIDENTIALITY AGREEMENT
On May 12, 1995, the Company and Sherwin-Williams entered into a
Confidentiality Agreement (the "Sherwin-Williams Confidentiality Agreement").
The following is a summary of certain provisions of the Sherwin-Williams
Confidentiality Agreement, a copy of which is filed as Exhibit 2 hereto and is
incorporated herein by reference. Pursuant to the Sherwin-Williams
Confidentiality Agreement, Sherwin-Williams agreed, among other things, to keep
confidential certain information furnished to it by the Company, provided that
Sherwin-Williams is permitted to disclose such of the information as it is
advised by counsel is legally required to be disclosed under the federal
securities laws.
Sherwin-Williams has further agreed that, except as provided in the next
paragraph, for a period of three years, neither Sherwin-Williams nor any of its
affiliates will, without the prior written consent of the Company: (i) acquire,
offer to acquire, or agree to acquire, directly or indirectly, by purchase or
otherwise, any voting securities or direct or indirect rights to acquire any
voting securities of the Company or any subsidiary thereof, or any assets of
the Company or any subsidiary or division thereof; (ii) make, or in any way
participate in, directly or indirectly, any solicitation of proxies to vote, or
seek to advise or influence any person or entity with respect to the voting of,
any voting securities of the Company; (iii) make any public announcement with
respect to, or submit a proposal for, or offer of (with or without conditions)
any extraordinary transaction involving the Company or any of its subsidiaries
or their securities or assets; (iv) form, join or in any way participate in a
"group" (as defined in Section 13(d)(3) of the Exchange Act) in connection with
any of the foregoing; (v) seek to acquire control of the Company or influence
the Board of Directors, management or policies of the Company; (vi) induce any
other person or entity to do any of the foregoing; or (vii) request the Company
or any of its representatives, directly or indirectly, to amend or waive any of
the foregoing provisions.
Notwithstanding the foregoing restrictions, Sherwin-Williams or any direct or
indirect wholly-owned subsidiary of Sherwin-Williams is permitted to acquire
Shares pursuant to the pending cash tender offer commenced on May 8, 1995 by
Sherwin-Williams' wholly-owned subsidiary for all outstanding Shares at a price
not less than $19.50 net per Share in cash to the seller or such higher price
in cash that Sherwin-Williams or one of its direct wholly-owned subsidiaries
may offer to pay for Shares pursuant to such pending cash tender offer;
provided, however, Sherwin-Williams is permitted to acquire Shares pursuant to
a cash tender for all outstanding Shares by Sherwin-Williams or any direct or
indirect wholly-owned subsidiary of Sherwin-Williams made in accordance with
Regulation 14D under the Exchange Act at the amount per Share offered (or any
greater amount per Share offered) in any merger, tender offer or similar
transaction that shall have been approved by the Company's Board of Directors
within 90 days prior to the commencement of such cash tender by Sherwin-
Williams or its direct or indirect wholly-owned subsidiary, except that this
proviso is not applicable to approval by the Company's Board of Directors of
the ICI Offer.
Except as described above and in Item 4 (the provisions of which are hereby
incorporated by reference), there are no transactions, board resolutions,
agreements in principle or signed contracts in response to the Sherwin-Williams
Offer which relate to or would result in one or more of the matters referred to
in paragraph (a) of this Item 7.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
RIGHTS AGREEMENT
In connection with the execution of the ICI Merger Agreement, the Board of
Directors of the Company authorized an amendment (the "Rights Amendment") to
the Rights Agreement. The Rights Amendment
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prevents ICI and its wholly owned subsidiary GDEN from becoming an Acquiring
Person or Adverse Person (each as defined in the Rights Agreement) and prevents
a Stock Acquisition Date or Distribution Date (each as defined in the Rights
Agreement) from occurring, in each case as a result of the ICI Offer, the ICI
Merger or the Corimon Option Agreement or the other transactions contemplated
by the ICI Merger Agreement. The Rights Amendment also provides that the Rights
will expire and be of no force or effect upon consummation of the ICI Merger. A
copy of the Rights Amendment is filed as Exhibit 18 hereto and is incorporated
herein by reference.
At a special meeting of the Board of Directors held on May 9, 1995, the Board
unanimously adopted a resolution that notwithstanding anything in the Rights
Agreement, the Distribution Date (as defined in the Rights Agreement) of the
Rights was postponed until May 31, 1995 or such later date as may be determined
by the Board of Directors or a committee thereof consisting of Messrs. Banks,
Frank and Keane.
CERTAIN LITIGATION
On May 1, 1995, a class action entitled General Color Company Pension Plan v.
Grow Group, Inc. et al., was filed in the Supreme Court of the State of New
York, New York County (the "General Color State Action") purportedly on behalf
of the class of all the Company's current shareholders. In addition to the
Company, all members of the Company's Board of Directors are named as
defendants in the General Color State Action. The complaint in the General
Color State Action alleges that the $18.10 per Share pursuant to which ICI will
offer to purchase all the outstanding Shares is insufficient and that the
proposed ICI Offer is unfair to the Company's shareholders and represents an
attempt by the defendants to enrich themselves at the expense of the plaintiff
class. The plaintiff in the General Color State Action asserts that defendants
violated their fiduciary duties to the Company's shareholders by allegedly
failing adequately to evaluate the Company as a potential acquisition
candidate; to take adequate steps to enhance the Company's value as an
acquisition candidate; and to create an active and open auction for the
Company. The complaint in the General Color State Action further alleges that
the defendants have wrongfully decided not to solicit proposals or initiate
discussions with third parties for the acquisition of the Company, instead of
seeking the highest possible price for the Shares of the plaintiff class. The
complaint in the General Color State Action seeks, among other relief, a
preliminary and permanent injunction barring defendants from taking any steps
to accomplish the proposed merger with ICI at a price that is not fair and
equitable to the plaintiffs and restraining the defendants' ability to use
their alleged voting control of the Company to effect the transaction with ICI.
The complaint also seeks unspecified damages for losses suffered and to be
suffered by the plaintiff class as a result of the acts alleged in the
complaint.
On May 4, 1995, the Company learned that a purported class action entitled
Miriam Sarnoff and Frederick Rand v. Grow Group, Inc. et al., was filed on May
2, 1995 in the Supreme Court of the State of New York, New York County (the
"Sarnoff State Action") on behalf of the Company's shareholders. In addition to
the Company, all members of the Company's Board of Directors are named as
defendants (the "Individual Defendants") in the Sarnoff State Action. The
complaint in the Sarnoff State Action alleges that the proposed transaction
with ICI is grossly unfair and detrimental to the Company's shareholders. The
complaint asserts that the Individual Defendants agreed to the proposed
transaction with ICI in order to enable the Individual Defendants to maintain
their positions as directors and officers of the Company, and to benefit
Corimon, which allegedly had an incentive to accept a low bid because it needed
to raise cash quickly in order to fund its recently announced acquisition of
"Standard Paints" in California. The complaint further alleges that the ICI
Merger Agreement prohibits defendants from negotiating with third parties, and
that as a result, there was no possibility that competition between ICI and
other companies could have driven up the purchase price. The complaint in the
Sarnoff State Action seeks, among other relief, an order requiring defendants
to announce their intention to cooperate with any entity having a bona fide
interest in proposing a transaction that would maximize shareholder value,
undertake an evaluation of the Company's worth as a merger/acquisition
candidate, and act independently to protect the shareholders' interests. The
complaint also seeks an accounting for damages allegedly suffered by
shareholders as a result of the acts and transaction alleged in the complaint.
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On May 5, 1995, a purported class action entitled Martin Appelbaum and
Rosalyn Younger v. Grow Group, Inc., et al., was filed in the Supreme Court of
the State of New York, New York County (the "Appelbaum State Action") on behalf
of the Company's shareholders against the Company, the Individual Defendants,
and ICI. The complaint alleges that the Individual Defendants have breached and
are breaching their fiduciary duties to the purported class of the Company's
shareholders by, among other things, failing to respond in a reasonable and
informed manner to Sherwin Williams' expression of interest in the Company; and
to inform themselves as to other potential acquirors or merger partners so as
to maximize shareholder value.
The complaint in the Appelbaum State Action seeks, among other things, an
order: requiring the defendants to carry out their fiduciary duties to
plaintiffs and other members of the purported class; enjoining the transaction
between the Company and ICI, and rescinding any transactions effected by the
defendants in an unfair manner and for an unfair price; damages suffered as a
result of the acts and transactions alleged in the complaint; an accounting for
all profits realized as a result of the complained of transaction; and costs,
disbursements, and reasonable attorneys' and experts fees.
On May 5, 1995, a purported class action entitled Samuel Pill v. Grow Group,
Inc., et al., was filed in the Supreme Court of the State of New York, New York
County (the "Pill State Action") on behalf of the Company's shareholders,
against the Company and the Individual Defendants. The complaint alleges that
the Individual Defendants breached their fiduciary duties to the purported
class of the Company's shareholders by agreeing to the transaction with ICI at
a price which they knew was grossly unfair, inadequate and not representative
of the true and present value of the Company. The complaint also alleges, among
other things, that the Individual Defendants have breached their fiduciary
duties to the purported class by failing to auction the Company to the highest
bidder. The complaint further alleges that the option granted to ICI to
purchase Corimon's 25% interest in the Company is a breach of the fiduciary
duties owed by defendant Broslat, who is a director of the Company and the
Chief Financial Officer of Corimon.
The complaint in the Pill State Action seeks, among other things, an order
declaring that the Individual Defendants have breached their fiduciary duties;
enjoining defendants from proceeding with the transaction with ICI; damages in
an unspecified amount; and costs, disbursements and counsel and expert fees.
On May 8, 1995, an action entitled The Sherwin-Williams Company v. Imperial
Chemical Industries PLC et al., was filed in the United States District Court
for the Northern District of Ohio, Eastern Division by Sherwin-Williams against
ICI, GDEN and the Company (the "Sherwin-Williams Federal Action"). The
complaint alleges, among other things, that the GDEN Offer to Purchase is
materially false and misleading, in that it (i) falsely describes the break-up
fee provisions of the ICI Merger Agreement; (ii) misrepresents the terms and
nature of the Corimon Option Agreement; and (iii) misrepresents ICI's ability
to consummate with the Company the merger provided for in the ICI Merger
Agreement (the "ICI Merger") which, according to the complaint, cannot be
consummated for five years under Section 912 of the New York Business
Corporation Law ("BCL"). The complaint also alleges that the Company's May 4
Schedule 14D-9 is materially false and misleading in that it (i) impliedly
represents that the Board of Directors of the Company had an informed basis
upon which to recommend the ICI Merger with GDEN when, in fact, the Board did
not have such an informed basis; (ii) contains misrepresentations and omissions
concerning Sherwin-Williams' repeated indications of interest in negotiating
and consummating an acquisition of the Company; and (iii) misrepresents the
terms and nature of the Corimon Option Agreement.
The complaint in the Sherwin-Williams Federal Action seeks, among other
things, an order: (i) preliminarily and permanently enjoining ICI and all other
persons acting in concert with it, from acquiring or attempting to acquire the
Shares or continuing the ICI Offer; (ii) that ICI, GDEN and the Company make
appropriate disclosures to correct the alleged false and misleading statements
described above, and prohibiting ICI from purchasing or making any tender offer
for Shares for an appropriate period to allow full dissemination of such
disclosures to the marketplace and to the Company's shareholders; (iii)
enjoining the
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Company and all other persons acting in concert with them, from taking any
steps to assist or facilitate the completion of the ICI Offer. The complaint
also seeks costs, disbursements and reasonable attorney's fees. The Court in
the Sherwin-Williams Federal Action has scheduled a hearing on Sherwin-
Williams' motion for a preliminary injunction for May 26, 1995.
The Company has filed a motion to transfer the Sherwin-Williams Federal
Action from the United States District Court for the Northern District of Ohio
to the United States District Court for the Southern District of New York based
on the convenience of the witnesses and parties.
On May 8, 1995, Sherwin-Williams commenced an action entitled The Sherwin-
Williams Company v. Grow Group, Inc., et al., in the Supreme Court of the State
of New York (the "Sherwin-Williams New York Action") against the Company, ICI,
GDEN and members of the Company's Board of Directors (collectively, the
"Defendants"). The complaint in the Sherwin-Williams New York Action alleges,
among other things, that the Company and its Board of Directors breached their
fiduciary duties to the Company's shareholders by, among other things, entering
into the ICI Merger Agreement and agreeing to the Corimon Option Agreement and
the "Break Up Fee" without first negotiating with Sherwin-Williams or
adequately considering potential alternative transactions available to the
Company. The complaint also alleges, among other things, that the ICI Merger
Agreement and proposed merger with ICI violate Section 912 of the BCL, which,
according to the complaint, prevents the merger between ICI and the Company for
five years. The complaint further alleges that the Company's Board of Directors
breached its fiduciary duty to make truthful and complete disclosures by (i)
misleadingly stating that the transaction and proposed merger with ICI are fair
to, and in the best interest of, the Company's shareholders when in fact it had
no informed basis to make such a statement; and (ii) failing to disclose that
the transaction and proposed merger with ICI violate Section 912 of the BCL.
The complaint in the Sherwin-Williams New York Action seeks, among other
things, an order declaring that the ICI Merger Agreement and the Corimon Option
Agreement are null and void and unlawful and were entered into in breach of the
fiduciary duties of the Company's Board; requiring the Company and the Board of
Directors of the Company to provide Sherwin-Williams a fair and equal
opportunity to acquire the Company; and enjoining any further conduct by ICI
intended to cause, or having the effect of causing, the Company to forego the
opportunity to enter into an economically more favorable transaction than the
ICI Merger. The complaint also seeks costs and disbursements, including
attorneys' fees.
On May 8, 1995, Sherwin-Williams moved by order to show cause for a hearing
(the "Hearing") on a motion for a preliminary injunction, among other things,
(i) enjoining defendants from taking any further steps to facilitate or
consummate the ICI Offer; (ii) enjoining and invalidating the Break Up Fee; and
(iii) directing the Company and the Board of Directors of the Company to
investigate and explore all bona fide offers and proposals to acquire the
Company, including the Sherwin-Williams Offer, and to remove all impediments to
the Sherwin-Williams Offer.
On May 8, 1995, Sherwin-Williams also moved by order to show cause for a
temporary restraining order, pending the Hearing, (i) enjoining ICI from
exercising any right under the Corimon Option Agreement to prevent Corimon from
withdrawing any Shares that Corimon may tender into the ICI Offer; and (ii)
enjoining and directing the Company to provide Sherwin-Williams by 10:00 a.m.
on May 10, 1995 with a record of the names and addresses of the Company's
shareholders, and the number and class of Shares held by each.
At a hearing on May 8, 1995, the Court denied Sherwin-Williams' motion for a
temporary restraining order. The Court also scheduled a hearing for May 25,
1995 at 4:00 p.m. on Sherwin-Williams' motion for a preliminary injunction.
On May 8, 1995, a purported class action entitled A.D. Gilhart & Co., Inc.,
v. Grow Group, Inc. et al., was commenced in the Supreme Court of the State of
New York, New York County (the "Gilhart Action") against the Company and
members of the Company's Board of Directors. The complaint in the Gilhart
Action alleges, among other things, that the defendants breached their
fiduciary duties owed to the
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Company's shareholders in connection with the proposed ICI Merger by failing to
pursue discussions with Sherwin-Williams about a possible acquisition of the
Company by Sherwin-Williams.
The complaint in the Gilhart Action seeks, among other things, an order (i)
enjoining defendants from enforcing the Company's "anti-takeover procedures";
(ii) requiring defendants to explore third party interest and accept the
highest bid obtainable for the Shares; and (iii) awarding the plaintiffs' costs
and disbursements, including attorneys' fees.
On May 9, 1995, a purported class action entitled Kim J. Hammond and Jeffrey
Dell v. Grow Group, Inc., et al., (the "Hammond Action") was commenced in the
United States District Court for the Southern District of New York against the
Company and certain members of the Company's Board of Directors (collectively,
the "Hammond Defendants") on behalf of all persons who sold the Company's
securities during the period from April 29, 1995 to May 4, 1995 and who
sustained damages as a result of such sale. The complaint alleges violations of
Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder for,
among other things, issuing the statements contained in press releases dated
April 28, 1995 and May 1, 1995 which allegedly were materially false and
misleading for failing to adequately disclose all material facts concerning
Sherwin-Williams' contacts with the Company regarding a proposed acquisition by
Sherwin-Williams; and for falsely creating the impression that the Board of
Directors had "shopped" the Company. The complaint further alleges that the
above mentioned disclosures artificially affected the market price of the
Company's securities.
The complaint in the Hammond Action seeks, among other things, monetary
damages against the Hammond Defendants in an unspecified amount for all losses
suffered by the plaintiffs as a result of the allegedly improper activity of
the Hammond Defendants and costs, reasonable attorneys' fees and expert fees
and disbursements.
On May 9, 1995, a purported class action entitled Steiner v. Grow Group,
Inc., et al., was filed in the Supreme Court of the State of New York, New York
County (the "Steiner State Action") on behalf of the Company's shareholders
against the Company, certain members of the Company's Board of Directors, and a
former director of the Board (the "Director Defendants"). The complaint alleges
that the Director Defendants breached their fiduciary duties to the purported
class in connection with the proposed ICI Merger by failing to adequately
respond to expressions of interest from bona fide purchasers, such as Sherwin-
Williams, thereby failing to maximize shareholder value.
The complaint in the Steiner State Action seeks, among other things,
preliminary and permanent relief, including injunctive relief, as follows:
declaring that the Company and the Director Defendants have breached their
fiduciary duties to plaintiff and other members of the class; enjoining the
purchase of the Company by ICI pursuant to the ICI Merger Agreement; requiring
the Company and the Director Defendants to negotiate with Sherwin-Williams
and/or other potential acquirors in a manner designed to maximize shareholder
value and to utilize the rights plan to benefit the members of the class and
maximize the value of their holdings; and awarding costs, disbursements, and
reasonable attorneys' and experts' fees.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<S> <C>
Exhibit 1 Schedule 14D-9 Solicitation/Recommendation Statement Pursuant to
Section 14(d)(4) of the Securities Exchange Act of 1934, dated May
4, 1995, relating to the tender offer by GDEN Corporation, a New
York corporation and indirect wholly-owned subsidiary of Imperial
Chemical Industries PLC.
Exhibit 2 Confidentiality Agreement, dated May 12, 1995, between Grow Group,
Inc. and The Sherwin-Williams Company.
Exhibit 3 Option Agreement, dated as of April 30, 1995, among Imperial Chemical
Industries PLC, GDEN Corporation, Corimon Corporation and Corimon
S.A.C.A.
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<S> <C>
Exhibit 4 Complaint entitled General Color Company Pension Plan v. Grow Group,
Inc., et al., filed in the Supreme Court of the State of New York,
New York County.
Exhibit 5 Complaint entitled Miriam Sarnoff and Frederick Rand v. Grow Group,
Inc. et. al., filed in the Supreme Court of the State of New York,
New York County.
Exhibit 6 Class Action Complaint entitled Martin Appelbaum and Rosalyn Younger
v. Grow Group, Inc. et. al., filed in the Supreme Court of the State
of New York, New York County.
Exhibit 7 Class Action Complaint entitled Samuel Pill v. Grow Group, Inc. et
al., filed in the Supreme Court of the State of New York, New York
County.
Exhibit 8 Complaint entitled The Sherwin-Williams Company v. Imperial Chemical
Industries PLC et. al., filed in the United States District Court
for the Northern District of Ohio of the Eastern Division.
Exhibit 9 Complaint entitled The Sherwin-Williams Company v. Grow Group, Inc.
et. al., filed in the Supreme Court of the State of New York, New
York County.
Exhibit 10 Class Action Complaint entitled A. D. Gilhart & Co. Inc. v. Grow
Group, Inc. et. al., filed in the Supreme Court of the State of New
York, New York County.
Exhibit 11 Class Action Complaint entitled Kim J. Hammond and Jeffrey Dell v.
Grow Group, Inc. et. al., filed in the United States District Court
for the Southern District of New York.
Exhibit 12 Class Action Complaint entitled Steiner v. Grow Group, Inc., et al.,
filed in the Supreme Court of the State of New York, New York
County.
Exhibit 13 Letter to Shareholders of Grow Group, Inc., dated May 16, 1995.*
Exhibit 14 Press Release, dated May 8, 1995, issued by Grow Group, Inc.
Exhibit 15 Press Release, dated May 9, 1995, issued by Grow Group, Inc.
Exhibit 16 Press Release, dated May 10, 1995, issued by Grow Group, Inc.
Exhibit 17 Press Release, dated May 16, 1995, issued by Grow Group, Inc.
Exhibit 18 Amendment to Rights Agreement, dated as of April 30, 1995, to the
Amended and Restated Rights Agreement, dated as of August 7, 1992,
between Grow Group, Inc. and The Bank of New York.
Exhibit 19 Consulting Agreement, dated as of April 30, 1995, between Grow Group,
Inc. and Russell Banks.
Exhibit 20 Amendment and Extension Agreement, dated as of April 27, 1995,
between Grow Group, Inc. and Russell Banks.
Exhibit 21 Severance Agreement, dated April 27, 1995, between Grow Group, Inc.
and John F. Gleason.
Exhibit 22 Severance Agreement, dated April 27, 1995, between Grow Group, Inc.
and Lloyd Frank.
Exhibit 23 Amendment of Employment Agreement, dated as of April 27, 1995,
between Grow Group, Inc. and Frank Esser.
</TABLE>
- --------
* Included in copies of the Schedule 14D-9 mailed to shareholders.
16
<PAGE>
SIGNATURE
After reasonable 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.
Dated: May 16, 1995
GROW GROUP, INC.
By /s/ Lloyd Frank
----------------------
Title: Secretary
17
<PAGE>
SCHEDULE I
CERTAIN TRANSACTIONS IN SHARES OF COMMON STOCK OF
GROW GROUP, INC. EFFECTED DURING THE PAST 60 DAYS
The following purchases of Shares were credited to the accounts of the below
listed executive officers pursuant to the Company's monthly investment plan:
<TABLE>
<CAPTION>
SHARES
NAME DATE PURCHASED PRICE
---- ------- --------- --------
<S> <C> <C> <C>
Frank V. Esser................................. 3/28/95 4.2118 $14.2456
4/25/95 3.6931 $16.2465
Joseph H. Quinn, Jr. .......................... 3/28/95 4.2118 $14.2456
4/25/95 3.6931 $16.2465
John F. Gleason................................ 3/28/95 7.7217 $14.2456
4/25/95 6.7707 $16.2465
Henry W. Jones................................. 3/28/95 4.2118 $14.2456
4/25/95 3.6931 $16.2465
</TABLE>
<PAGE>
FOR IMMEDIATE RELEASE
GROW GROUP ANNOUNCES NEUTRAL POSITION
ON SHERWIN-WILLIAMS OFFER
NEW YORK, NEW YORK -- May 16, 1995 -- Grow Group, Inc. (NYSE: GRO)
announced today that, in light of the uncertainties of the current circumstances
and given that both The Sherwin-Williams Company ("Sherwin-Williams") and
Imperial Chemical Industries, PLC ("ICI") are interested in acquiring Grow, the
Board of Directors has determined to express no opinion and remain neutral at
this time with respect to Sherwin-Williams' $19.50 per share cash tender offer
for all outstanding shares of Grow Common Stock.
Grow stated that discussions with both ICI and Sherwin-Williams are
continuing at this time, and Grow has urged both parties to improve their
current offers.
Grow also said that, at Sherwin-Williams' request, Grow has permitted
Sherwin-Williams to conduct a due diligence review of Grow so that it may be in
a position to increase its $19.50 per share offer should it choose to do so.
Today Grow is publicly filing and mailing to Grow's shareholders a
Solicitation/Recommendation Statement on Schedule 14D-9 which sets forth, among
other things, the reasons for Grow's determination to remain neutral at this
time with respect to Sherwin-Williams' tender offer.
As previously announced, Grow has entered into a definitive merger
agreement with ICI pursuant to which ICI has commenced a tender offer to
purchase all outstanding shares of Grow's Common Stock for $18.10 per share.
ICI has separately agreed to purchase the Grow shares owned by Corimon, a 25%
shareholder, for $17.50 per share. ICI's purchase of the shares owned by
Corimon is conditioned upon ICI's prior consummation of its tender offer.
