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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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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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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, as thereafter amended (the "Rights Agreement"),
between the Company and The Bank of New York, which will become inoperative in
connection with the Merger (as defined below)).
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates 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"), disclosed in a Tender Offer Statement on Schedule 14D-1,
dated May 4, 1995 (the "Schedule 14D-1"), 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 the Offer to Purchase, dated May 4, 1995
(the "Offer to Purchase"), and the related Letter of Transmittal (which
together with the Offer to Purchase constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated as
of April 30, 1995 (the "Merger Agreement"), among Purchaser, Parent and the
Company. The Company understands that pursuant to the Merger Agreement, Parent
has assigned to Purchaser its rights to purchase Shares pursuant to the Offer
to Purchase, although such assignment does not relieve Parent of its
obligations under the Offer or prejudice the rights of tendering shareholders
to receive payment for Shares validly tendered and accepted for payment
pursuant to the Offer. The Merger Agreement provides, among other things, that
as soon as practicable after the satisfaction or waiver of the conditions set
forth in the Merger Agreement, Purchaser will be merged with and into the
Company (the "Merger"), and the Company will continue as the surviving
corporation (the "Surviving Corporation"). A copy of the Merger Agreement is
filed herewith as Exhibit 1 and is incorporated herein by reference.
As set forth in the Schedule 14D-1, the principal executive offices of Parent
are located at 9 Millbank, London SW1P, 3JF, England and the principal
executive offices of Purchaser are located c/o ICI American Holdings Inc., 3411
Silverside Road, P.O. Box 15391, Wilmington, Delaware 19850.
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) Each material contract, agreement, arrangement and understanding and
actual or potential conflict of interest between the Company or its affiliates
and: (i) the Company, its executive officers, directors or affiliates or (ii)
the Purchaser, its executive officers, directors or affiliates, is described in
the attached Schedule I (which information is incorporated herein by reference)
or is set forth below.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements (the "Employment
Agreements") with Russell Banks, President and Chief Executive Officer of the
Company, and with the following executive officers of the Company: Joseph M.
Quinn, Stephen L. Dearborn, Frank V. Esser and Henry W. Jones.
The Employment Agreement with Mr. Banks (entered into effective as of October
31, 1992), originally scheduled to expire on October 31, 1995, was extended
until October 31, 1996 by the Company's Board of Directors (the "Board") on
December 16, 1994. In the event of the termination of employment (including
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termination by Mr. Banks for Good Reason, as defined in the Employment
Agreement) within two years after a Change in Control (as defined in the
Employment Agreement) of the Company, Mr. Banks will (except if termination is
for cause) be entitled to receive a lump sum payment equal in amount to the sum
of (i) Mr. Banks' base salary and average three-year bonus for the remainder of
the term of the Employment Agreement and (ii) three times the sum of such
salary and bonus. In addition, the Company must in such circumstances continue
Mr. Banks' then current welfare benefits for the remainder of the term of the
Employment Agreement. In no case, however, may Mr. Banks receive any payment or
benefit in connection with a Change in Control in excess of 2.99 times his
"base amount" (as that term is defined in Section 280G of the Internal Revenue
Code of 1986, as amended, and hereafter referred to as the "Code"). In the
event of disability of Mr. Banks, the Employment Agreement provides for
continued payment of 50% of his base salary for the remainder of the term of
the Employment Agreement. An amendment to Mr. Banks' Employment Agreement was
approved by the Board on April 27, 1995. Such amendment (i) memorialized the
action of the Board taken on December 16, 1994 to extend the agreement until
October 31, 1996, (ii) amended the provision setting forth the calculation of
the severance benefit to include bonuses in the portion of the severance
formula that is multiplied by three (as described above), (iii) provided that
the benefit payable upon Mr. Banks' death need not be provided solely through
life insurance, and (iv) clarified that "Good Reason" includes a determination
by Mr. Banks that, as a result of a Change in Control, he is unable to
discharge his duties effectively. The Company has obtained insurance policies
on Mr. Banks' life, as to which the Company is the beneficiary, in the
aggregate face amount of $400,000. The aggregate premium paid by the Company
during the fiscal year ended June 30, 1994 with respect to those policies was
$9,852. Pursuant to the Employment Agreement, Mr. Banks has the right to
purchase such insurance policies from the Company at a purchase price equal to
the amount at which the Company carries such policies on its books, which is
estimated to be less than $50,000. The Purchaser and Parent have agreed to
honor, and cause the Surviving Corporation to honor, Mr. Banks' Employment
Agreement, as amended, and have acknowledged that the consummation of the Offer
will constitute a Change in Control as defined in the Employment Agreement. It
is estimated that Mr. Banks would receive approximately $2.3 million under the
Employment Agreement upon a qualifying termination of employment following the
consummation of the Offer.
The Employment Agreement with Mr. Quinn (entered into effective as of
September 15, 1988 and amended effective as of July 1, 1994) is for a term
presently expiring on June 30, 1996, subject to automatic annual renewals until
age 65 unless notice of non-renewal is given on or before April 1 preceding the
scheduled termination date. In the event of the termination of employment
(including termination by Mr. Quinn for Good Reason, as defined in the
Employment Agreement) within two years after a Change in Control (as defined in
the Employment Agreement) of the Company, Mr. Quinn will (except if termination
is for cause) be entitled to receive a lump sum payment equal in amount to
three times the sum of his salary (based upon his annual base salary at the
date of termination) and average three-year bonus payments. In addition, the
Company must in such circumstances continue Mr. Quinn's then current welfare
benefits for a period of three years. In no case, however, may Mr. Quinn
receive any payment or benefit in connection with a Change in Control in excess
of 2.99 times his "base amount" (as that term is defined in Section 280G of the
Code). The Purchaser and Parent have agreed to honor, and cause the Surviving
Corporation to honor, Mr. Quinn's Employment Agreement and have acknowledged
that the consummation of the Offer will constitute a Change in Control as
defined in the Employment Agreement. It is estimated that Mr. Quinn would
receive approximately $1.1 million upon a qualifying termination of employment
following the consummation of the Offer.
The Employment Agreement with Mr. Esser (entered into effective as of
September 15, 1988) is for a term presently expiring on September 14, 1995,
which term is subject to automatic annual renewal until age 65 unless notice of
non-renewal is given on or before July 1 preceding the scheduled termination
date. In the event of the termination of employment (including termination by
Mr. Esser for Good Reason, as defined in the Employment Agreement) within two
years after a Change in Control (as defined in the Employment Agreement) of the
Company, Mr. Esser will (except if termination is for cause) be entitled to
receive a
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lump sum payment equal in amount to three times the sum of his salary (based
upon his annual base salary at the date of termination) and average three-year
bonus payments. In addition, the Company must in such circumstances continue
Mr. Esser's then current welfare benefits for a period of three years. In no
case, however, may Mr. Esser receive any payment or benefit in connection with
a Change in Control in excess of 2.99 times his "base amount" (as that term is
defined in Section 280G of the Code). An amendment to Mr. Esser's Employment
Agreement was approved by the Board on April 27, 1995 to increase the payout
period from two years to three years and to provide that the bonuses to be
taken into account in computing the termination payments would be the bonuses
paid to him in respect of the Company's prior three full fiscal years instead
of bonuses for the 1986-1988 fiscal years. The Purchaser and Parent have agreed
to honor, and cause the Surviving Corporation to honor, Mr. Esser's Employment
Agreement and have acknowledged that the consummation of the Offer will
constitute a Change in Control as defined in the Employment Agreement. It is
estimated that Mr. Esser would receive approximately $485,000 upon a qualifying
termination of employment following the consummation of the Offer.
The Employment Agreement with Mr. Dearborn (entered into effective as of June
2, 1994) is for a term presently expiring on May 31, 1997, which term is
subject to automatic annual renewal until age 65 unless notice of non-renewal
is given on or before November 30 preceding the scheduled termination date. In
the event of the termination of employment (except if termination is for
cause), Mr. Dearborn will be entitled to receive his base salary for the
remainder of the term of the Employment Agreement (but not less than one year).
In addition, the Company must in such circumstances continue Mr. Dearborn's
then current welfare benefits for the remainder of the term of the Employment
Agreement. The Purchaser and Parent have agreed to honor, and to cause the
Surviving Corporation to honor, Mr. Dearborn's Employment Agreement. It is
estimated that Mr. Dearborn would receive approximately $450,000 upon a
qualifying termination of employment following the consummation of the Offer.
The Employment Agreement with Mr. Jones (entered into effective as of March
1, 1995) is for a term presently expiring on February 29, 1996, subject to
automatic annual renewals until age 65 unless notice of non-renewal is given on
or before December 1 preceding the scheduled termination date. In the event of
the termination of employment (including termination by Mr. Jones for Good
Reason, as defined in the Employment Agreement) within two years after a Change
in Control (as defined in the Employment Agreement) of the Company, Mr. Jones
will (except if termination is for cause) be entitled to receive a lump sum
payment equal in amount to one times the sum of his salary (based upon his
annual base salary at the date of termination) and average three-year bonus
payments. In addition, the Company must in such circumstances continue Mr.
Jones' then current welfare benefits for a period of one year. In no case,
however, may Mr. Jones receive any payment or benefit in connection with a
Change in Control in excess of 2.99 times his "base amount" (as that term is
defined in Section 280G of the Code). The Purchaser and Parent have agreed to
honor, and to cause the Surviving Corporation to honor, Mr. Jones' Employment
Agreement and have acknowledged that the consummation of the Offer will
constitute a Change in Control as defined therein. It is estimated that Mr.
Jones would receive approximately $96,000 upon a qualifying termination of
employment following the consummation of the Offer.
SEVERANCE AGREEMENTS
The Company currently is a party to severance agreements ("Severance
Agreements") with approximately 90 employees. Approximately 55 of the severance
agreements were either adopted or modified to increase the benefits thereunder
by the Board on April 27, 1995, including adoption of new agreements for two
executive officers, John F. Gleason and Lloyd Frank. The Severance Agreements
provide for the payment of certain severance and other benefits to employees
who are terminated within two years of a Change in Control of the Company (as
defined in the Severance Agreements). In the event of the termination of
employment (including termination by the employee for Good Reason, as defined
in the Severance Agreement) within two years after a Change in Control (as
defined in the Severance Agreement) of the Company, the employee will (except
if termination is for cause) be entitled to receive a lump sum payment equal in
amount to the sum of his salary (based upon his or her annual base salary at
the date of termination)
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and average three-year bonus payments multiplied by the number of months
specified in the applicable Severance Agreement, and shall continue the
employee's welfare benefits for the same period. In the case of Mr. Frank, the
applicable period will be 36 months and in the case of Mr. Gleason, the
applicable period will be 24 months and will be based upon annual base salary
only. In no case, however, may the employee receive any payment or benefit in
connection with the consummation of the Offer in excess of 2.99 times his "base
amount" (as that term is defined in Section 280G of the Code). The Severance
Agreements with Messrs. Gleason and Frank, as well as the agreements with the
other employees of the Company, were approved by the Board on April 27, 1995.
The Purchaser and Parent have agreed to honor, and to cause the Surviving
Corporation to honor, the Severance Agreements and have acknowledged that the
consummation of the Offer will constitute a Change in Control as defined in the
Severance Agreements. It is estimated that Mr. Gleason would receive
approximately $440,000 and Mr. Frank would receive approximately $300,000, upon
a qualifying termination of employment following the consummation of the Offer.
CONSULTING AGREEMENT WITH MR. BANKS
On April 30, 1995, in connection with entering into the Merger Agreement, the
Company entered into a consulting agreement with Mr. Banks (the "Consulting
Agreement"). The term of the Consulting Agreement begins on the date on which
Mr. Banks ceases to be a full-time employee of the Company following
consummation of the Offer (the "Commencement Date") and ends on the first
anniversary of the Commencement Date (the "Term"). The Consulting Agreement (i)
requires Mr. Banks to provide such consulting and advisory services to the
Company as are reasonably requested by the Company's Chief Executive Officer or
Board of Directors and (ii) subjects Mr. Banks to nondisclosure and
noncompetition restrictions during the Term and for one year thereafter. Mr.
Banks will be paid at an annual rate of $400,000 for his services under the
Consulting Agreement. In the event of the death of Mr. Banks during the Term,
Mr. Banks' spouse will receive the remainder of the consulting fee in monthly
installments. During the Term and, in some instances, for a specified period
thereafter, the Company will provide Mr. Banks with medical and health
coverage, an automobile and other specified personal benefits, including two
club memberships, and reimbursement for financial planning, which reimbursement
for financial planning shall not exceed $25,000 in the aggregate.
STOCK OPTIONS
The Company maintains the 1976 Stock Option Incentive Plan (the "1976 Option
Plan") and the 1990 Stock Option Incentive Plan, as amended (the "Option
Plan"). The Option Plan provides for grants of stock options ("Options") to
certain key employees and non-employee directors of the Company. The aggregate
number of authorized Shares available pursuant to the Option Plan is 500,000.
The Option Plan provides for the granting of non-qualified options or options
qualifying as incentive stock options under Section 422 of the Code. The
exercise price of the Shares covered by each Option may not be less than 100%
of the fair market value of such Shares on the date the Option is granted. The
Option Plan also provides that each non-employee director who is elected to the
Board for the first time at any special or annual meeting of stockholders of
the Company is to receive, on such date, an Option to purchase 10,000 Shares,
which becomes exercisable in each of the six years commencing two years after
the date of grant to the extent of one-sixth of the Shares subject to such
Option. The Option Plan and the 1976 Option Plan provide that outstanding
Options become exercisable immediately upon the occurrence of a Change in
Control of the Company (as defined in such Plans). For purposes of the Option
Plan and the 1976 Option Plan, the consummation of the Offer will constitute a
Change in Control.
In connection with the Merger, all outstanding Options will become fully
exercisable and vested. Each Option will then be cancelled and the holder of
the Option will receive an amount equal to the product of
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(A) the excess, if any, of $18.10 over the exercise price per Share of each
such Option and (B) the number of Shares relating to such Option.
Set forth below is a table indicating the treatment in the transaction of
currently outstanding Options held by executive officers and non-employee
directors of the Company. For purposes of the table, it has been assumed that
outstanding Options will not be exercised.
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<CAPTION>
AMOUNTS PAYABLE WITH RESPECT TO COMPANY OPTIONS
IN THE MERGER
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NUMBER OF OPTIONS/ AMOUNT PAYABLE UPON
EXERCISE PRICE CANCELLATION OF OPTIONS
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NON-EMPLOYEE DIRECTORS
Harold G. Bittle........ 10,000/$14.00 $41,000.00
Tully Plesser........... 10,000/$14.00 41,000.00
Arthur W. Broslat....... 10,000/$12.00 61,000.00
Philippe Erard.......... 10,000/$11.81 62,900.00
William H. Turner ...... 10,000/$18.13 0.00
EXECUTIVE OFFICERS
Russell Banks........... 423/$10.54 3,197.88
23,712/$10.54 79,262.72
10,000/$14.75 33,500.00
Joseph M. Quinn......... 5,000/$7.25 54,250.00
25,000/$9.81 07,250.00
15,000/$14.75 50,250.00
John F. Gleason......... 4,500/$14.75 15,075.00
Stephen L. Dearborn..... 10,000/$14.75 33,500.00
Lloyd Frank............. 7,875/$10.54 59,535.00
4,000/$14.75 13,400.00
Frank V. Esser.......... 5,250/$10.54 39,690.00
2,000/$14.75 6,700.00
Henry W. Jones.......... 3,500/$14.75 11,725.00
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NON-EMPLOYEE DIRECTOR FEE CONTINUATION PAYMENTS
Pursuant to the Company's existing Non-Employee Director Fee Continuation
Plan ("Fee Continuation Plan") (adopted effective as of September 16, 1988),
each person who serves as a non-employee director of the Company for at least
five years and who ceases to serve as a director after age 70, or before age 70
if such director is not re-elected or is removed as a director within three
years of a Change in Control (as defined in the Fee Continuation Plan), will
receive $20,000 per year for each of the ten years following the cessation of
his service as a director. In the event of death during this ten year period,
payments will continue to the director's designated beneficiary. The Company,
and in the event of a Change in Control, the director, may elect to receive the
amount to which he is entitled under the Fee Continuation Plan in a discounted
lump sum. The Purchaser and Parent have agreed to honor, and cause the
Surviving Corporation to honor, the Fee Continuation Plan and have acknowledged
that the consummation of the Offer will constitute a Change in Control as
defined therein. As a result of the Merger, each of Messrs. Angus MacDonald and
Peter Keane will receive $20,000 per year for ten years under the Fee
Continuation Plan. In addition, Parent and the Purchaser have agreed to honor,
and cause the Surviving Corporation to honor, the fee continuation agreement
between the Company and Mr. Robert Milano, which provides for the payment of
$20,000 per annum for life following his cessation of service as a director.
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EMPLOYEE SUPPLEMENTAL RETIREMENT
AND DEATH BENEFIT ARRANGEMENTS
The Company is a party to Supplemental Retirement and Death Benefit
Agreements effective September 15, 1988 which amend and restate agreements
entered into in 1983, as amended, with Messrs. Banks, Quinn, Gleason and Frank
(as amended and restated, the "SERP Agreements"). Each SERP Agreement provides
for the payment in each year for 15 years following cessation of employment at
age 65 or thereafter, or prior to age 65 if terminated by the Company (except
if termination is for cause) or by the employee for Good Reason (as defined in
the SERP Agreements) within three years after any Change in Control of the
Company (as defined in the SERP Agreements), of an amount equal to 30% of his
base salary for fiscal 1982. In the event of death during the 15-year period,
payments will continue during the remainder of the period to his designated
beneficiaries. In the event of death prior to cessation of employment, there
shall be payable in each year for 15 years following his death, in lieu of the
foregoing amount, an amount equal to 20% of his base salary for fiscal 1982. At
the Company's option, supplemental retirement benefits which become payable may
be paid in a discounted lump sum. However, for employees under the age of 65
who become entitled to payments upon a Change in Control, such amounts shall be
paid to the employee in an undiscounted lump sum. Each such employee is also
entitled to a post-termination death benefit in an amount equal to the lesser
of $500,000 or three times his base salary for fiscal 1982. Fiscal 1982 base
salaries for Messrs. Banks, Quinn, Gleason and Frank were $250,000, $83,841,
$140,000 and $100,000, respectively. No decision has been made as to whether
the supplemental retirement benefits will be paid in lump sums. The Purchaser
and Parent have agreed to honor, and cause the Surviving Corporation to honor,
the SERP Agreements and have acknowledged that the consummation of the Offer
will constitute a "Change in Control" as defined in the SERP Agreements. In the
event of lump sum payments, the estimated amounts of such payments to Messrs.
Banks, Quinn, Gleason and Frank would be $620,830, $377,285, $347,665 and
$248,332, respectively.
BONUS PLAN
For the fiscal year of the Company ending June 30, 1995, the Company will
determine the bonus pools for the short term bonus arrangements of the Company
using the same objective criteria that were used to determine such bonus pools
for the fiscal year of the Company ended June 30, 1994. Parent shall, to the
extent said bonus arrangements call for a discretionary allocation of the bonus
pool, allocate the entire bonus pool and consult with Messrs. Banks, Frank and
Keane (the current Chairman of the Compensation Committee of the Board) to
ascertain their views with respect to the appropriate allocation of said bonus
pool. Assuming net income per share for fiscal 1995 of $.62 (which is the
Company's current projection for net income per share for fiscal 1995), the
aggregate bonus pool available for discretionary allocation to corporate
headquarters (which would include approximately 35 persons, among whom are
Messrs. Banks, Quinn, Gleason, Dearborn, Frank, Jones and Esser) would be
approximately $590,000. To the best knowledge of the Company, Parent has not
made any determination as to how any discretionary bonuses would be allocated
among the possible recipients.
ESOP
Most Company employees (including all the executive officers) are
participants in the Company's Employee Stock Ownership and Savings Plan
("ESOP"), which holds approximately 560,600 Shares as of May 1, 1995. As
permitted by the Merger Agreement, it is the intention of the Company to make a
contribution to the ESOP of approximately $2.6 million prior to the
consummation of the Offer in order to permit the ESOP to repay its remaining
debt. Such a contribution would permit allocation of additional Shares to the
ESOP accounts of all participants in accordance with the provisions of the ESOP
and applicable law. As of the Effective Time (as defined below), the ESOP will
be terminated and each ESOP participant will be given the opportunity to
receive his or her account balance under the ESOP in a lump sum distribution or
to have such account balance transferred to an individual retirement account.
While individual allocations will vary, it is estimated that, as a result of
the repayment of the ESOP's debt, Shares having a value of approximately
$20,000 would be allocated to each of the Company's executive officers.
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The trustees for the ESOP are Messrs. Russell Banks, Lloyd Frank and Peter
Keane ("Trustees"). Pursuant to the applicable documents governing the ESOP,
the Trustees have the authority to determine whether ESOP Shares will be
tendered in the Offer. The Trustees, who are required to act in accordance with
their fiduciary duties under the Employee Retirement Income Security Act of
1974, as amended, have indicated their intention to tender all ESOP Shares.
SAVINGS PLAN
The Company also maintains an Employee Stock Ownership and Savings Plan (the
"Savings Plan"), which holds approximately 128,000 Shares as of December 31,
1994. Pursuant to the applicable documents governing the Savings Plan, the
trustee of the Savings Plan, as independent third party institution, has the
authority to determine whether to tender the Savings Plan Shares in the Offer.
CERTAIN EMPLOYEE PROVISIONS IN THE MERGER AGREEMENT
The Merger Agreement provides that, during the six-month period following the
Effective Time, employees who continue to be employed by the Company following
the Effective Time will either continue to participate in the same employee
benefit plans and arrangements as those in which they were participating
immediately prior to the Effective Time or be provided with benefits that are
no less favorable in the aggregate than the existing benefit plans and
arrangements. With respect to such benefits during such six-month period,
service accrued by Company employees during employment with the Company prior
to the Effective Time will be recognized to the extent and for the purposes
such service was recognized prior to the Effective Time by the applicable
employee plan or benefit arrangements. The Surviving Corporation has reserved
the right to terminate the employment of any employee after the Effective Time.
None of Parent, the Purchaser or the Surviving Corporation will be required to
recognize service with the Company prior to the Effective Time after the end of
such six month period except as required by law; provided that with respect to
Company employees who are participants in a nonunion employee plan, Parent and
the Purchaser have agreed to cause its nonunion employee benefit plans to
recognize, for purposes of vesting and eligibility to participate only, service
which is recognized for such purposes by the comparable employee benefit plan
of the Company with respect to employees who otherwise become eligible to
participate in an employee benefit plan of Parent or its subsidiaries. In
addition, (i) the Purchaser and Parent will honor, in accordance with their
terms, all employment and severance agreements in effect or authorized by the
Company's Board of Directors on or before the date of the Merger Agreement, as
well as the above-described retirement obligations to certain members of the
Board of Directors, and (ii) short-term bonuses for the current fiscal year
generally will be determined on the basis of the same criteria used for such
purpose for the immediately prior fiscal year (see "Bonus Plan" above).
THE MERGER AGREEMENT
The summary of the Merger Agreement contained in the Offer to Purchase, which
has been filed with the Securities and Exchange Commission (the "Commission")
as an exhibit to the Schedule 14D-1, a copy of which is enclosed with this
Schedule 14D-9, is incorporated herein by reference. Such summary should be
read in its entirety for a more complete description of the terms and
provisions of the Merger Agreement. A copy of the Merger Agreement has been
filed as Exhibit 1 hereto and is incorporated herein by reference. The
following is a summary of certain portions of the Merger Agreement which relate
to arrangements among the Company, Purchaser, Parent and the Company's
executive officers and directors and certain other significant provisions.
Board Representation. The Merger Agreement provides that, effective upon the
acceptance for payment by Parent of any Shares, Parent shall be entitled to
designate the number of directors, rounded up to the next whole number, on the
Company's Board of Directors that equals the product of (i) the total number of
directors on the Company's Board of Directors (giving effect to the election of
any additional directors pursuant to such provision) and (ii) the percentage
that the number of Shares owned by Parent (including Shares accepted for
payment and, assuming the number of Shares owned by Parent or accepted for
payment
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constitute at least a majority of the outstanding Shares on a fully diluted
basis, the 4,025,841 Shares owned by Corimon Corporation (the "Corimon
Shares")) bears to the total number of Shares outstanding. The Company is
required to take all action necessary to cause Parent's designees to be elected
or appointed to the Company's Board of Directors, including, without
limitation, increasing the number of directors and seeking and accepting
resignations of incumbent directors. At such times, the Company will use its
best efforts to cause individuals designated by Parent to constitute the same
percentage as such individuals represent on the Company's Board of (x) each
committee of the Board (other than any committee of the Board established to
take action under the Merger Agreement), (y) each board of directors of each
subsidiary of the Company and (z) each committee of each such board. The Merger
Agreement provides that, notwithstanding the foregoing, until the effective
time of the Merger (the "Effective Time"), the Company shall retain as members
of its Board of Directors at least two directors who are directors of the
Company on the date of the Merger Agreement.
The Merger Agreement provides that from and after the time, if any, that
Parent's designees constitute a majority of the Company's Board of Directors,
any amendment of the Merger Agreement, any termination of the Merger Agreement
by the Company, any extension of time for performance of any of the obligations
of Parent or the Purchaser thereunder, any waiver of any condition to the
obligations of the Company or any of the Company's rights thereunder or other
action by the Company thereunder may be effected only by the action of a
majority of the directors of the Company then in office who were directors of
the Company on the date of the Merger Agreement, which action shall be deemed
to constitute the action of the full Board of Directors; provided, that if
there shall be no such directors, such actions may be effected by majority vote
of the entire Board of Directors of the Company.
The Merger Agreement provides that the Company's obligation to appoint
Parent's designees to the Company's Board is subject to Section 14(f) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), which
requires the Company to mail to its shareholders the Information Statement
containing the information required by Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder. A copy of the Information Statement is
attached as Schedule I hereto and is incorporated herein by reference.
Director and Officer Indemnification and Insurance. The Merger Agreement
provides that for six years after the Effective Time, Parent will, and will
cause the Surviving Corporation to, (i) indemnify and hold harmless the present
and former officers, directors, employees and agents of the Company in respect
of acts or omissions occurring prior to the Effective Time (including, without
limitation, in respect of acts or omissions in connection with the Merger
Agreement and the transactions contemplated thereby) and (ii) advance to such
persons expenses incurred in defending any action or suit with respect to such
matters, in each case to the extent such persons are entitled to
indemnification or advancement of expenses under the Company's or any
subsidiary's certificate of incorporation and bylaws in effect on the date of
the Merger Agreement and subject to the terms of such certificates of
incorporation and bylaws. In the event any claim or claims are asserted or made
within such six year period, all rights to indemnification in respect of any
such claim or claims shall continue until disposition of any and all such
claims. The Merger Agreement provides that all rights to indemnification and
all limitations on liability existing in favor of any such officer, director,
employee or agent as provided in the Company's Certificate of Incorporation and
By-laws as in effect as of the date of the Merger Agreement will survive the
Merger and will continue in full force and effect. The Merger Agreement
provides that any determination required to be made with respect to whether
such person is entitled to indemnification will be made by independent legal
counsel selected mutually by such person and Parent.
The Merger Agreement provides that for six years after the Effective Time,
Parent will cause the Surviving Corporation to use its best efforts to provide
officers' and directors' liability insurance in respect of acts or omissions
occurring prior to the Effective Time covering each such person currently
covered by the Company's officers' and directors' liability insurance policy on
terms with respect to coverage and amount no less favorable than those of such
policy in effect on the date of the Merger Agreement; provided that in
satisfying its obligation, Parent shall not be obligated to cause the Surviving
Corporation to pay premiums in
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excess of $400,000 per annum; provided further that if the premiums would
exceed $400,000 in a given year, the Surviving Corporation shall use its best
efforts to purchase coverage that in the opinion of the Surviving Corporation
is the best available for $400,000 per year. The Merger Agreement provides that
Parent will cause the Surviving Corporation to continue to indemnify in
accordance with the Company's past practices certain employees in respect of
certain identified lawsuits.
No Solicitation of Offers. From the date of the Merger Agreement until the
termination thereof, the Company and its subsidiaries and the officers,
directors, employees or other agents of the Company and its subsidiaries have
agreed not to, directly or indirectly, (i) take any action to solicit, initiate
or encourage any Acquisition Proposal (as defined below) or (ii) subject to the
fiduciary duties of the Board of Directors under applicable law as advised by
counsel, engage in negotiations with, or disclose any nonpublic information
relating to the Company or any subsidiary or afford access to the properties,
books or records of the Company or any subsidiary to, any person that may be
considering making, or has made, an Acquisition Proposal. The Company has
agreed to promptly notify Parent 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
or for access to the properties, books or records of the Company or any
subsidiary by any person that may be considering making, or has made, an
Acquisition Proposal and has agreed to keep Parent fully informed of the status
and details of any such Acquisition Proposal, indication or request. 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 Merger Agreement. Such restriction will not
prohibit the Company or its Board of Directors from taking and disclosing to
the Company's shareholders a position with respect to a tender or exchange
offer by a third party pursuant to Rules 14d-9 and 14e-2(a) promulgated under
the Exchange Act or from making such disclosure to the Company's shareholders
or otherwise which, in the judgment of the Board of Directors with the advice
of independent legal counsel, may be required under applicable law or rules of
any stock exchange. The Merger Agreement provides that references therein to
the "fiduciary duties" of the members of the Board mean the fiduciary duties of
such members to the holders of Shares other than Corimon Corporation.
Break-up Fee. The Company has agreed to pay Parent in respect of its expenses
an amount in immediately available funds equal to $8,000,000 promptly, but in
no event later than two business days, after the occurrence of any of the
following events (a "Trigger Event"):
(i) the Company shall have entered into, or shall have publicly announced
its intention to enter into, an agreement or an agreement in principle with
respect to any Acquisition Proposal other than the transactions
contemplated by the Merger Agreement;
(ii) the Board of Directors of the Company shall have withdrawn or
materially modified its approval or recommendation of the Offer or the
Merger Agreement other than as a result of Parent's breach of the Merger
Agreement; or
(iii) any person or group (as defined in Section 13(d)(3) of the Exchange
Act) (other than Parent or any of its affiliates) shall have become the
beneficial owner (as defined in Rule 13d-3 promulgated under the Exchange
Act) of at least 25% of any class or series of capital stock of the Company
(including the Shares), or shall have acquired, directly or indirectly, at
least 25% of the assets of the Company other than acquisitions of
securities for bona fide arbitrage purposes only and other than Corimon or
its affiliates; or Corimon and its affiliates shall beneficially own more
than 28% of the Shares.
CORIMON OPTION AGREEMENT
The following is a summary of the Option Agreement, dated as of April 30,
1995, among Parent, the Purchaser, 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 2 hereto and is incorporated herein by reference.
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Exercise of Option. Pursuant to the Corimon Option Agreement, Stockholder
granted to Parent 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 Parent 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, Parent may elect to change the August 31, 1995 date to
no later than October 31, 1995); provided that Parent 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) Parent has paid for or accepted for payment all Shares
properly tendered and not withdrawn pursuant to the Offer (the "Tendered
Shares") in accordance with the terms of the Offer and the 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 Parent pursuant to the Offer or the 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.
Parent may allow the Option to expire without purchasing the Shares
thereunder; provided however that once Parent has delivered to the Stockholder
notice that Parent will exercise the Option (the "Exercise Notice"), Parent
will be bound to effect the purchase as described in such Exercise Notice; and
provided further that if the Corimon Minimum Condition is satisfied, Parent
shall thereafter be bound to exercise the Option within two business days
following the date of such satisfaction. The Corimon Option Agreement
terminates upon the termination of the Merger Agreement.
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 below) existing as of the date of
the 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 Offer unless directed to do so by Parent; provided that if
it is so directed by Parent, Stockholder will, to the extent permitted by
certain permitted Liens, properly tender or cause to be tendered the Corimon
Shares into the 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 Offer, Stockholder will pay, subject to applicable law, to
Parent 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 above); (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
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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
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.
Stockholder and Corimon have agreed to notify Parent 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 Parent 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 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 Merger, the Merger Agreement (as amended
from time to time) or any of the transactions contemplated by the 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 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 Merger Agreement or which could result in
any of the conditions to any party's obligations under the Merger Agreement not
being fulfilled.
Certain Claims. The Corimon Option 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 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 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.
NON-DISCLOSURE AGREEMENT
The following is a summary of certain provisions of the Non-Disclosure
Agreement between the Company and Parent, filed as Exhibit 3 hereto and
incorporated herein by reference. The summary is qualified in its entirety by
reference to the Non-Disclosure Agreement. Pursuant to the Non-Disclosure
Agreement, Parent agreed, among other things, to keep confidential certain
information furnished to it by the Company (the "Information") and to use the
Information solely for the purpose of evaluating a possible transaction with
the Company. Parent has further agreed that (i) it will be entitled to maintain
for investment purposes only any common stock of the Company as listed on the
New York Stock Exchange provided always that such interest is no greater than
15% of all the issued securities of the Company; and (ii) for a period of two
years from the date of the Non-Disclosure Agreement, neither Parent nor any of
its affiliates, including any person or entity directly or indirectly through
one or more intermediaries, controlling Parent or controlled by or under common
control with Parent, will purchase, offer or agree to purchase any securities
or assets of the Company, enter or agree to enter into any acquisition or other
business combination, relating to the Company, or make, or induce any other
entity to make or negotiate or otherwise deal with others for a tender or
exchange offer of common stock of the Company, solicit proxies, votes or
consents other than for nominees
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selected by the Company's Board of Directors, or otherwise seek to acquire
control of the Company unless such purchase, transaction, offer, agreement or
proposal shall have previously been approved by the Company's Board of
Directors. The Non-Disclosure Agreement will survive any termination of the
Merger Agreement.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) RECOMMENDATION OF THE BOARD OF DIRECTORS.
The Board of Directors has unanimously determined that the consideration to
be paid for each Share in the Offer and the Merger is fair to the shareholders
of the Company and that the Offer and the Merger are otherwise in the best
interests of the Company and its shareholders, has approved and adopted the
Merger Agreement and the transactions contemplated thereby, including the Offer
and the Merger, and recommends that all holders of Shares accept the Offer and
tender their Shares pursuant to the Offer.
A letter to the Company's shareholders communicating the Board's
recommendation and a press release announcing the Merger Agreement and related
transactions are filed herewith as Exhibits 4 and 5, respectively, and are
incorporated herein by reference.
(b) BACKGROUND; REASONS FOR THE BOARD'S RECOMMENDATION.
Background. On November 4, 1994, following a contact with Parent initiated by
a representative of Wertheim Schroder Co. Incorporated, the Company's financial
advisor ("Wertheim Schroder"), Mr. Russell Banks, President and Chief Executive
Officer of the Company, met in London with Mr. John Dewhurst, the General
Manager of Planning and Acquisitions of Parent, to discuss on a preliminary
basis whether Parent would be interested in considering a possible acquisition
of the Company or a significant portion of its assets. On November 22, 1994,
Mr. John Thompson, the Chief Planner of the paints division of Parent, met in
New York with Mr. Banks to further discuss on a preliminary basis Parent's
interest in the Company.
On December 1, 1994, Parent and the Company entered into a Non-Disclosure
Agreement (the "Non-Disclosure Agreement") pursuant to which Parent agreed to
keep confidential non-public information to be furnished by the Company to
Parent. During December 1994, the Company furnished Parent with certain non-
public information pursuant to the Non-Disclosure Agreement and Mr. Banks met
with Mr. Thompson to discuss possible alternative structures for an acquisition
by Parent of the Company or a significant portion of its assets.
In late December 1994, a representative of Wertheim Schroder met with Mr.
Thompson near London and there was a discussion concerning the possibility of
Parent acquiring the entire Company.
On January 16, 1995, Parent sent a letter to the Company stating that based
on its preliminary, non-binding evaluation, Parent valued the Company's
Coatings and Chemicals Group for purposes of an asset acquisition in the range
of $250-$275 million. Parent's letter also stated that while Parent's
preference was to purchase the assets of the Company's Coatings and Chemical
Group, it was prepared to consider a transaction based on a purchase of the
Company's Shares. The letter further stated that Parent was prepared to
commence negotiations with the Company, and Parent requested further due
diligence and a 90-day exclusive negotiating period.
On January 19, 1995, Mr. Banks met in New York with Mr. Thompson and Mr.
Herman Scopes, the Chief Executive Officer of the paints division of Parent, to
conduct further discussions concerning Parent's interest in the Company. Mr.
Banks stated that the Company would not be interested in pursuing a sale of the
assets of its Coatings and Chemicals Group because, among other reasons,
Parent's proposal did not contemplate an assumption of liabilities and the sale
of assets would have resulted in a substantial tax liability to the Company.
Mr. Banks also advised Messrs. Scopes and Thompson that the Company would not
agree to grant Parent exclusive negotiating rights, but would permit Parent to
conduct further due diligence.
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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 to assist the Company in considering and reviewing
alternatives to enhance shareholder value.
During the period between February 7, 1995 and February 10, 1995,
representatives of Parent conducted business and legal due diligence with
respect to the Company at the offices of Wertheim Schroder in New York. On
February 8, 1995, the Board of Directors of the Company met and Mr. Banks
reviewed with the Board the status of discussions between the Company and
Parent.
On February 21, 1995, Mr. Banks and another officer of the Company met with
Mr. Thompson in New York. At that meeting, Mr. Thompson discussed Parent's
valuation of the Company based on its due diligence review to date and stated
that Parent had a preliminary interest in negotiating an acquisition of all
Shares at a price in the range of $17.50 to $18.50 per Share. Mr. Banks
informed Mr. Thompson that the Company would not be interested in entering into
negotiations with Parent on that basis at that time. Mr. Thompson also stated
that Parent's Board of Directors would be meeting the following day and, at
such meeting, Parent's Board would consider Parent's valuation of the Company.
Later in the day of February 21, 1995, Mr. Thompson met with representatives of
Wertheim Schroder to discuss Parent's valuation of the Company.
On February 22, 1995, Mr. Thompson informed Mr. Banks that Parent's Board of
Directors had determined that Parent would not be interested in acquiring the
Company at a price in excess of $17.50 per Share. By letter dated February 22,
1995, Mr. Thompson confirmed to Mr. Banks that the Board of Directors of Parent
had indicated that its non-binding valuation for an acquisition of the Company
through a cash offer for all Shares was $17.50 per Share. The letter stated
that this valuation was based on the information supplied by the Company to
Parent as of such date and was subject to (i) completion of due diligence, (ii)
approval by the Boards of Directors of Parent and the Company of a mutually
acceptable Merger Agreement, (iii) the Company dealing exclusively with Parent
for a period of 60 days, (iv) appropriate governmental and regulatory
approvals, and (v) the Company maintaining the confidentiality of the letter.
Following receipt of Mr. Thompson's February 22, 1995 letter, Mr. Banks and
representatives of Wertheim Schroder again informed Parent that the Company was
not prepared at that time to enter into negotiations based on the $17.50 per
Share valuation and requested Parent to review its valuation analysis with a
view toward increasing the price which it would be prepared to pay to acquire
the Company. The Company's representatives also declined to grant Parent
exclusive negotiating rights.
The Company understands that on March 6, 1995, Mr. Thompson met in Miami with
Mr. Arthur Broslat, Executive Vice President of Corimon and a member of the
Company's Board of Directors, to discuss whether Corimon would be willing to
sell its Shares to Parent in the event of a bid from Parent to acquire the
Company. The Company understands that Mr. Broslat confirmed such willingness,
subject to a satisfactory offer.
On March 8, 1995, Mr. Banks and other representatives of the Company and
Wertheim Schroder met with Mr. Scopes in New York, and Mr. Scopes requested
that Parent be permitted to conduct additional due diligence, including on-site
due diligence at locations other than the Company's New York headquarters. Mr.
Banks stated that the Company would not permit on-site due diligence unless
Parent indicated a willingness to consider an acquisition of the Company at a
price in excess of $17.50 per Share.
Following the issuance of the Company's press release on January 26, 1995,
the Company and representatives of Wertheim Schroder engaged in discussions
with several third parties to determine whether they had an interest in
acquiring the Company. Certain of these third parties were furnished with
confidential information. None of these contacts with parties other than Parent
led to substantive negotiations.
On March 21, 1995, Mr. Banks, other officers of the Company and a
representative of Wertheim Schroder met in New York with Mr. Scopes to discuss
Parent's valuation of the Company and its request for additional due diligence.
On March 22, 1995, Mr. Scopes sent a letter to Mr. Banks setting forth Parent's
additional due diligence requests.
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On April 3, 1995, Mr. Banks met in London first with Mr. Scopes and Sir
Ronald Hampel, Chief Executive and Chairman of the Board-designate of Parent,
and subsequently with Messrs. Scopes and Thompson. At such meetings, Parent's
representatives advised Mr. Banks that Parent was prepared to consider the
possibility of improving its $17.50 per Share valuation if justified by further
due diligence and, as a result, Mr. Banks agreed to permit Parent to conduct
additional due diligence, including on-site due diligence at locations outside
of the Company's New York headquarters. During the period between April 10,
1995 through April 19, 1995, representatives of Parent conducted additional
business and legal due diligence, including on-site due diligence at various of
the Company's plants and facilities.
On April 13, 1995, Mr. Banks and another officer of the Company met in New
York with Mr. Thompson and Mr. John Danzeisen, President of The Glidden
Company, a subsidiary of Parent. Mr. Banks described the Company's preliminary
estimate of results for the third fiscal quarter ended March 31, 1995 and the
Company's revised estimates for the full fiscal year.
On April 21, 1995, Mr. Banks and another officer of the Company met with
Messrs. Thompson and Danzeisen in New York. Messrs. Thompson and Danzeisen
expressed concern regarding the Company's performance in the third quarter. Mr.
Thompson also stated that based on Parent's additional due diligence review,
Parent continued to believe that $17.50 was the appropriate per Share valuation
for the Company. Mr. Banks again requested that Parent reconsider its valuation
of the Company with a view towards improving its proposal.
On the evening of April 24, 1995, counsel for Parent delivered to the Company
and its counsel a draft Merger Agreement proposed by Parent.
On April 26, 1995, Mr. Banks and another officer of the Company, together
with representatives of Wertheim Schroder, met with Mr. Thompson. Mr. Thompson
again stated that Parent was not prepared to increase its proposed $17.50 per
Share price. Mr. Thompson further stated that as part of any transaction,
Parent would expect to receive 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, and a termination fee in the event the
Company were to terminate the Merger Agreement in order to accept a competing
offer. The Company's representatives again requested that Parent consider
improving its $17.50 per Share proposal. They also stated that the Company was
not prepared to consent to a "lock-up" by Parent of Corimon's Shares and that
the Company would be unwilling to agree to any termination fee in a transaction
at $17.50 per Share. The Company's representatives also noted that pursuant to
a pre-existing standstill agreement between the Company and Corimon, Corimon
was not permitted to sell its Shares to Parent without the Company's prior
approval.
During the meeting held on April 26, 1995, there was a discussion as to
whether Parent would be willing to increase its proposed price of $17.50 per
Share to shareholders other than Corimon if Corimon would agree to sell its
Shares to Parent for $17.50 per Share. Mr. Banks stated he would discuss this
possibility with representatives of Corimon.
Later in the day of April 26, 1995, Mr. Banks and other representatives of
the Company met with Mr. Broslat and Mr. Philippe Erard, Chairman and Chief
Executive Officer of Corimon and a member of the Company's Board of Directors,
to inquire whether Corimon would be willing to sell its Shares at a price of
$17.50 per Share while the other shareholders of the Company would receive a
higher price. The Corimon representatives indicated a general willingness to
sell Corimon's Shares at a price of $17.50 per Share in order to facilitate a
transaction between Parent and the Company.
The Company understands that on the same day, Messrs. Scopes, Thompson and
Danzeisen also met with Messrs. Broslat and Erard to discuss the same issue.
The Company's Board of Directors met during the evening of April 26, 1995,
and Mr. Banks and a representative of Wertheim Schroder advised the Board as to
the status of the discussions with Parent. The Company's outside counsel also
attended the Board meeting.
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In the early morning of April 27, 1995, Mr. Thompson advised Mr. Banks in a
telephone conversation that Parent was prepared to increase its proposed price
from $17.50 per Share to $18.10 per Share based on Corimon's stated willingness
to sell its Shares at a price of $17.50 per Share. Mr. Thompson also advised
Mr. Banks that Parent's proposed price of $18.10 per Share was conditioned upon
the receipt by Parent of a "lock-up" on Corimon's Shares and a termination fee
equal to 2% of the aggregate purchase price. Mr. Banks stated that he would
discuss Parent's proposal with the Company's Board of Directors which was
scheduled to meet again that morning.
At the Company's Board of Directors' meeting on April 27, 1995, Mr. Banks
reviewed the proposal made by Mr. Thompson earlier that morning. After a
lengthy discussion with representatives of Wertheim Schroder and outside
counsel, the directors expressed concern about the proposed "lock-up" on the
Corimon Shares. The Board instructed Wertheim Schroder to request Parent to
improve its proposed purchase price and to advise Parent that the Board
requested that there be no "lock-up" on the Corimon Shares.
On April 27, 1995, following the meeting of the Company's Board of Directors,
representatives of Wertheim Schroder met with Mr. Thompson and advised him with
respect to the position of the Company's Board of Directors. Mr. Thompson
responded that Parent would not increase its proposed price of $18.10 per
Share, but would reconsider its request for a "lock-up" on the Corimon Shares.
Later in the day of April 27, 1995, Mr. Thompson advised representatives of
Wertheim Schroder that Parent would agree to eliminate the "lock-up" it had
requested on Corimon's Shares provided that the termination fee was increased
from 2% of the aggregate purchase price (approximately $5.8 million) to $12
million. The Company's representatives and Mr. Thompson then reached an
understanding that Parent could enter into an option agreement with Corimon so
long as it provided that Parent could only acquire Corimon's Shares if Parent
consummated the Offer and that Parent's right to purchase the Corimon Shares
would terminate if the Merger Agreement terminated.
Mr. Banks, together with representatives of Wertheim Schroder, considered Mr.
Thompson's proposal concerning a $12 million termination fee, and advised Mr.
Thompson that the Company would be unwilling to agree to a termination fee in
that amount. Following further discussions during the afternoon of April 27,
1995, Mr. Thompson stated that Parent would agree to reduce the proposed
termination fee from $12 million to $8 million.
Starting on April 28, 1995, Company representatives and Parent
representatives and their respective counsel and financial advisors negotiated
the terms of the 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 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.
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On the night of April 28, 1995, Mr. Conway G. Ivy, Vice President, Corporate
Planning and Development, of The Sherwin-Williams Company ("Sherwin-Williams")
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
16
<PAGE>
On the morning of April 29, 1995, Mr. Banks advised Mr. Thompson that the
Company had received the above letter from Sherwin-Williams. Also, on April 29,
1995, Mr. Thompson rejected a request from a representative of the Company that
Parent increase the proposed purchase price and Mr. Banks rejected Parent's
request that the Company increase the termination fee from $8 million to $10
million. Mr. Thompson advised the Company on April 29, 1995 that it was
Parent's expectation that negotiations with the Company would be completed
prior to the opening of business on May 1, 1995.
Starting in the afternoon of April 30, 1995, the Company's Board of Directors
met to consider Parent's offer of $18.10 per Share. The terms of the proposed
transaction and related 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 Parent to the public shareholders of the
Company. The full Board of Directors discussed the proposed 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
Parent's offer for the reasons described below, and it approved the Merger
Agreement and the transactions contemplated thereby and unanimously recommended
that shareholders accept the Offer and tender their Shares pursuant thereto.
The Board of Directors also 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 the Corimon Option Agreement.
The Company and Parent entered into the 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 Merger Agreement. Later in the
day on May 1, 1995, Mr. 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.
Reasons for the Transaction; Factors Considered by the Board. In approving
the Merger Agreement and the transactions contemplated thereby and recommending
that all holders of Shares tender their Shares pursuant to the Offer, the Board
of Directors considered a number of factors including:
1. the presentation of Wertheim Schroder at the April 30, 1995 Board of
Directors' meeting and the opinion of Wertheim Schroder to the effect that,
as of the date of its opinion and based upon and subject to certain matters
stated therein, the $18.10 per Share cash consideration to be received by
the holders of Shares pursuant to the Offer and the Merger is fair, from a
financial point of view, to the public shareholders of the Company. (As
used in the Wertheim Schroder opinion and as used herein, "public
shareholders" means all shareholders other than Corimon.) The full text of
Wertheim Schroder's written opinion, which sets forth the assumptions made,
matters considered and limitations on the review undertaken by Wertheim
Schroder, is attached hereto as Exhibit 6 and is incorporated herein by
reference. SHAREHOLDERS ARE URGED TO READ THE OPINION OF WERTHEIM SCHRODER
CAREFULLY IN ITS ENTIRETY;
2. the fact that the proposed structure of the Offer and Merger involves
an immediate cash tender offer for all outstanding Shares to be followed by
a merger for the same consideration, thereby enabling the Company's public
shareholders to obtain cash for their Shares at the earliest possible time;
3. the fact that the Merger Agreement, which prohibits the Company, its
subsidiaries or its affiliates from initiating, soliciting or encouraging
any potential Acquisition Proposal (as defined in the Merger Agreement),
does permit the Company to furnish non-public information to, allow access
by and participate in discussions and negotiations with, any third party
that has submitted an Acquisition Proposal to the Company, if the Board of
Directors under applicable law as advised by counsel determines that it is
advisable to do so in the exercise of its fiduciary duties;
17
<PAGE>
4. the fact that in the event that the Board decided to accept an
Acquisition Proposal by a third party, the Board may terminate the Merger
Agreement and pay Parent a termination fee of $8 million (or approximately
$.50 per Share). The Board, after considering the advice of Wertheim
Schroder, did not believe that such termination provision would be a
significant deterrent to a higher offer by a third party interested in
acquiring the Company;
5. the terms and conditions of the Merger Agreement, including the fact
that the obligations of Parent and Purchaser to consummate the Offer and
the Merger is not conditioned upon financing;
6. the fact that on January 26, 1995, the Company issued a press release
stating that the Board of Directors had authorized Wertheim Schroder to
assist the Company in considering and reviewing alternatives to enhance
shareholder value; and the fact that since such time the Company had
preliminary discussions with certain third parties regarding an acquisition
of the Company but none of such preliminary discussions led to substantive
negotiations for the acquisition of the Company;
7. the fact that the Company was in negotiations with a third party to
acquire the Company at a price of $18.10 was publicly disclosed on April
28, 1995, that the Offer and the Merger would be publicly disclosed on May
1, 1995, that the earliest date that the Offer could be consummated is May
30, 1995 and that, based on the advice of Wertheim Schroder, it was highly
likely that third parties which might be interested in making a competitive
offer for the Company would learn of the Offer and Merger very promptly and
would likely have sufficient time to make such an offer should they wish to
do so;
8. the letter received by the Company on April 28, 1995 from Sherwin-
Williams, including the fact that Sherwin-Williams' interest in pursuing a
transaction with the Company was subject to due diligence and that such
letter did not state that Sherwin-Williams was prepared to pay in excess of
$18.10 per Share. The Board also considered the advice from its financial
and legal advisors that the terms of the Merger Agreement and Corimon
Option Agreement should not unduly discourage Sherwin-Williams or other
third parties from making bona fide proposals subsequent to signing the
Merger Agreement and, if any such proposal was made, the Company, in the
exercise of its fiduciary duties, could determine to provide information to
and engage in negotiations with Sherwin-Williams or any other third party.
In addition, the Board considered Wertheim Schroder's advice that, based on
their analyses, the price of $18.10 per Share was towards the high end of
the range of fairness;
9. the historical market prices of, and recent trading activity in, the
Shares, particularly the fact that the Offer and the Merger will enable the
shareholders of the Company to realize a significant premium (30.45%) over
the closing price of the Shares on the last trading day prior to the public
announcement on January 26, 1995 that the Company was reviewing
alternatives to enhance shareholder value, and a premium (6.77%) over the
closing price of the Shares on the last trading day prior to the public
announcement on April 28, 1995 that the Company was in negotiations
relating to the proposed transaction;
10. information with regard to the financial condition, results of
operations, cash flow, competitive position, business and prospects of the
Company, as reflected in the Company's projections, as well as the risks
involved in achieving those prospects especially in light of the recent
decrease in earnings of the Company (as described in paragraph 15 below),
current economic and market conditions (including current conditions in the
industries in which the Company is engaged) and the going concern value of
the Company; the Board did not consider the liquidation of the Company as a
viable course of action, and, therefore, no appraisal or liquidation values
were sought for purposes of evaluating the Offer and the Merger;
11. the possible alternatives to the Offer and the Merger, including,
without limitation, continuing to operate the Company as an independent
entity and the risks associated therewith;
12. the fact that Corimon, a 25% shareholder of the Company with three
representatives serving on the Company's Board of Directors, has indicated
that it desires to liquify its position in the Company and was in favor of
the Offer and the Merger;
18
<PAGE>
13. the fact that in order to facilitate the Offer and Merger, Corimon
has agreed to sell its Shares for $17.50 per Share so that the public
shareholders may receive $18.10 per Share in the Offer and Merger;
14. the terms and conditions of the Corimon Option Agreement, including
the fact that Corimon would be free to sell its Shares to a competing
bidder in the event that the Company's Board of Directors decided to accept
an Acquisition Proposal from such competing bidder;
15. the familiarity of the Board of Directors with the business, results
of operations, properties and financial condition of the Company and the
nature of the industries in which it operates, based, in part, upon
presentations by management of the Company, including the prospects if the
Company were to remain independent; in particular, the Board noted that the
recent results of operations for the Company's third fiscal quarter ended
March 31, 1995 reflected a net loss of approximately $868,000 (or a loss of
($.05) per Share) as compared to net income of $1,278,000 (or $.08 per
Share) for the comparable period of the prior fiscal year, reflecting a
significant decrease, and that net income for fiscal 1995 was projected,
based on current information, to be approximately $10,046,000 ($.62 per
Share) compared to $14,056,000 ($.87 per Share) for fiscal 1994, reflecting
a projected decrease of approximately 28.5%;
16. the compatibility of the business and operating strategies of Parent
and the Company regarding, among other things, geographic areas, services,
planned expansion and distribution and the potential efficiencies and
synergies expected to be realized by combining the operations of the
Company and Parent;
17. the representation of Parent and the Purchaser that they have
sufficient funds available to them to consummate the Offer and the Merger;
and
18. the regulatory approvals required to consummate the Merger,
including, among others, antitrust approvals, and the prospects for
receiving such approvals.
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 and recommendation as being based on the
totality of the information presented to and considered by it.
The financial projection set forth in paragraph 15 above has been prepared by
the Company based on information available to it, but such projection was not
prepared for publication or with a view to complying with the published
guidelines of the Securities and Exchange Commission regarding financial
projections or with the AICPA Guide for Prospective Financial Statements. While
presented with numerical specificity, the financial projection necessarily
reflects numerous assumptions with respect to industry performance, general
business and economic conditions, the availability and cost of capital and
other matters, many of which are inherently uncertain, difficult or impossible
to predict or are beyond the Company's control. Accordingly, such financial
projection is inherently imprecise and there can be no assurance that it can be
realized. Also, it is expected that there will be a difference between actual
and projected results, and actual results may vary materially from those
contained in the financial projection. Presentation of this information should
not be regarded as an indication that the Company or anyone else considers it a
reliable prediction of future events or actual results and this information
should not be relied on as such.
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 public
shareholders of the Company. The Company agreed to pay Wertheim Schroder a fee
of $50,000 on the date the letter agreement between the Company and Wertheim
Schroder was signed and an additional fee of 1% of the aggregate consideration
(as defined in
19
<PAGE>
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 Offer and Merger are consummated, the Company will pay Wertheim Schroder a
fee of approximately $2.9 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 Offer or the Merger.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Except for the Corimon Option Agreement and as set forth in Schedule II
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.
(b) To the best knowledge of the Company, except for Corimon as described
above under Item 3--Corimon Option Agreement, all of its executive officers,
directors, affiliates and subsidiaries currently intend to tender pursuant to
the Offer all Shares held of record or beneficially owned by them (other than
Shares issuable upon exercise of stock options and Shares, if any, which if
tendered could cause such persons to incur liability under the provisions of
Section 16(b) of the Exchange Act).
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in this Schedule 14D-9, the Company is not engaged in
any negotiation in response to the 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) Except as described in Item 3(b) and Item 4 above (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
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 AMENDMENT.
In connection with the execution of the Merger Agreement, the Board of
Directors of the Company authorized an amendment (the "Rights Amendment") to
the Rights Agreement. The Rights Amendment prevents Parent and Purchaser 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 Offer, Merger or Corimon Option Agreement or other transactions
contemplated by the Merger Agreement. The Rights Amendment also provides that
the Rights will expire and be of no force or effect upon consummation of the
Merger. A copy of the Rights Amendment is filed as Exhibit 7 hereto and is
incorporated herein by reference.
20
<PAGE>
CERTAIN LITIGATION.
On May 1, 1995, a purported 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 "State Action") 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
State Action. The complaint in the State Action alleges that the $18.10 per
Share price which Parent is offering for all the outstanding Shares is
insufficient and that the proposed 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 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 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 State Action seeks, among other relief, a preliminary and
permanent injunction barring defendants from taking any steps to accomplish the
proposed Merger 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 Parent. 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.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<S> <C>
Exhibit 1 Agreement and Plan of Merger, dated as of April 30, 1995, among Grow
Group, Inc., Imperial Chemical Industries PLC and GDEN Corporation.
Exhibit 2 Option Agreement, dated as of April 30, 1995, among Imperial Chemical
Industries PLC, GDEN Corporation, Corimon Corporation and Corimon
S.A.C.A.
Exhibit 3 Non-Disclosure Agreement, dated December 1, 1994, between Grow Group,
Inc. and Imperial Chemical Industries PLC.
Exhibit 4 Letter to Shareholders of Grow Group, Inc., dated May 4, 1995.*
Exhibit 5 Press Release, dated May 1, 1995, issued by Grow Group, Inc.
Exhibit 6 Opinion of Wertheim Schroder & Co. Incorporated dated April 30,
1995.*
Exhibit 7 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 8 Consulting Agreement, dated as of April 30, 1995, between Grow Group,
Inc. and Russell Banks.
Exhibit 9 Amendment and Extension Agreement, dated as of April 27, 1995,
between Grow Group, Inc. and Russell Banks.
Exhibit 10 Severance Agreement, dated April 27, 1995, between Grow Group, Inc.
and John F. Gleason.
Exhibit 11 Severance Agreement, dated April 27, 1995, between Grow Group, Inc.
and Lloyd Frank.
Exhibit 12 Amendment of Employment Agreement, dated as of April 27, 1995,
between Grow Group, Inc. and Frank Esser.
Exhibit 13 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.
</TABLE>
- --------
* Included in copies of the Schedule 14D-9 mailed to shareholders.
21
<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 4, 1995
GROW GROUP, INC.
By /s/ Lloyd Frank
-----------------------
Title: Secretary
22
<PAGE>
SCHEDULE I
GROW GROUP, INC.
200 Park Avenue
New York, New York 10016
----------------
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about May 4, 1995 as part of
the Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-
9") to holders of record of the Shares at the close of business on or about May
4, 1995. You are receiving this Information Statement in connection with the
possible election of persons designated by Parent to a majority of the seats on
the Board of Directors of the Company. The Merger Agreement requires the
Company to take all action necessary to cause the Parent Designees (as defined
below) to be elected to the Board of Directors under the circumstances
described therein. This Information Statement is required by Section 14(f) of
the Exchange Act and Rule 14f-1 thereunder. See "General Information Regarding
the Company". You are urged to read this Information Statement carefully. You
are not, however, required to take any action. Capitalized terms used and not
otherwise defined herein shall have the meaning set forth in the Schedule 14D-
9.
Pursuant to the Merger Agreement, the Purchaser commenced the Offer on May 4,
1995. The Offer is scheduled to expire at 12:00 Midnight on June 1, 1995,
unless the Offer is extended.
The information contained in this Information Statement (including
information incorporated by reference) concerning Parent, the Purchaser and the
Parent Designees has been furnished to the Company by Parent, and the Company
assumes no responsibility for the accuracy or completeness of such information.
Certain capitalized terms used but not defined in this Information Statement
have the meanings ascribed to them in the Schedule 14D-9.
GENERAL INFORMATION REGARDING THE COMPANY
GENERAL
The Shares are the only class of voting securities of the Company
outstanding. Each Share has one vote. As of April 29, 1995, there were
16,101,712 Shares outstanding and 318,699 Shares reserved for issuance upon the
exercise of certain options outstanding.
RIGHT TO DESIGNATE DIRECTORS; PARENT DESIGNEES
Pursuant to the Merger Agreement, promptly upon the acceptance for payment of
the Shares by Parent pursuant to the Offer, Parent shall be entitled to
designate the number of directors, rounded up to the next whole number, on the
Company's Board of Directors that equals the product of (i) the total number of
directors on the Company's Board (giving effect to the election of any
additional directors designated by Parent pursuant to this sentence) and (ii)
the percentage that the number of Shares owned by Parent (including Shares
accepted for payment and, assuming the number of Shares owned by Parent or
accepted for payment constitutes at least a majority of the outstanding Shares
on a fully diluted basis, the Corimon Shares) bears to the total number of
Shares outstanding. The Merger Agreement requires that the Company shall take
all action necessary to cause Parent's designees (the "Parent Designees") to be
elected or appointed to the Company's Board of Directors including, without
limitation, increasing the number of directors and seeking and accepting
resignations of incumbent directors. The Merger Agreement provides that the
Company will use its best efforts to cause individuals designated by Parent to
constitute the same percentage as such individuals represent on the Company's
Board of Directors of (x) each committee of the Board (other than any committee
of the Board established to take action under the Merger Agreement), (y) each
board of directors of each Subsidiary and (z) each committee of each such
board. Notwithstanding the foregoing, until the Effective Time, the Company
shall retain as members of its Board of Directors at least two directors who
are directors of the Company on the date of the Merger Agreement.
<PAGE>
Parent has informed the Company that each of the Parent Designees listed
below has consented to act as a director.
It is expected that the Parent Designees may assume office at any time
following the purchase by Parent of a majority of the Shares pursuant to the
Offer, which purchase cannot be earlier than June 2, 1995, and that, upon
assuming office, the Parent Designees will thereafter constitute at least a
majority of the Board of Directors of the Company.
The Board of Directors is divided into three classes serving staggered terms
in accordance with the Company's Restated Articles of Incorporation.
Biographical information concerning each of the Parent Designees, directors
and executive officers is presented below.
PARENT DESIGNEES
Parent may designate the following individuals to the Board of Directors of
the Company. Such individual's name, age as of the date hereof, present
principal occupation or employment and five-year employment history are set
forth below.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AGE AND FIVE-YEAR EMPLOYMENT HISTORY
---- --- -----------------------------------------------
<C> <C> <S>
John K. Thompson........ 54 Chief Planner of ICI Paints, a division of
Parent, since February 1987.
Stanley A. Lockitski.... 47 Director of The Glidden Company (and its
predecessor company), a subsidiary of Parent
("Glidden"), since November 1986; Vice
President, General Counsel and Secretary since
July 1986.
Norman Schueftan........ 42 Treasurer and Tax Director of ICI Americas
Inc., a subsidiary of Parent ("ICI Americas"),
since December 1992; Assistant Taxation
Controller (of predecessor company) from
February 1990 to November 1992.
John R. Danzeisen....... 47 President of Glidden since April 1991; Finance
Director of ICI Paints from January 1987 to
March 1991; Chairman of the Board of Directors
of ICI Americas.
William J. Thornton..... 55 Director of Glidden since November 1986; Vice
President--Finance since July 1986.
Thomas C. Osborne....... 44 Executive Vice President of Glidden since
January 1994; Vice President--Branch
Operations from April 1992 to January 1994;
Vice President--Planning and Acquisitions from
August 1989 to April 1992.
</TABLE>
DIRECTORS
Arthur W. Broslat, 49, has been an Executive Vice President and the Chief
Financial Officer of Corimon S.A.C.A., a Venezuelan industrial corporation
("Corimon"), since November 1989. Prior thereto, Mr. Broslat served as a Vice
President of the Bank of America in Caracas, Venezuela. Mr. Broslat also serves
as a director of Corimon. He became a director of the Company in 1992.
Lloyd Frank, 69, has served as Secretary of the Company since 1963. Mr. Frank
is also an attorney admitted to practice in the State of New York and has been
a member of the law firm of Parker Chapin Flattau & Klimpl for more than the
past five years. Mr. Frank also serves as a director of Metro-Tel Corp. and
Park Electrochemical Corp. He became a director of the Company in 1987.
I-2
<PAGE>
Angus N. MacDonald, 68, has served as President of Angus MacDonald & Company,
Inc., a financial consulting firm, for more than the past five years. Mr.
MacDonald is a Life Trustee of the Massachusetts Institute of Technology. He
became a director of the Company in 1984.
William H. Turner, 54, has been a Senior Executive Vice President of Chemical
Banking Corporation (a bank holding company) since December 1991, when Chemical
Banking Corporation merged with Manufacturers Hanover Corporation. From August
1990 until he assumed his present position, Mr. Turner was Vice Chairman of
Chemical Bank, a banking subsidiary of Chemical Banking Corporation. Prior to
August 1990, he was responsible for the Middle Market Banking Group of Chemical
Bank. In addition, he is Chairman and Chief Executive Officer of Chemical New
Jersey Holding Inc. (a holding company for two New Jersey banking companies).
He is also a director and member of the Executive Committee of the Paterson
Economic Development Corporation, and a director of Franklin Electronic
Publishers, Incorporated and Standard Motor Products, Inc. Mr. Turner became a
director of the Company in 1994.
Harold G. Bittle, 66, retired in 1989 as a Vice President--International of
the Coatings and Resins Group of PPG Industries, Inc., a manufacturer of
paints, coatings and glass, and is currently Managing Director of Adhesive
Coatings Company, which develops polymer technologies in the adhesive, coating
and ink markets. Mr. Bittle also serves as a consultant to Corimon. From 1951
to 1989, Mr. Bittle served in various executive capacities with PPG Industries,
Inc. Mr. Bittle became a director of the Company in 1993.
John F. Gleason, 66, has been an executive officer of the Company since 1976
and has, for more than the past five years, served as an Executive Vice
President of the Company. Mr. Gleason became a director of the Company in 1976.
Robert J. Milano, 82, served as Chairman and Chief Executive Officer of
Millmaster Onyx Group, Inc., a manufacturer of chemical specialties, from
December 1982 until December 1986. Mr. Milano serves or has served as Chairman
of the State of New York Mortgage Agency and of the Council of Governing Boards
for Colleges and Universities in New York State; Vice Chairman of the New
School for Social Research; and Director of the New York State Urban
Development Corporation. Mr. Milano served as a director of the Company from
1978 to 1981 and has served continuously as a director since 1983.
Tully Plesser, 61, has, for more than the past five years, served as
president of Dataplan Inc., a national marketing, public opinion and
communications research consulting firm, which serves as a consultant to many
major U.S. corporations. Mr. Plesser is also a political research consultant.
He was formerly a consultant to the Republican National Committee and the
National Republican Senatorial Committee, and is presently an advisor to
certain United States Senators. Mr. Plesser became a director of the Company in
1993.
Russell Banks, 75, has been President and Chief Executive Officer of the
Company since 1962 and a director since 1960. Mr. Banks is a past president of
the National Paint & Coatings Association and he also served on the Executive
Committee of the Board of Directors of the American Management Association and
is presently on its General Management Council. He is also on the Advisory
Boards of the Fordham University Graduate School of Business Administration,
the Washington Legal Foundation and the International Trade Development
Council.
Philippe Erard, 45, was appointed Chairman of Corimon in 1992 and has been
President and Chief Executive Officer of Corimon since 1988. For more than
three years prior thereto, Mr. Erard served as Executive Vice President of
Corimon. Mr. Erard also serves as a director of Corimon. Mr. Erard is a member
of the Business Advisory Board of the World Bank's International Finance
Corporation, the South America Advisory Board of General Electric Co. and the
Advisory Board of the World Economic Forum. He became a director of the Company
in 1992.
Peter L. Keane, 77, an attorney admitted to practice in the State of New
York, is a Senior Advisor to the law firm of Morgan, Lewis & Bockius. He was
counsel to the law firm of Lord Day & Lord, Barrett Smith from 1991 to 1993 and
for more than five years prior thereto, was a member of such firm. Mr. Keane
has served as Chairman of the Catholic Network of Volunteer Service since 1992.
He became a director of the Company in 1969.
I-3
<PAGE>
Joseph M. Quinn, 57, has been an executive officer of the Company since 1981.
Since August 1991, Mr. Quinn has served as Executive Vice President of the
Company and from August 1991 until January 1995 served as Chief Operating
Officer of the Company; for two and one-half years prior thereto, he served as
Executive Vice President in charge of the Coatings and Chemical Group; and, for
more than five years prior thereto, he served as Group Vice President of the
Company and President of the Company's Devoe Marine Coatings Co. Division. Mr.
Quinn also served as President of the Company's Devoe & Raynolds Company
Division from January 1988 until August 1992. He became a director of the
Company in 1989.
EXECUTIVE OFFICERS OF THE COMPANY
Russell Banks, age 75, President and Chief Executive Officer of the Company
since 1962. See information set forth above under "Directors".
Joseph M. Quinn, age 57, executive officer of the Company since 1981. See
information set forth above under "Directors".
John F. Gleason, age 66, executive officer of the Company since 1976. See
information set forth above under "Directors".
Stephen L. Dearborn, age 39, has served as Senior Vice President, Strategic
Planning and Operations of the Company since June 1994. For the 17 years prior
thereto, Mr. Dearborn served in a number of management capacities at PPG
Industries, Inc. involving international and domestic strategic business
planning, marketing and operations.
Henry W. Jones, age 46, was appointed Vice President, Regulatory Affairs of
the Company in June 1994. For one year prior thereto, Mr. Jones served as
Director, Environmental Safety and Health Compliance of the Company. He also
served as Corporate Manager, Environmental Affairs of the Company from August
1985 to April 1993.
Frank V. Esser, age 55, has served as an executive officer of the Company
since 1981 and was elected Treasurer and Chief Financial Officer of the Company
in 1989. Mr. Esser is a certified public accountant.
Lloyd Frank, age 69, has served as Secretary of the Company since 1963. See
information set forth above under "Directors".
There are no family relationships among any of the Company's executive
officers or directors. There are no arrangements or understandings between any
executive officer and any other person pursuant to which such person was
selected as an officer (although certain executive officers are parties to
employment agreements with the Company).
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has standing Audit, Compensation and
Pension Committees. The Board of Directors does not have a standing nominating
committee but acts as a committee of the whole with respect to nominations.
The members of the Audit Committee are Messrs. Milano, Keane, Broslat,
Plesser and Bittle. This committee is authorized to examine and consider
matters related to the financial affairs and accounts of the Company; the
internal and external audit of the Company's accounts, including the selection
of independent auditors, subject to approval of the Board of Directors; the
scope of the independent auditors' engagement; the effect on the Company's
financial statements of any proposed changes in generally accepted accounting
principles; disagreements, if any, between the Company's independent auditors
and management; the quality of the Company's system of internal accounting
controls and its internal audit program; matters of concern
I-4
<PAGE>
to the independent auditors resulting from audits, including the results of the
independent auditors' review of the system of internal accounting controls and
suggestions for improvements; and to report to the Board of Directors with
respect to each of the foregoing. This committee held two meetings during the
year ended June 30, 1994.
The members of the Compensation Committee are Messrs. Keane, Erard,
MacDonald, Milano and Turner. This committee is authorized to examine,
administer and approve salaries of top management of the Company and its
subsidiaries, bonuses to such persons and all grants to employees of options to
purchase shares under the Company's stock option plans; to review employee
benefit plans (other than retirement plans); and to report to the Board of
Directors with respect to each of the foregoing. This committee held four
meetings during the year ended June 30, 1994.
The members of the Company's Pension Committee are Messrs. MacDonald,
Broslat, Plesser, Bittle and Turner. This committee is authorized to examine,
administer, approve and review the retirement plans of the Company and its
subsidiaries and to report to the Board of Directors with respect thereto. This
committee held five meetings during the year ended June 30, 1994.
MEETINGS OF THE BOARD OF DIRECTORS
During the Company's last fiscal year, its Board of Directors held twelve
meetings. Each director attended at least 75% of the total number of meetings
of the Board of Directors and committees on which he served which were held
during the period he served as a director in that fiscal year.
COMPENSATION OF DIRECTORS
Directors (except those who are also employees of the Company) receive a
retainer at the rate of $20,000 per annum for serving on the Board of Directors
and committees thereof and a fee of $750 for each meeting of the Board of
Directors and committees thereof attended except Chairmen of committees receive
$1,000 per meeting. Directors who are also employees of the Company receive a
fee of $250 for each meeting of the Board of Directors attended.
The Company has a Non-Employee Director Fee Continuation Plan which covers
each person who serves as a non-employee director of the Company for at least
five years and who was less than 70 years of age both at the time of becoming a
director and at the time of adoption of this plan. The plan provides, in
general, that each non-employee director who ceases to serve as a director at
age 70 or thereafter (or prior to age 70, under certain circumstances, in the
event he is not re-elected or is removed as a director within three years of a
change in control of the Company, as defined) is to receive $20,000 per annum
for each of the ten years following his ceasing to serve as a director. In the
event of death during the ten-year period, payments will continue to the
director's designated beneficiaries during the remainder of the period. In the
event an eligible director otherwise ceases to serve as a director prior to age
70 (other than as a result of a change in control), payments may be reduced or
terminated in the discretion of the Board of Directors. At the Company's option
or, in the event amounts become payable as a result of a change in control of
the Company under certain circumstances, at the option of the non-employee
director entitled thereto, amounts which become payable under the Non-Employee
Director Fee Continuation Plan may be paid in a discounted lump sum.
The Company has entered into a fee continuation agreement with Robert J.
Milano, who was over 70 years of age at the time of his election to the Board
in 1983 and thus not eligible to participate in the Non-Employee Director Fee
Continuation Plan, which provides for the payment of $20,000 per annum for life
following his cessation of service as a director.
Each current non-employee director and each person who becomes a non-employee
director (other than Mr. Milano and those who become a director after attaining
the age of 70) is entitled to a $100,000 death
I-5
<PAGE>
benefit under the Company's group life insurance policy in the event of death
while serving or after ceasing to serve as a director (subject, in the latter
case, to reduction or termination in the discretion of the Board of Directors
in the event of his ceasing to serve as a director prior to age 70, except
that, under certain circumstances, there shall be no reduction or termination
in the event he is not re-elected or is removed as a director within three
years of a change in control of the Company).
The Company has purchased life insurance coverage on the lives of the non-
employee directors eligible to participate in the Non-Employee Director Fee
Continuation Plan. As described in "Executive Compensation--Employee
Supplemental Retirement and Death Benefit Arrangements" below, said insurance
(in combination with the other insurance coverage described therein) is
intended to offset the Company's future liabilities under the arrangements
described above (other than the Fee Continuation Agreements with Mr. Milano and
another former non-employee director) and those described under "Executive
Compensation--Employee Supplemental Retirement and Death Benefit Arrangements"
below, including the cost of providing the above described group life insurance
benefits to non-employee directors. Premiums for group life insurance provided
to non-employee directors as described above aggregated $12,792 for the year
ended June 30, 1994.
Under the Company's 1990 Stock Option Incentive Plan, non-employee directors
are automatically granted non-qualified stock options to purchase 10,000 shares
of the Company's Common Stock upon their initial election to the Board. Such
options are exercisable at the rate of 16 2/3% per annum commencing two years
after the date of grant and terminating ten years after the date of grant. The
exercise price is 100% of the greater of the fair market value of the Company's
Common Stock on the date of grant or the book value per share of the Company's
Common Stock as of the end of the quarter immediately preceding the date of
grant.
Dataplan, Inc., a consulting firm controlled by Tully Plesser, provided
marketing research services to the Company during its 1994 fiscal year (for
which the Company paid Dataplan, Inc. approximately $39,000) and such firm is
providing marketing research services to the Company during its current fiscal
year.
I-6
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as to the beneficial ownership of
shares of the Company's Common Stock, as of May 1, 1995, with respect to (a)
each director, (b) each executive officer named in the Summary Compensation
Table under the caption "Executive Compensation" below (other than Mr. W.
Horton Russell who retired effective July 1, 1994) and (c) all directors and
executive officers of the Company as a group. The Company understands that,
except as noted below, each beneficial owner has sole voting and investment
power with respect to all shares attributable to such owner.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP(1) CLASS
- ---------------- ------------ ----------
<S> <C> <C>
Russell Banks.................................... 425,431(2)(3)(4) 2.6%
Harold G. Bittle................................. -- --
Arthur W. Broslat................................ 1,667(5)(6) *
Stephen L. Dearborn.............................. 1,500 *
Philippe Erard................................... 1,667(5)(6) *
Frank V. Esser................................... 12,429(2)(4) *
Lloyd Frank...................................... 12,949(2)(4)(7) *
John F. Gleason.................................. 64,444(4) *
Henry Jones...................................... 1,130 *
Peter L. Keane................................... 27,326(4) *
Angus N. MacDonald............................... 164 *
Robert J. Milano................................. 46,035 *
Tully Plesser.................................... 2,000(8) *
Joseph M. Quinn.................................. 37,195(2)(4) *
William H. Turner................................ 1,000 *
All directors and executive officers as a group
(15 persons)..................................... 634,937(9) 3.9%
</TABLE>
- --------
(1) An asterisk indicates that the Percent of Class is under one.
(2) Includes 24,135, 5,250, 7,875 and 13,333 shares of the Company's Common
stock as to Messrs. Banks, Esser, Frank and Quinn, respectively, which were
not outstanding but which were issuable upon exercise of key employee
options to the extent those options were exercisable on, or were to become
exercisable within sixty days after, May 1, 1995.
(3) Includes 9,868 shares of the Company's Common Stock owned by a trust of
which Mr. Banks is the trustee. Excludes 23,851 shares owned by Mr. Banks'
wife as to which Mr. Banks disclaims beneficial ownership.
(4) Includes 197, 1,274, 1,109, 1,720, 466 and 1,884 shares allocated to the
accounts of Messrs. Banks, Esser, Frank, Gleason, Jones and Quinn,
respectively, held in trust under the Company's Employee Stock Ownership
Plan (no allocation has been made relating to fiscal 1995 contributions)
and the Employee Stock Ownership and Savings Plan. Excludes 560,592 shares
(3.5% of the class) held in trust under the Employee Stock Ownership Plan.
As to 310,241 of such shares (which are not yet allocated to plan
participants), Messrs. Esser and Frank, as the members of the
Administrative Committee of said Plan, share the power to direct the vote;
as to 250,351 shares, they may share the right to direct the vote to the
extent they receive no voting directions from plan participants; and, as to
all of such shares, Messrs. Frank, Banks and Keane, as trustees of said
Plan, may, under certain circumstances, share the right to direct the
disposition. Also excludes 127,817 shares (less than 1.0% of the class)
held in trust under the Company's Employee Stock Ownership and Savings Plan
which Messrs. Esser, Frank and Keane, as members of the Administrative
Committee of such Plan, may share the right to direct the vote and, under
certain circumstances, may share the right to direct the disposition.
(5) Excludes 4,025,841 shares owned by Corimon Corporation, which shares may be
deemed beneficially owned indirectly by its parent, Corimon S.A.C.A., a
publicly-held company, of which Messrs. Erard
I-7
<PAGE>
and Broslat are executive officers and directors. Messrs. Erard and Broslat
disclaim beneficial ownership of such shares. See "Security Ownership of
Management--Corimon Agreements" below.
(6) Includes 1,667 shares of the Company's Common Stock as to each of Messrs.
Broslat and Erard which were not outstanding but which were issuable upon
the exercise of non-employee director options to the extent those options
were exercisable on, or were to become exercisable within sixty days after,
May 1, 1995.
(7) Excludes 7,259 shares of the Company's Common Stock owned beneficially by
Mr. Frank's wife as to which shares Mr. Frank disclaims beneficial
ownership.
(8) Such shares are owned by a retirement trust of which Mr. Plesser is the
principal beneficiary.
(9) Includes (i) 53,927 shares which were not outstanding but which were
issuable upon exercise of options held by such persons to the extent those
options were exercisable on, or were to become exercisable within sixty
days after, May 1, 1995, (ii) 9,868 shares owned by a trust of which an
officer and director of the Company is the trustee, and (iii) 2,000 shares
owned by a trust of which a director is the principal beneficiary. Excludes
(i) 31,110 shares owned by the spouses of two officers and directors, (ii)
except for 6,650 shares underlying units allocated to the accounts of
executive officers, the shares held by the Company's employee benefit plans
reflected in footnote (4) above, and (iii) the shares held by Corimon whose
designees, Philippe Erard, Arthur W. Broslat and Harold G. Bittle, are
members of the Company's Board of Directors.
The Company believes that, during the 1994 fiscal year, all filing
requirements required under Section 16(a) of the Securities Exchange Act of
1934 were timely complied with by its directors, officers and beneficial owners
of greater than 10% of the Company's Shares.
CORIMON AGREEMENTS
On August 7, 1992, the Company sold 2,312,000 newly issued Shares to Corimon
Corporation, a wholly owned subsidiary of Corimon, for $16.75 per share, or an
aggregate of $38,726,000. Corimon's subsidiary has subsequently acquired
1,713,841 additional shares of the Company's Common Stock in open market and
private transactions, raising its ownership to approximately 25% of the
Company's Shares at May 1, 1995.
Pursuant to an agreement entered into when the Shares were purchased from the
Company, Corimon is currently entitled to designate three persons to serve on
the Company's Board of Directors. At the Company's 1992 Annual Meeting of
Shareholders, two designees of Corimon, Philippe Erard and Arthur W. Broslat,
were elected to the Board of Directors of the Company as Class III and Class II
directors, respectively. Harold G. Bittle, Corimon's third designee, was
elected to the Board of Directors of the Company as a Class I director at the
1993 Annual Meeting of Shareholders. Subject to certain exceptions, the
agreement with Corimon will remain in effect until the earlier of the Company's
1996 Annual Meeting of Shareholders or October 31, 1996 (the "Standstill
Period").
During the Standstill Period, Corimon and its affiliates are permitted to
acquire additional voting securities of the Company only through open market or
privately negotiated transactions and only so long as such acquisition does not
cause Corimon and its affiliates to beneficially own more than 28% of the
Company's outstanding voting securities. As of May 1, 1995, Corimon and its
affiliates owned 4,025,841 shares, constituting approximately 25% of the
Company's outstanding Common Stock.
The agreement with Corimon also provides that, during the Standstill Period,
Corimon and its affiliates will vote all Shares owned by them in favor of the
slate of nominees proposed by the Board of Directors to stand for election as
directors.
I-8
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table set forth below contains information for the Company's last three
fiscal years concerning the compensation of the chief executive officer and
other four most highly compensated executive officers of the Company.
Subsequent to the Company's 1994 fiscal year, options were granted to the chief
executive officer and three of the executive officers listed below. See
"Options Granted Under 1990 Option Plan" below.
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION
----------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1)
- --------------------------- ---- -------- -------- ---------------
<S> <C> <C> <C> <C>
Russell Banks
President and Chief Executive Officer.. 1994 $400,000 $200,000 $21,672
1993 391,667 250,000 25,011
1992 375,000 220,000
Joseph M. Quinn
Executive Vice President and Chief Op- 1994 $245,833 $100,000 $ 5,901
erating Officer........................ 1993 225,000 175,000 6,518
1992 222,493 165,275
John F. Gleason
Executive Vice President............... 1994 $220,000 $ 50,000 $ 8,006
1993 220,000 72,000 10,798
1992 220,000 60,000
Frank V. Esser
Treasurer and Chief Financial Officer.. 1994 $153,331 $ 36,000 $ 1,821
1993 145,000 45,000 4,158
1992 143,301 37,500
W. Horton Russell(2)
Vice President, Manufacturing, Safety,
Health and Environment................. 1994 $ 98,000 $ 32,260 $ 2,897
1993 93,333 39,775 6,653
1992 90,164 32,525
</TABLE>
- --------
(1) "All Other Compensation" for fiscal 1994 includes: (i) the dollar value of
term life insurance premiums for the benefit of the named executive
officers (Mr. Banks--$19,204, Mr. Quinn--$3,035, Mr. Gleason-- $4,990, Mr.
Esser--$862, and Mr. Russell--$2,212); (ii) the value of shares of the
Company's Common Stock represented by the estimated number of units to be
allocated to the named executive officers under the Company's Employee
Stock Ownership Plan (Mr. Banks--$668, Mr. Quinn--$1,216, Mr. Gleason--
$1,216, Mr. Esser--$959, and Mr. Russell--$685); and (iii) fees paid to
directors who are also employees of the Company for attending meetings of
the Board of Directors (Mr. Banks--$1,800, Mr. Quinn-- $1,650 and Mr.
Gleason--$1,800). In accordance with the transitional provisions under the
revised compensation disclosure rules of the Securities and Exchange
Commission, amounts in this column for fiscal 1992 are omitted.
(2) Mr. Russell retired from employment with the Company effective July 1,
1994.
I-9
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END VALUES
The following table contains information concerning the exercise of stock
options during the Company's fiscal year ended June 30, 1994 by the executive
officers named in the Summary Compensation Table and the fiscal year-end values
of unexercised options held by such executive officers. No options were granted
to any of the executive officers during the fiscal year ended June 30, 1994.
The only options granted during fiscal 1994 under the 1990 Plan were options to
purchase 10,000 Shares which were automatically granted to each of three
outside Directors who joined the Board during that fiscal year.
AGGREGATED OPTION EXERCISES IN FISCAL 1994
AND 1994 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS AT FISCAL YEAR- THE-MONEY OPTIONS AT
SHARES END FISCAL YEAR-END(2)
ACQUIRED ON VALUE ------------------------- ------------------------
NAME EXERCISE(#) REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCIABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Russell Banks........... -- -- 24,135 0 $167,979 $ 0
Joseph M. Quinn......... -- -- 8,334 21,666 74,755 168,744
John F. Gleason......... 17,364 $93,939 0 0 0 0
Frank V. Esser.......... 5,788 28,563 5,250 0 36,540 0
W. Horton Russell....... 1,000 8,120 0 0 0 0
</TABLE>
- --------
(1) Market value (the mean between the highest and lowest quoted selling prices
of the Company's Common Stock as reported by the New York Stock Exchange)
on the exercise date, less the exercise price.
(2) Market value (the mean between the highest and lowest quoted selling prices
of the Company's Common Stock as reported by the New York Stock Exchange)
on June 30, 1994, less the exercise price.
OPTIONS GRANTED UNDER 1990 OPTION PLAN
The grant of options is within the discretion of the Committee of the Board
which administers the Option Plan. Accordingly, the Company is unable to
determine future options, if any, that may be granted to the named persons or
groups in the following table. The following table sets forth the number of
shares underlying options that were granted under the 1990 Plan since July 1,
1994, the beginning of the Company's current fiscal year, to (i) the chief
executive officer and the other executive officers named in the Summary
Compensation Table in "Executive Compensation", above, (ii) all current
executive officers as a group, (iii) all current directors who are not
executive officers and (iv) all other employees, including current officers who
are not executive officers:
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING
NAME OR CATEGORY OF OPTIONEE OPTIONS GRANTED
- ---------------------------- ----------------
<S> <C>
Russell Banks.................................................. 10,000
Joseph M. Quinn................................................ 15,000
John F. Gleason................................................ 4,500
Frank V. Esser................................................. 2,000
Henry Jones.................................................... 3,500
Stephen Dearborn............................................... 10,000
Executive Officers as a group (7 persons)...................... 45,000
Non-executive officer directors as a group..................... 0
Other employees as a group (34 persons)........................ 103,500
</TABLE>
Each of the foregoing options are for a term of ten years and are
exercisable, on a cumulative basis, as to one-fifth of the number of shares
originally subject to the option in each year commencing two years after the
date of grant. Certain of the options provide that they will be exercisable, on
a cumulative basis, as to one-third of the number of shares originally subject
to the option in each year commencing two years after the date of grant.
I-10
<PAGE>
All options were granted at 100% of the fair market value of the underlying
shares on the date of grant.
PENSION PLAN
The Company has a non-contributory trusteed pension plan covering employees
of the Company and certain subsidiaries (the "Pension Plan"). The following
table sets forth the estimated annual benefits payable upon retirement under
the Pension Plan for participants in various remuneration classifications after
the indicated periods of credited service, assuming (i) payment commences at
age 65, (ii) the election of a life annuity without survivor benefits and (iii)
annual primary social security insurance benefits based on the assumptions that
the remuneration upon which a participant's social security benefits are
determined is equal to his or her covered remuneration under the Pension Plan,
remuneration increases have been at a rate of 5% per annum and primary social
security benefit rates have continued at current levels. The following table
gives effect to the limitations under the Internal Revenue Code of 1986, as
amended (the "Code"), on annual covered compensation ($235,840 for 1993 and
$150,000 for each of 1994 and 1995) as well as the current limitation on
aggregate qualified employee benefits:
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION BENEFITS PAYABLE AT AGE 65
FOR THE
NUMBER OF YEARS OF CREDITED SERVICE SHOWN
-----------------------------------------------------------
AVERAGE ANNUAL 15
REMUNERATION YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- -------------- ----- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 90,000 $15,023 $20,030 $20,030 $25,038 $25,038
125,000 21,848 29,130 29,130 36,413 36,413
150,000 26,723 35,630 35,630 44,538 44,538
175,000 31,273 41,805 41,805 52,338 52,338
200,000 35,823 47,980 47,980 60,138 60,138
225,000 40,373 54,155 54,155 67,938 67,938
235,840 or greater 42,346 56,833 56,833 71,320 71,320
</TABLE>
Once computed, benefits payable under the Pension Plan are not further
reduced by social security benefits. Covered compensation is a participant's
annual compensation, exclusive of bonuses, directors' fees and certain other
items. The years of credited service under the Pension Plan at June 30, 1995
for Messrs. Quinn, Gleason, Esser and Russell, the only executive officers of
the Company named in the Summary Compensation Table above who participated in
the Pension Plan, will be 19.1, 19.1, 12.8 and 18.08, respectively. Accrued
benefits as of June 30, 1989 are computed as 35% of average compensation less
50% of social security benefits reduced proportionately for years of credited
service which are less than twenty. In order to comply with the Code, the
benefit formula under the Pension Plan was amended effective as of July 1,
1989. Benefits on or after July 1, 1989 are computed as .65% of average
compensation plus .65% of average compensation in excess of social security
covered compensation multiplied by years of credited service up to 27.
Estimated annual benefits for Messrs. Gleason, Quinn, Esser and Russell under
the new formula are $53,104, $48,305, $20,711 and $19,930, respectively.
EMPLOYEE SUPPLEMENTAL RETIREMENT AND DEATH BENEFIT ARRANGEMENTS
The Company is a party to Supplemental Retirement and Death Benefit
Agreements effective September 15, 1988 which amend and restate agreements
entered into in 1983, as amended, with Messrs. Banks, Quinn, Gleason and Frank
(as amended and restated, the "SERP Agreements"). Each SERP Agreement provides
for the payment in each year for 15 years following cessation of employment at
age 65 or thereafter, or prior to age 65 if terminated by the Company (except
if termination is for cause) or by the employee for Good Reason (as defined in
the SERP Agreements) within three years after any Change in Control of the
Company (as defined in the SERP Agreements), of an amount equal to 30% of his
base salary for fiscal 1982. In the event of death during the 15-year period,
payments will continue during the remainder of the period to his designated
beneficiaries. In the event of death prior to cessation of employment, there
shall be payable in each year for 15 years following his death, in lieu of the
foregoing amount, an amount equal to 20% of his base salary for fiscal 1982. At
the Company's option, supplemental retirement benefits which become payable
I-11
<PAGE>
may be paid in a discounted lump sum. However, for employees under the age of
65 who become entitled to payments upon a Change in Control, such amounts shall
be paid to the employee in an undiscounted lump sum. Each such employee is also
entitled to a post-termination death benefit in an amount equal to the lesser
of $500,000 or three times his base salary for fiscal 1982. Fiscal 1982 base
salaries for Messrs. Banks, Quinn, Gleason and Frank were $250,000, $83,841,
$140,000 and $100,000, respectively. No decision has been made as to whether
the supplemental retirement benefits will be paid in lump sums. The Purchaser
and Parent have agreed to honor, and cause the Surviving Corporation to honor,
the SERP Agreements and have acknowledged that the consummation of the Offer
will constitute a "Change in Control" as defined in the SERP Agreements. In the
event of lump sum payments, the estimated amounts of such payments to Messrs.
Banks, Quinn, Gleason and Frank would be $620,830, $377,285, $347,665 and
$248,332, respectively.
The Company has purchased whole-life insurance policies on the lives of these
executive officers and certain other executive officers in amounts that, in the
aggregate (in combination with insurance coverage purchased by the Company, and
payable to it, with respect to the arrangements described under "Compensation
of Directors" above), are intended to offset the Company's future liabilities
under the employee supplemental retirement and death benefit arrangements and
the non-employee director fee continuation and death benefit arrangements,
other than the Fee Continuation Agreement with non-employee director Robert J.
Milano described under "Compensation of Directors" above (and a similar
agreement with one former non-employee director). Premiums paid on such
policies for the year ended June 30, 1994 amounted to $342,880 (before giving
effect to increases in cash surrender value of $504,173). The SERP Agreements
and such other arrangements were designed so that, if assumptions as to
mortality experience, policy dividends, tax effects and other factors are
realized and if no benefits are payable by reason of a change in control of the
Company, as defined, the Company would eventually recover, from the proceeds of
the whole-life insurance, the costs attendant to the SERP Agreements and such
other arrangements, including the premiums for such whole-life insurance, the
premiums payable with respect to the group life insurance benefits payable to
non-employee directors (as described above) and a factor for the use of Company
funds. However, benefits payable under the SERP Agreements and such other
arrangements are not limited or governed in any way by the amount of proceeds
received by the Company under such whole-life insurance policies and there is
no assurance that amounts paid by the Company will be fully recovered. The
Company is the owner and sole beneficiary of the whole-life insurance policies,
and the officers and directors participating in such arrangements and the
beneficiaries will have no claim against the policies.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements (the "Employment
Agreements") with Russell Banks, President and Chief Executive Officer of the
Company, and with the following executive officers of the Company: Joseph M.
Quinn, Stephen L. Dearborn, Frank V. Esser and Henry W. Jones.
The Employment Agreement with Mr. Banks (entered into effective as of October
31, 1992), originally scheduled to expire on October 31, 1995, was extended
until October 31, 1996 by the Company's Board of Directors (the "Board") on
December 16, 1994. In the event of the termination of employment (including
termination by Mr. Banks for Good Reason, as defined in the Employment
Agreement) within two years after a Change in Control (as defined in the
Employment Agreement) of the Company, Mr. Banks will (except if termination is
for cause) be entitled to receive a lump sum payment equal in amount to the sum
of (i) Mr. Banks' base salary and average three-year bonus for the remainder of
the term of the Employment Agreement and (ii) three times the sum of such
salary and bonus. In addition, the Company must in such circumstances continue
Mr. Banks' then current welfare benefits for the remainder of the term of the
Employment Agreement. In no case, however, may Mr. Banks receive any payment or
benefit in connection with a Change in Control in excess of 2.99 times his
"base amount" (as that term is defined in Section 280G of the Internal Revenue
Code of 1986, as amended, and hereafter referred to as the "Code"). In the
event of disability of Mr. Banks, the Employment Agreement provides for
continued payment of 50% of his base salary for the remainder of the term of
the Employment Agreement. An amendment to Mr. Banks' Employment
I-12
<PAGE>
Agreement was approved by the Board on April 27, 1995. Such amendment (i)
memorialized the action of the Board taken on December 16, 1994 to extend the
agreement until October 31, 1996, (ii) amended the provision setting forth the
calculation of the severance benefit to include bonuses in the portion of the
severance formula that is multiplied by three (as described above), (iii)
provided that the benefit payable upon Mr. Banks' death need not be provided
solely through life insurance, and (iv) clarified that "Good Reason" includes a
determination by Mr. Banks that, as a result of a Change in Control, he is
unable to discharge his duties effectively. The Company has obtained insurance
policies on Mr. Banks' life, as to which the Company is the beneficiary, in the
aggregate face amount of $400,000. The aggregate premium paid by the Company
during the fiscal year ended June 30, 1994 with respect to those policies was
$9,852. Pursuant to the Employment Agreement, Mr. Banks has the right to
purchase such insurance policies from the Company at a purchase price equal to
the amount at which the Company carries such policies on its books, which is
estimated to be less than $50,000. The Purchaser and Parent have agreed to
honor, and cause the Surviving Corporation to honor, Mr. Banks' Employment
Agreement, as amended, and have acknowledged that the consummation of the Offer
will constitute a Change in Control as defined in the Employment Agreement. It
is estimated that Mr. Banks would receive approximately $2.3 million under the
Employment Agreement upon a qualifying termination of employment following the
consummation of the Offer.
The Employment Agreement with Mr. Quinn (entered into effective as of
September 15, 1988 and amended effective as of July 1, 1994) is for a term
presently expiring on June 30, 1996, subject to automatic annual renewals until
age 65 unless notice of non-renewal is given on or before April 1 preceding the
scheduled termination date. In the event of the termination of employment
(including termination by Mr. Quinn for Good Reason, as defined in the
Employment Agreement) within two years after a Change in Control (as defined in
the Employment Agreement) of the Company, Mr. Quinn will (except if termination
is for cause) be entitled to receive a lump sum payment equal in amount to
three times the sum of his salary (based upon his annual base salary at the
date of termination) and average three-year bonus payments. In addition, the
Company must in such circumstances continue Mr. Quinn's then current welfare
benefits for a period of three years. In no case, however, may Mr. Quinn
receive any payment or benefit in connection with a Change in Control in excess
of 2.99 times his "base amount" (as that term is defined in Section 280G of the
Code). The Purchaser and Parent have agreed to honor, and cause the Surviving
Corporation to honor, Mr. Quinn's Employment Agreement and have acknowledged
that the consummation of the Offer will constitute a Change in Control as
defined in the Employment Agreement. It is estimated that Mr. Quinn would
receive approximately $1.1 million upon a qualifying termination of employment
following the consummation of the Offer.
The Employment Agreement with Mr. Esser (entered into effective as of
September 15, 1988) is for a term presently expiring on September 14, 1995,
which term is subject to automatic annual renewal until age 65 unless notice of
non-renewal is given on or before July 1 preceding the scheduled termination
date. In the event of the termination of employment (including termination by
Mr. Esser for Good Reason, as defined in the Employment Agreement) within two
years after a Change in Control (as defined in the Employment Agreement) of the
Company, Mr. Esser will (except if termination is for cause) be entitled to
receive a lump sum payment equal in amount to three times the sum of his salary
(based upon his annual base salary at the date of termination) and average
three-year bonus payments. In addition, the Company must in such circumstances
continue Mr. Esser's then current welfare benefits for a period of three years.
In no case, however, may Mr. Esser receive any payment or benefit in connection
with a Change in Control in excess of 2.99 times his "base amount" (as that
term is defined in Section 280G of the Code). An amendment to Mr. Esser's
Employment Agreement was approved by the Board on April 27, 1995 to increase
the payout period from two years to three years and to provide that the bonuses
to be taken into account in computing the termination payments would be the
bonuses paid to him in respect of the Company's prior three full fiscal years
instead of bonuses for the 1986-1988 fiscal years. The Purchaser and Parent
have agreed to honor, and cause the Surviving Corporation to honor, Mr. Esser's
Employment Agreement and have acknowledged that the consummation of the Offer
will constitute a Change in Control as defined in the Employment Agreement. It
is estimated that Mr. Esser would receive approximately $485,000 upon a
qualifying termination of employment following the consummation of the Offer.
I-13
<PAGE>
The Employment Agreement with Mr. Dearborn (entered into effective as of June
2, 1994) is for a term presently expiring on May 31, 1997, which term is
subject to automatic annual renewal until age 65 unless notice of non-renewal
is given on or before November 30 preceding the scheduled termination date. In
the event of the termination of employment (except if termination is for
cause), Mr. Dearborn will be entitled to receive his base salary for the
remainder of the term of the Employment Agreement (but not less than one year).
In addition, the Company must in such circumstances continue Mr. Dearborn's
then current welfare benefits for the remainder of the term of the Employment
Agreement. The Purchaser and Parent have agreed to honor, and to cause the
Surviving Corporation to honor, Mr. Dearborn's Employment Agreement. It is
estimated that Mr. Dearborn would receive approximately $450,000 upon a
qualifying termination of employment following the consummation of the Offer.
The Employment Agreement with Mr. Jones (entered into effective as of March
1, 1995) is for a term presently expiring on February 29, 1996, subject to
automatic annual renewals until age 65 unless notice of non-renewal is given on
or before December 1 preceding the scheduled termination date. In the event of
the termination of employment (including termination by Mr. Jones for Good
Reason, as defined in the Employment Agreement) within two years after a Change
in Control (as defined in the Employment Agreement) of the Company, Mr. Jones
will (except if termination is for cause) be entitled to receive a lump sum
payment equal in amount to one times the sum of his salary (based upon his
annual base salary at the date of termination) and average three-year bonus
payments. In addition, the Company must in such circumstances continue Mr.
Jones' then current welfare benefits for a period of one year. In no case,
however, may Mr. Jones receive any payment or benefit in connection with a
Change in Control in excess of 2.99 times his "base amount" (as that term is
defined in Section 280G of the Code). The Purchaser and Parent have agreed to
honor, and to cause the Surviving Corporation to honor, Mr. Jones' Employment
Agreement and have acknowledged that the consummation of the Offer will
constitute a Change in Control as defined therein. It is estimated that Mr.
Jones would receive approximately $96,000 upon a qualifying termination of
employment following the consummation of the Offer.
SEVERANCE AGREEMENTS
The Company currently is a party to severance agreements ("Severance
Agreements") with approximately 90 employees. Approximately 55 of the severance
agreements were either adopted or modified to increase the benefits thereunder
by the Board on April 27, 1995, including adoption of new agreements for two
executive officers, John F. Gleason and Lloyd Frank. The Severance Agreements
provide for the payment of certain severance and other benefits to employees
who are terminated within two years of a Change in Control of the Company (as
defined in the Severance Agreements). In the event of the termination of
employment (including termination by the employee for Good Reason, as defined
in the Severance Agreement) within two years after a Change in Control (as
defined in the Severance Agreement) of the Company, the employee will (except
if termination is for cause) be entitled to receive a lump sum payment equal in
amount to the sum of his salary (based upon his or her annual base salary at
the date of termination) and average three-year bonus payments multiplied by
the number of months specified in the applicable Severance Agreement, and shall
continue the employee's welfare benefits for the same period. In the case of
Mr. Frank, the applicable period will be 36 months and in the case of Mr.
Gleason, the applicable period will be 24 months and will be based upon annual
base salary only. In no case, however, may the employee receive any payment or
benefit in connection with the consummation of the Offer in excess of 2.99
times his "base amount" (as that term is defined in Section 280G of the Code).
The Severance Agreements with Messrs. Gleason and Frank, as well as the
agreements with the other employees of the Company, were approved by the Board
on April 27, 1995. The Purchaser and Parent have agreed to honor, and to cause
the Surviving Corporation to honor, the Severance Agreements and have
acknowledged that the consummation of the Offer will constitute a Change in
Control as defined in the Severance Agreements. It is estimated that Mr.
Gleason would receive approximately $440,000 and Mr. Frank would receive
approximately $300,000, upon a qualifying termination of employment following
the consummation of the Offer.
I-14
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
William H. Turner, a director of the Company, is an executive officer of
Chemical Banking Corporation and Chemical New Jersey Holding Inc., subsidiaries
of which, together with two unrelated banks, are parties to a Credit Agreement
which provides the Company with a revolving credit and a letter of credit
facility in an amount not to exceed $75,000,000, of which Chemical Bank New
Jersey, N.A. has a 40% share.
During the Company's 1994 fiscal year, the Company entered into a letter of
intent to execute an agreement with one of Corimon's wholly-owned subsidiaries
for the distribution of the Company's industrial maintenance and marine
coatings products in select markets in South America. Under the letter of
intent, Corimon paid the Company a fee in the amount of $200,000. The Company
is also a party to license agreements with Corimon granting Corimon rights to
use the Company's architectural coatings technology and industrial maintenance
and marine coatings technology and under which the Company received an initial
fee and is receiving royalties based on net sales. During fiscal 1994, the
Company received royalties from Corimon in the amount of $100,000. Corimon
Corporation owns approximately 25% of the Company's outstanding Common Stock.
Philippe Erard and Arthur W. Broslat, directors of the Company, are executive
officers and directors of Corimon. Harold G. Bittle, a director of the Company,
is a consultant to Corimon.
During the Company's 1994 fiscal year, the Company retained the law firms of
Lord Day & Lord, Barrett Smith, to which Peter L. Keane, a director of the
Company, was counsel, and Parker Chapin Flattau & Klimpl, of which Lloyd Frank,
a director and officer of the Company, is a partner. The Company has retained
Parker Chapin Flattau & Klempl and Morgan, Lewis & Bockius, of which Mr. Keane
is a Senior Advisor, during the current fiscal year.
OWNERSHIP OF VOTING SECURITIES
The following table sets forth information, as of May 1, 1995, as to each
person (including any "group" as that term is used in Section 13(d)(3) of the
Exchange Act) who is known to the Company to be the beneficial owner of more
than five percent of the Company's Common Stock, its only class of voting
securities:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
-------------- ----------------------------------- ----------------------- --------
<S> <C> <C> <C>
Common Stock............ Corimon Corporation 4,025,841(1) 25%
Corimon International Holdings Ltd.
Corimon S.A.C.A.
Edif. Corimon, Calle Hans Neuman
Los Cortijos de Lourdes
Caracas 1071, Venezuela
</TABLE>
- --------
(1) Based upon information provided to the Company by Corimon. See "Security
Ownership of Management--Corimon Agreements."
I-15
<PAGE>
SCHEDULE II
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 of the Company 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>
EXHIBIT 99.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF
APRIL 30, 1995
AMONG
GROW GROUP, INC.,
IMPERIAL CHEMICAL INDUSTRIES PLC
AND
GDEN CORPORATION
<PAGE>
TABLE OF CONTENTS/1/
ARTICLE I
THE OFFER
SECTION 1.01. The Offer.................................................... 2
SECTION 1.02. Company Action............................................... 3
SECTION 1.03. Directors.................................................... 5
ARTICLE II
THE MERGER
SECTION 2.01. The Merger................................................... 6
SECTION 2.02. Conversion of Shares......................................... 6
SECTION 2.03. Surrender and Payment........................................ 7
SECTION 2.04. Dissenting Shares............................................ 8
SECTION 2.05. Stock Options................................................ 9
SECTION 2.06. Merger Without Meeting of Shareholders....................... 9
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.01. Certificate of Incorporation................................. 10
SECTION 3.02. Bylaws....................................................... 10
SECTION 3.03. Directors and Officers....................................... 10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
SECTION 4.01. Corporate Existence and Power................................ 10
SECTION 4.02. Corporate Authorization...................................... 11
SECTION 4.03. Governmental Authorization................................... 11
SECTION 4.04. Non-Contravention............................................ 11
SECTION 4.05. Capitalization............................................... 12
SECTION 4.06. Subsidiaries................................................. 13
SECTION 4.07. Investments.................................................. 14
SECTION 4.08. SEC Filings.................................................. 14
SECTION 4.09. Financial Statements......................................... 14
SECTION 4.10. Disclosure Documents......................................... 15
SECTION 4.11. Absence of Certain Changes................................... 15
SECTION 4.12. No Undisclosed Material Liabilities.......................... 17
SECTION 4.13. Litigation................................................... 17
SECTION 4.14. Taxes........................................................ 17
SECTION 4.15. Employee Matters............................................. 19
SECTION 4.16. Labor Matters................................................ 23
SECTION 4.17. Compliance with Laws......................................... 23
SECTION 4.18. Finders' Fees................................................ 23
SECTION 4.19. Environmental Matters........................................ 23
SECTION 4.20. Property..................................................... 25
- ------------
/1/ The Table of Contents is not a part of this Agreement.
i
<PAGE>
SECTION 4.21. Trademarks................................................... 25
SECTION 4.22. Material Contracts........................................... 26
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BUYER AND MERGER SUBSIDIARY
SECTION 5.01. Corporate Existence and Power................................ 26
SECTION 5.02. Corporate Authorization...................................... 26
SECTION 5.03. Governmental Authorization................................... 27
SECTION 5.04. Non-Contravention............................................ 27
SECTION 5.05. Disclosure Documents......................................... 27
SECTION 5.06. Finders' Fees................................................ 28
SECTION 5.07. Financing.................................................... 28
SECTION 5.08. Share Ownership.............................................. 28
SECTION 5.09. Merger Subsidiary's Operations............................... 28
ARTICLE VI
COVENANTS OF THE COMPANY
SECTION 6.01. Conduct of the Company....................................... 28
SECTION 6.02. Stockholder Meeting; Proxy Material.......................... 29
SECTION 6.03. Access to Information........................................ 30
SECTION 6.04. Other Offers................................................. 30
SECTION 6.05. Notices of Certain Events.................................... 31
SECTION 6.06. Amendment of Rights Agreement................................ 31
SECTION 6.07. Conveyance Taxes............................................. 32
ARTICLE VII
COVENANTS OF BUYER
SECTION 7.01. Obligations of Merger Subsidiary............................. 32
SECTION 7.02. Voting of Shares............................................. 32
SECTION 7.03. Director and Officer Liability............................... 32
ARTICLE VIII
COVENANTS OF BUYER
AND THE COMPANY
SECTION 8.01. Best Efforts................................................. 33
SECTION 8.02. Certain Filings.............................................. 34
SECTION 8.03. Public Announcements......................................... 34
SECTION 8.04. Conveyance Taxes............................................. 34
SECTION 8.05. Further Assurances........................................... 34
SECTION 8.06. Employee Matters............................................. 35
ii
<PAGE>
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.01. Conditions to the Obligations of Each Party.................. 37
ARTICLE X
TERMINATION
SECTION 10.01. Termination................................................. 37
SECTION 10.02. Effect of Termination....................................... 39
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Notices..................................................... 39
SECTION 11.02. Survival of Representations and Warranties.................. 40
SECTION 11.03. Amendments; No Waivers...................................... 40
SECTION 11.04. Expenses.................................................... 41
SECTION 11.05. Successors and Assigns...................................... 41
SECTION 11.06. Governing Law............................................... 42
SECTION 11.07. Severability................................................ 42
SECTION 11.08. Third Party Beneficiaries................................... 42
SECTION 11.09. Entire Agreement............................................ 42
SECTION 11.10. Counterparts; Effectiveness................................. 42
SECTION 11.11. Jurisdiction................................................ 42
ANNEX I
Schedule 4.01: Licenses
Schedule 4.03: Governmental Authorization
Schedule 4.04: Non-Contravention
Schedule 4.05: Stock Options
Schedule 4.06: Subsidiaries
Schedule 4.07: Investments
Schedule 4.11: Absence of Certain Changes
Schedule 4.12: Material Liabilities
Schedule 4.13: Litigation
Schedule 4.15: Employee Matters
Schedule 4.16: Labor Matters
Schedule 4.17: Compliance with Laws
Schedule 4.19: Environmental Matters
Schedule 4.21: Trademarks
Schedule 4.22: Material Contracts
Schedule 7.03: Director and Officer Liability
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of April 30, 1995 (this
"AGREEMENT") among Grow Group, Inc., a New York corporation (the "COMPANY"),
Imperial Chemical Industries PLC, a corporation organized under the laws of
England ("BUYER"), and GDEN Corporation, a New York corporation and an indirect
wholly owned subsidiary of Buyer ("MERGER SUBSIDIARY").
WHEREAS, the Boards of Directors of Buyer, Merger Subsidiary and the
Company have each determined that it is in the best interests of their
respective shareholders for Buyer to acquire all of the outstanding capital
stock of the Company upon the terms and subject to the conditions set forth
herein; and
WHEREAS, in furtherance of such acquisition, it is proposed that Buyer
shall make a cash tender offer (the "OFFER") to acquire all the issued and
outstanding shares of Common Stock, par value $.10 per share, of the Company
(the "SHARES") for $18.10 per Share net to the seller in cash, upon the terms
and subject to the conditions of this Agreement and the Offer; and
WHEREAS, the Board of Directors of the Company has unanimously
approved the making of the Offer and resolved and agreed to recommend that
holders of Shares tender their Shares pursuant to the Offer; and
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of Buyer, Merger Subsidiary and the Company have each approved the
merger of Merger Subsidiary with and into the Company in accordance with the
Business Corporation Law of the State of New York ("NEW YORK LAW") following the
consummation of the Offer and upon the terms and subject to the conditions set
forth herein;
WHEREAS, in consideration of the willingness of Buyer and Merger
Subsidiary to enter into this Agreement, Corimon Corporation, a Delaware
corporation ("CORIMON CORP.") and Corimon, S.A.C.A., a corporation organized
under the laws of Venezuela ("CORIMON"), have entered into a Stockholders
Agreement, dated as of the date hereof, with Buyer and Merger Subsidiary (the
"CORIMON OPTION AGREEMENT"), pursuant to which Corimon Corp. has granted Buyer
an option to purchase 4,025,841 Shares (the "CORIMON SHARES"), all upon the
terms and subject to the conditions set forth in the Corimon Option Agreement;
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Buyer, Merger Subsidiary and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01. The Offer. (a) Provided that nothing shall have
---------
occurred that would result in a failure to satisfy any of the conditions set
forth in Annex I hereto, Buyer shall, as promptly as practicable after the date
hereof, but in no event later than five business days following the public
announcement of the terms of this Agreement, commence the Offer to purchase all
of the outstanding Shares at a price of $18.10 per Share (the "OFFER PRICE"),
net to the sellers in cash, subject to any amounts required to be withheld under
applicable federal, state, local or foreign income tax regulations. The Offer
shall be subject to the condition that there shall be validly tendered in
accordance with the terms of the Offer prior to the expiration date of the Offer
and not withdrawn a number of Shares which, together with the Corimon Shares and
any other Shares then owned by Buyer, represents at least two-thirds of the
Shares outstanding on a fully diluted basis (the "MINIMUM CONDITION") and to the
other conditions set forth in Annex I hereto. Buyer expressly reserves the
right to waive the Minimum Condition (provided that in no event shall Buyer be
permitted to accept Shares for payment pursuant to the Offer unless the Shares
so accepted for payment, together with the Corimon Shares and any other Shares
then owned by Buyer, represent at least a majority of the outstanding Shares on
a fully diluted basis) or any of the other conditions to the Offer and to make
any change in the terms or conditions of the Offer; provided that no change may
--------
be made which changes the form of consideration to be paid or decreases the
price per Share or the number of Shares sought in the Offer or which imposes
conditions to the Offer in addition to those set forth in Annex I or which
amends any condition to the Offer in any manner adverse to the holders of the
Shares. Notwithstanding the foregoing, Buyer shall extend the Offer at any time
up to the Outside Termination Date (as defined in Section 10.01) for one or more
periods of not more than 10 business days, if at the initial expiration date of
the Offer, or any extension thereof, the condition to the Offer requiring the
expiration or termination of any applicable waiting periods under the HSR Act
and the Exon-Florio Provision (as such terms are defined in Section 4.03) is not
satisfied or required. In addition, the Offer Price may be increased and the
Offer may be extended to the extent
2
<PAGE>
required by law in connection with such increase in each case without the
consent of the Company. Subject to the terms and conditions of the Offer, Buyer
shall pay, as promptly as practicable after expiration of the Offer, for all
Shares validly tendered and not withdrawn.
(b) As soon as practicable on the date of commencement of the Offer,
Buyer shall file (i) with the Securities and Exchange Commission (the "SEC"), a
Tender Offer Statement on Schedule 14D-1 with respect to the Offer which will
contain the offer to purchase and form of the related letter of transmittal
(together with any supplements or amendments thereto, collectively, the "SEC
OFFER DOCUMENTS") and (ii) with the Attorney General of the State of New York, a
Registration Statement (together with any supplements or amendments thereto,
collectively, the "NEW YORK DISCLOSURE DOCUMENTS") in accordance with Article 16
(the "SECURITY TAKEOVER DISCLOSURE ACT") of New York Law. (The SEC Offer
Documents and the New York Disclosure Documents are collectively referred to
herein as the "OFFER DOCUMENTS".) Buyer and the Company each agrees promptly to
correct any information provided by it for use in the Offer Documents if and to
the extent that it shall have become false or misleading in any material
respect. Buyer agrees to take all steps necessary to cause the Offer Documents
as so corrected to be filed with the SEC and to be disseminated to holders of
Shares, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Offer Documents prior to their being
filed with the applicable authorities.
SECTION 1.02. Company Action. (a) The Company hereby consents to the
--------------
Offer and represents that its Board of Directors, at a meeting duly called and
held on April 30, 1995, has (i) unanimously determined that this Agreement and
the transactions contemplated hereby, including the Offer and the Merger (as
defined in Section 2.01), are fair to and in the best interest of the Company's
stockholders, (ii) unanimously approved this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, which approval
satisfies in full the requirements of New York Law and Section 11(c)(ii) of the
Certificate of Incorporation of the Company and (iii) unanimously resolved to
recommend acceptance of the Offer and approval and adoption of this Agreement
and the Merger by its stockholders; provided that such recommendation may be
--------
withdrawn, modified or amended if, in the opinion of the Board of Directors,
after consultation with independent legal counsel, such recommendation would be
inconsistent with its fiduciary duties to the Company's shareholders under
applicable law. The parties agree that this Agreement shall constitute the
memorandum of understanding
3
<PAGE>
contemplated by Section 11 of the Company's Certificate of Incorporation setting
forth the principal terms of the Merger and related transactions.
The Company represents that all members of the Board of Directors of
the Company who are not designees of Corimon have, in accordance with the
Standstill Agreement between the Company, Corimon and Corimon Corp., dated July
21, 1992, as amended (the "STANDSTILL AGREEMENT"), adopted a resolution
providing for a waiver of the restrictions in Sections 3.1 and 4.1 of the
Standstill Agreement to permit Corimon and Corimon Corp. to enter into and
perform its obligations under the Corimon Option Agreement. The Company further
represents that Wertheim Schroder & Co. Inc., as financial advisors to the
Company, has delivered to the Company's Board of Directors its written opinion
that the consideration to be paid in the Offer and the Merger is fair to the
holders of Shares (other than Corimon and Corimon Corp.) from a financial point
of view. The Company has been advised that all of its directors and executive
officers intend to tender their Shares (other than the Corimon Shares) pursuant
to the Offer. The Company will promptly furnish Buyer with a list of its
stockholders, mailing labels and any available listing or computer file
containing the names and addresses of all holders of record of Shares and lists
of securities positions of Shares held in stock depositories, in each case true
and correct as of the most recent practicable date, and will provide to Buyer
such additional information (including, without limitation, updated lists of
stockholders, mailing labels and lists of securities positions) and such other
assistance as Buyer or Merger Subsidiary may reasonably request in connection
with the Offer.
(b) As soon as practicable on the day that the Offer is commenced the
Company will file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (the "SCHEDULE 14D-9") which shall reflect the recommendations of
the Company's Board of Directors referred to above, but subject to the proviso
to the sentence referring to such recommendations above. The Company, Buyer and
Merger Subsidiary each agree to correct promptly any information provided by it
for use in the Schedule 14D-9 if and to the extent that it shall have become
false or misleading in any material respect. The Company agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. Buyer and its counsel
shall be given a reasonable opportunity to review and comment on the Schedule
14D-9 prior to its being filed with the SEC.
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(c) References herein to the "fiduciary duties" of the members of the
Board of Directors of the Company mean the fiduciary duties of such members to
the holders of Shares other than Corimon Corp.
SECTION 1.03. Directors. (a) Effective upon the acceptance for
---------
payment by Buyer of any Shares, Buyer shall be entitled to designate the number
of directors, rounded up to the next whole number, on the Company's Board of
Directors that equals the product of (i) the total number of directors on the
Company's Board of Directors (giving effect to the election of any additional
directors pursuant to this Section) and (ii) the percentage that the number of
Shares owned by Buyer (including Shares accepted for payment and, assuming the
number of Shares owned by Buyer or accepted for payment constitute at least a
majority of the outstanding Shares on a fully diluted basis, the Corimon Shares)
bears to the total number of Shares outstanding, and the Company shall take all
action necessary to cause Buyer's designees to be elected or appointed to the
Company's Board of Directors, including, without limitation, increasing the
number of directors and seeking and accepting resignations of incumbent
directors. At such times, the Company will use its best efforts to cause
individuals designated by Buyer to constitute the same percentage as such
individuals represent on the Company's Board of Directors of (x) each committee
of the Board (other than any committee of the Board established to take action
under this Agreement), (y) each board of directors of each Subsidiary (as
defined in Section 4.06) and (z) each committee of each such board.
Notwithstanding the foregoing, until the Effective Time (as defined in Section
2.01), the Company shall retain as members of its Board of Directors at least
two directors who are directors of the Company on the date hereof (the "COMPANY
DESIGNEES").
(b) The Company's obligations to appoint designees to the Board of
Directors shall be subject to Section 14(f) of the Exchange Act (as defined in
Section 4.03) and Rule 14f-1 promulgated thereunder. The Company shall promptly
take all actions required pursuant to Section 14(f) and Rule 14f-1 in order to
fulfill its obligations under this Section and shall include in the Schedule
14D-9 such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill its
obligations under this Section 1.03. Buyer will supply to the Company in
writing and be solely responsible for any information with respect to itself and
its nominees, officers, directors and affiliates required by Section 14(f) and
Rule 14f-1.
(c) From and after the time, if any, that Buyer's designees
constitute a majority of the Company's Board of Directors, any amendment of this
Agreement, any termination
5
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of this Agreement by the Company, any extension of time for performance of any
of the obligations of Buyer or Merger Subsidiary hereunder, any waiver of any
condition to the obligations of the Company or any of the Company's rights
hereunder or other action by the Company hereunder may be effected only by the
action of a majority of the directors of the Company then in office who were
directors of the Company on the date hereof, which action shall be deemed to
constitute the action of the full Board of Directors; provided that if there
--------
shall be no such directors, such actions may be effected by majority vote of the
entire Board of Directors of the Company.
ARTICLE II
THE MERGER
SECTION 2.01. The Merger. (a) At the Effective Time (as defined in
----------
Section 2.01(b)), Merger Subsidiary shall be merged (the "MERGER") with and into
the Company in accordance with the New York Law, whereupon the separate
existence of Merger Subsidiary shall cease, and the Company shall be the
surviving corporation (the "SURVIVING CORPORATION").
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger, the Company and
Merger Subsidiary will file a certificate of merger with the Department of State
of the State of New York and make all other filings or recordings required by
New York Law in connection with the Merger. The Merger shall become effective
on such date as the certificate of merger is duly filed with the Department of
State of the State of New York or at such later date as is specified in the
certificate of merger (the "EFFECTIVE TIME").
(c) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, powers and franchises and be subject
to all of the restrictions, disabilities, liabilities and duties of the Company
and Merger Subsidiary, all as provided under New York Law.
SECTION 2.02. Conversion of Shares. At the Effective Time:
--------------------
(a) each Share held by the Company as treasury stock or owned by
Buyer, Merger Subsidiary or any other subsidiary of Buyer immediately prior
to the Effective Time shall be canceled, and no payment shall be made with
respect thereto;
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(b) each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become
one share of common stock of the Surviving Corporation with the same
rights, powers and privileges as the shares so converted and shall
constitute the only outstanding shares of capital stock of the Surviving
Corporation; and
(c) each Share outstanding immediately prior to the Effective Time
shall, except as otherwise provided in Section 2.02(a) or as provided in
Section 2.04 with respect to Shares as to which appraisal rights have been
exercised, be converted into the right to receive $18.10 in cash or any
higher price paid for each Share in the Offer, without interest (the
"MERGER CONSIDERATION").
SECTION 2.03. Surrender and Payment. (a) Prior to the Effective
---------------------
Time, Buyer shall appoint a depositary (the "DEPOSITARY") for the purpose of
exchanging certificates representing Shares for the Merger Consideration. The
Depositary shall at all times be a commercial bank having a combined capital and
surplus of at least $100,000,000. Buyer will pay to the Depositary immediately
prior to the Effective Time, the Merger Consideration to be paid in respect of
the Shares. For purposes of determining the Merger Consideration to be so paid,
Buyer shall assume that no holder of Shares will perfect his right to appraisal
of his Shares. Promptly after the Effective Time, Buyer will send, or will
cause the Depositary to send, but in no event later than three business days
after the Effective Time, to each holder of Shares at the Effective Time a
letter of transmittal for use in such exchange (which shall specify that the
delivery shall be effected, and risk of loss and title shall pass, only upon
proper delivery of the certificates representing Shares to the Depositary).
(b) Each holder of Shares that have been converted into a right to
receive the Merger Consideration, upon surrender to the Depositary of a
certificate or certificates properly representing such Shares, together with a
properly completed letter of transmittal covering such Shares, will be entitled
to receive the Merger Consideration payable in respect of such Shares. Until so
surrendered, each such certificate shall, after the Effective Time, represent
for all purposes, only the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a
Person other than the registered holder of the Shares represented by the
certificate or certificates surrendered in exchange therefor, it shall be a
condition to
7
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such payment that the certificate or certificates so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that the
Person requesting such payment shall pay to the Depositary any transfer or other
taxes required as a result of such payment to a Person other than the registered
holder of such Shares or establish to the satisfaction of the Depositary that
such tax has been paid or is not payable. For purposes of this Agreement,
"PERSON" means an individual, a corporation, limited liability company, a
partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or any agency or instrumentality
thereof.
(d) After the Effective Time, there shall be no further registration
of transfers of Shares. If, after the Effective Time, certificates representing
Shares are presented to the Surviving Corporation, they shall be canceled and
exchanged for the consideration provided for, and in accordance with the
procedures set forth, in this Article II.
(e) Any portion of the Merger Consideration paid to the Depositary
pursuant to Section 2.03(a) that remains unclaimed by the holders of Shares one
year after the Effective Time shall be returned to Surviving Corporation, upon
demand, and any such holder who has not exchanged his Shares for the Merger
Consideration in accordance with this Section prior to that time shall
thereafter look only to Surviving Corporation for payment of the Merger
Consideration in respect of his Shares. Notwithstanding the foregoing, Buyer,
Merger Subsidiary and the Surviving Corporation shall not be liable to any
holder of Shares for any amount paid to a public official pursuant to applicable
abandoned property laws. Any amounts remaining unclaimed by holders of Shares
on the day immediately prior to such time as such amounts would otherwise
escheat to or become property of any governmental entity shall, to the extent
permitted by applicable law, become the property of Buyer free and clear of any
claims or interest of any Person previously entitled thereto.
(f) Any portion of the Merger Consideration paid to the Depositary
pursuant to Section 2.03(a) to pay for Shares for which appraisal rights have
been perfected shall be returned to Surviving Corporation upon demand.
SECTION 2.04. Dissenting Shares. Notwithstanding Section 2.02,
-----------------
Shares outstanding immediately prior to the Effective Time and held by a holder
who has not voted in favor of the Merger or consented thereto in writing and who
has demanded appraisal for such Shares in accordance with New York Law shall not
be converted into a right to receive
8
<PAGE>
the Merger Consideration, unless such holder fails to perfect or withdraws or
otherwise loses his right to appraisal. If after the Effective Time such holder
fails to perfect or withdraws or loses his right to appraisal, such Shares shall
be treated as if they had been converted as of the Effective Time into a right
to receive the Merger Consideration. The Company shall give Buyer prompt notice
of any demands received by the Company for appraisal of Shares, and Buyer shall
have the right to participate in all negotiations and proceedings with respect
to such demands. The Company shall not, except with the prior written consent
of Buyer, make any payment with respect to, or settle or offer to settle, any
such demands.
SECTION 2.05. Stock Options. (a) Immediately prior to the Effective
-------------
Time, each outstanding employee stock option (an "OPTION") to purchase Shares
granted under any employee stock option or compensation plan or arrangement of
the Company shall be canceled, and each holder of any such Option, whether or
not then vested or exercisable, shall be paid by the Company at the Effective
Time for each such Option an amount determined by multiplying (i) the excess, if
any, of $18.10 per Share over the applicable exercise price of such Option by
(ii) the number of Shares such holder could have purchased (assuming full
vesting of all Options) had such holder exercised such Option in full
immediately prior to the Effective Time.
(b) Prior to the Effective Time, the Company shall (i) use its best
efforts to obtain any consents from holders of Options and (ii) make any
amendments to the terms of such stock option or compensation plans or
arrangements, to the extent such consents or amendments are necessary to give
effect to the transactions contemplated by Section 2.05(a). Notwithstanding any
other provision of this Section, payment may be withheld in respect of any
Option until necessary consents are obtained.
SECTION 2.06. Merger Without Meeting of Shareholders.
--------------------------------------
Notwithstanding Section 6.02 hereof, in the event that Buyer, Merger Subsidiary
or any other subsidiary of Buyer shall acquire at least 90% of the outstanding
shares of each class of capital stock of the Company, pursuant to the Offer or
otherwise, the parties hereto agree to take all necessary and appropriate action
to cause the Merger to become effective as soon as practicable after such
acquisition, without a meeting of shareholders of the Company, in accordance
with Section 905 of the New York Law.
9
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ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.01. Certificate of Incorporation. The certificate of
----------------------------
incorporation of Merger Subsidiary in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law, except that the name of the Surviving
Corporation shall be "Grow Group, Inc.".
SECTION 3.02. Bylaws. The bylaws of Merger Subsidiary in effect at
------
the Effective Time shall be the bylaws of the Surviving Corporation until
amended in accordance with applicable law.
SECTION 3.03. Directors and Officers. From and after the Effective
----------------------
Time, until successors are duly elected or appointed and qualified in accordance
with applicable law, the directors of Merger Subsidiary at the Effective Time
shall be the initial directors of the Surviving Corporation and the officers of
Merger Subsidiary at the Effective Time shall be the initial officers of the
Surviving Corporation, in each case until their respective successors are duly
elected and appointed or qualified.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to Buyer and Merger Subsidiary
that:
SECTION 4.01. Corporate Existence and Power. The Company is a
-----------------------------
corporation duly incorporated, validly existing and in good standing under the
laws of the State of New York, and except as set forth on Schedule 4.01, has all
corporate powers and all governmental licenses, authorizations, consents and
approvals (collectively, "LICENSES") required to carry on its business as now
conducted except where the failure to have any such License would not,
individually or in the aggregate, have a Material Adverse Effect (as defined
below). The Company is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such qualification
necessary, except for those jurisdictions where the failure to be so qualified
would not, individually or in the aggregate, have a Material Adverse Effect. As
used herein, the term "MATERIAL ADVERSE EFFECT" means a material adverse effect
on the condition
10
<PAGE>
(financial or otherwise), business, assets or results of operations of the
Company and its Subsidiaries (as defined in Section 4.06) taken as a whole, that
is not a result of general changes in the economy or the industries in which the
Company and its Subsidiaries operate. The Company has heretofore delivered to
Buyer true and complete copies of the Company's certificate of incorporation and
bylaws as currently in effect.
SECTION 4.02. Corporate Authorization. The execution, delivery and
-----------------------
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby are within the Company's corporate
powers and, except for any required approval by the Company's stockholders in
connection with the consummation of the Merger, have been duly authorized by all
necessary corporate action. This Agreement, assuming due and valid
authorization, execution and delivery by the parties hereto, constitutes a valid
and binding agreement of the Company except that (i) enforcement may be subject
to applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws, now or hereafter in effect, affecting creditors' rights generally,
and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
SECTION 4.03. Governmental Authorization. Except as set forth in
--------------------------
Schedule 4.03, the execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions contemplated
hereby require no action by or in respect of, or filing with, any governmental
body, agency, official or authority (each, a "GOVERNMENTAL ENTITY") other than:
(i) the filing of a certificate of merger in accordance with New York Law; (ii)
compliance with any applicable requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR ACT"); (iii) compliance with any applicable
requirements of the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder (the "EXCHANGE ACT"); (iv) compliance with
any applicable requirements of the New Jersey Industrial Site Recovery Act
("ISRA"); (v) compliance with any applicable requirements of the Security
Takeover Disclosure Act; and (vi) compliance with any applicable requirements of
Section 721 of the Defense Production Act of 1950, as amended (the "EXON-FLORIO
PROVISION").
SECTION 4.04. Non-Contravention. The execution, delivery and
-----------------
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby do not and will not (i) contravene or
11
<PAGE>
conflict with the Certificate of Incorporation or Bylaws of the Company, (ii)
except as set forth in Schedule 4.04 and assuming compliance with the matters
referred to in Section 4.03, contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to the Company or any Subsidiary, (iii)
except as set forth in Schedule 4.04, with or without the giving of notice or
passage of time or both, constitute a default under or give rise to a right of
termination, cancellation or acceleration of any right or obligation of the
Company or any Subsidiary or to a loss of any benefit to which the Company or
any Subsidiary is entitled under any provision of any agreement, contract or
other instrument binding upon the Company or any Subsidiary or any license,
franchise, permit or other similar authorization held by the Company or any
Subsidiary, or (iv) result in the creation or imposition of any Lien on any
asset of the Company or any Subsidiary excluding from the foregoing clauses
(ii), (iii) or (iv) such violations, breaches, defaults or Liens which would
not, individually or in the aggregate, have a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole, and which will not materially
impair the ability of the Company to consummate the transactions contemplated
hereby. For purposes of this Agreement, "LIEN" means, with respect to any
asset, any mortgage, lien, pledge, charge, security interest or encumbrance of
any kind in respect of such asset.
SECTION 4.05. Capitalization. The authorized capital stock of the
--------------
Company consists of 50,000,000 shares of common stock, par value $0.10 per Share
and 1,000,000 shares of preferred stock. As of April 29, 1995, there were
outstanding (1) 16,101,712 Shares and (2) employee stock options to purchase an
aggregate of 318,699 Shares (the "OPTIONS") with a weighted average exercise
price of $12.74 and a maximum exercise price of $18.13. Schedule 4.05
accurately sets forth information regarding the exercise prices of the Options.
All outstanding shares of capital stock of the Company have been duly authorized
and validly issued and are fully paid and nonassessable. Except as set forth in
this Section, except as provided in the Standstill Agreement, except for the
Rights (as defined below), and except for changes since April 29, 1995 resulting
from the exercise of employee stock options outstanding on such date, there are
outstanding (i) no shares of capital stock or other voting securities of the
Company, (ii) no securities of the Company or of any Subsidiary convertible into
or exchangeable for shares of capital stock or voting securities of the Company,
and (iii) no options or other rights to acquire from the Company, and no
obligation of the Company to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital
12
<PAGE>
stock or voting securities of the Company (the items in clauses (i), (ii) and
(iii) being referred to collectively as the "COMPANY SECURITIES"). There are no
outstanding obligations of the Company or any Subsidiary to repurchase, redeem
or otherwise acquire any Company Securities.
SECTION 4.06. Subsidiaries. (a) Each Subsidiary that is actively
------------
engaged in any business or owns any material assets (an "ACTIVE SUBSIDIARY") (i)
is a corporation duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation, (ii) except as set forth in
Schedule 4.06, has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted and (iii) is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such qualification
necessary, except in each case to the extent the failure of this representation
and warranty to be true would not have a Material Adverse Effect. For purposes
of this Agreement, "SUBSIDIARY" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are directly or indirectly owned by the Company. All Active Subsidiaries and
their respective jurisdictions of incorporation are either identified in the
Company's annual report on Form 10-K for the fiscal year ended June 30, 1994
(the "COMPANY 10-K") or in Schedule 4.06.
(b) Except to the extent the failure of the representations and
warranties set forth in this subsection (b) would not have a Material Adverse
Effect, and except that the stock of the Active Subsidiaries is pledged under
the Loan Agreement set forth on Schedule 4.04 (the "Loan Agreement"), which Loan
Agreement restricts the sale of such stock, all of the outstanding capital stock
of, or other ownership interests in, each Active Subsidiary, is owned by the
Company, directly or indirectly, free and clear of any Lien and free of any
other limitation or restriction (including any restriction on the right to vote,
sell or otherwise dispose of such capital stock or other ownership interests);
there are no outstanding (i) securities of the Company or any Subsidiary
convertible into or exchangeable for shares of capital stock or other voting
securities or ownership interests in any Subsidiary, or (ii) options or other
rights to acquire from the Company or any Subsidiary, and no other obligation of
the Company or any Subsidiary to issue, any capital stock, voting securities or
other ownership interests in, or any securities convertible into or exchangeable
for any capital stock, voting securities or
13
<PAGE>
ownership interests in, any Subsidiary (the items in clauses (i) and (ii) being
referred to collectively as the "SUBSIDIARY SECURITIES"); and, there are no
outstanding obligations of the Company or any Subsidiary to repurchase, redeem
or otherwise acquire any outstanding Subsidiary Securities.
SECTION 4.07. Investments. Except as disclosed in Schedule 4.07 and
-----------
except to the extent the failure of this representation and warranty to be true
would not have a Material Adverse Effect, neither the Company nor any of its
Subsidiaries, directly or indirectly, owns any shares or has any ownership
interest in any other Person or is a partner with any other Person.
SECTION 4.08. SEC Filings. (a) The Company has delivered to Buyer
-----------
(i) the annual reports on Form 10-K for its fiscal years ended June 30, 1992,
1993 and 1994, (ii) its quarterly reports on Form 10-Q for its fiscal quarters
ended September 30, 1994 and December 31, 1994 (such reports are hereinafter
referred to as the "COMPANY 10-QS"), (iii) its proxy or information statements
relating to meetings of, or actions taken without a meeting by, the stockholders
of the Company held since October 25, 1994, and (iv) all of its other reports,
statements, schedules and registration statements filed by the Company with the
SEC since June 30, 1994. As used herein, the term "COMPANY SEC DOCUMENTS"
means, the annual report of the Company on Form 10-K for its fiscal year ended
June 30, 1994, the Company 10-Qs, the proxy statement of the Company for the
annual meeting of shareholders on October 26, 1994 and the current reports of
the Company on Form 8-K dated February 25, 1995 and August 17, 1994 (as amended
by the Form 8K/A dated October 12, 1994).
(b) As of its filing date, each such report or statement filed
pursuant to the Exchange Act did not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(c) Each such registration statement, as amended or supplemented, if
applicable, filed pursuant to the Securities Act of 1933 as of the date such
statement or amendment became effective did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
SECTION 4.09. Financial Statements. The audited consolidated
--------------------
financial statements and unaudited consolidated interim financial statements of
the Company included in its
14
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annual reports on Form 10-K and the Company Form 10-Qs fairly present, in
conformity with generally accepted accounting principles applied on a consistent
basis (except as may be indicated in the notes thereto and, in the case of the
interim financial statements included in the Company Form 10-Qs, except for the
absence of certain footnotes that would be required under GAAP), the
consolidated financial position of the Company and its consolidated subsidiaries
as of the dates thereof and their consolidated results of operations and cash
flows for the periods then ended (subject to normal year-end adjustments in the
case of any unaudited interim financial statements). For purposes of this
Agreement, "BALANCE SHEET" means the consolidated balance sheet of the Company
as of December 31, 1994 set forth in the Company 10-Q and "BALANCE SHEET DATE"
means December 31, 1994.
SECTION 4.10. Disclosure Documents. (a) Each document required to be
--------------------
filed by the Company with the SEC in connection with the transactions
contemplated by this Agreement (the "COMPANY DISCLOSURE DOCUMENTS"), including,
without limitation, the Schedule 14D-9 will, when filed, comply as to form in
all material respects with the applicable requirements of all applicable law,
including without limitation, the Exchange Act.
(b) The information with respect to the Company or any Subsidiary
that the Company furnishes to Buyer in writing specifically for use in the Offer
Documents will not, at the time of the filing thereof, at the time of any
distribution thereof and at the time of the consummation of the Offer, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
SECTION 4.11. Absence of Certain Changes. Since the Balance Sheet
--------------------------
Date, and except as set forth in Schedule 4.11 or as contemplated by this
Agreement, the Company and Subsidiaries have conducted their business in the
ordinary course consistent with past practice and there has not been:
(a) any event, occurrence or facts which has had or reasonably could
be expected to have a Material Adverse Effect;
(b) any declaration, setting aside or payment of any dividend (other
than regular quarterly dividends not to exceed $.07 per Share per quarter)
or other distribution with respect to any shares of capital stock of the
Company, or any repurchase, redemption or other acquisition by the Company
or any Subsidiary of
15
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any outstanding shares of capital stock or other securities of, or other
ownership interests in, the Company or any Subsidiary;
(c) any amendment of any material term of any outstanding security of
the Company or any Subsidiary;
(d) any incurrence, assumption or guarantee by the Company or any
Subsidiary of any indebtedness for borrowed money other than in the
ordinary course of business and in amounts and on terms consistent with
past practices;
(e) any creation or assumption by the Company or any Subsidiary of
any Lien on any asset other than in the ordinary course of business
consistent with past practices and other than Liens which, individually or
in the aggregate, do not have and could not reasonably be expected to have
a Material Adverse Effect;
(f) any making of any loan, advance or capital contributions to or
investment in any Person other than advances to employees in the ordinary
course of business consistent with past practice and loans, advances or
capital contributions to or investments in wholly owned Subsidiaries made
in the ordinary course of business consistent with past practices;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or
any Subsidiary which, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any Subsidiary relating to its assets or
business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any Subsidiary of any contract or other
right, in either case, that, individually or in the aggregate, have had or
could reasonably be expected to have a Material Adverse Effect, other than
transactions and commitments in the ordinary course of business consistent
with past practice and those contemplated by this Agreement;
(i) any material change in any method of accounting or accounting
practice by the Company or any Subsidiary, except for any such change
required by reason of a concurrent change in generally accepted accounting
principles; or
16
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(j) any (i) grant of any severance or termination pay to any
director, officer or employee of the Company or any Subsidiary, (ii)
entering into of any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any
director, officer or employee of the Company or any Subsidiary, (iii)
increase in benefits payable under any existing severance or termination
pay policies or employment agreements or (iv) increase in compensation,
bonus or other benefits payable to directors, officers or employees of the
Company or any Subsidiary, in each case, other than in the ordinary course
of business consistent with past practice.
SECTION 4.12. No Undisclosed Material Liabilities. Except as set
-----------------------------------
forth in Schedule 4.12, there are no liabilities of the Company or any
Subsidiary of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, and there is no existing condition or
fact which could reasonably be expected to result in such a liability, other
than:
(a) liabilities disclosed or provided for in the Balance Sheet;
(b) other liabilities the presence of which, individually or in the
aggregate, do not have and could not reasonably be expected to have a Material
Adverse Effect;
(c) liabilities incurred in the ordinary course of business consistent
with past practice since the Balance Sheet Date; and
(d) liabilities under this Agreement or in connection with this
Agreement or disclosed hereunder.
SECTION 4.13. Litigation. Except as set forth in the Company 10-K or
----------
in Schedule 4.13, there is no action, suit, investigation or proceeding pending
against, or to the knowledge of the Company threatened against, the Company or
any Subsidiary or any of their respective properties before any court or
arbitrator or any governmental body, agency or official which, if determined or
resolved adversely to the Company or any Subsidiary in accordance with the
plaintiff's demands, could reasonably be expected to have a Material Adverse
Effect.
SECTION 4.14. Taxes. (a) (i) all income and other material Tax
-----
returns, statements, reports and forms (including estimated Tax returns and
reports and information returns and reports) required to be filed with any
taxing authority with respect to any Pre-Closing Tax Period by or
17
<PAGE>
on behalf of the Company or any subsidiary of the Company (collectively, the
"RETURNS") were filed when due (including any applicable extension periods) in
accordance with all applicable laws; (ii) as of the time of filing, such Returns
correctly reflected in all material respects the facts regarding the income,
business, assets, operations, activities and status of the Company, its
Subsidiaries and any other information required to be shown therein; (iii) the
Company and its Subsidiaries have timely paid, or withheld and remitted to the
appropriate taxing authority, all Taxes shown as due and payable on the Returns
that have been filed; (iv) the charges, accruals and reserves for taxes with
respect to the Company and any Subsidiary for any Pre-Closing Tax Period
(including any Pre-Closing Tax Period for which no Return has yet been filed)
reflected on the books of the Company and its Subsidiaries (excluding any
provision for deferred income taxes) are adequate (in accordance with GAAP) to
cover such Taxes; (v) neither the Company nor any Subsidiary of the Company has
been a member of an affiliated group (as defined in Section 1504 of the Internal
Revenue Code of 1986, as amended (the "CODE")) other than one of which the
Company was the common parent, or filed or been included in a combined,
consolidated or unitary Return other than one filed by the Company; (vi) the
Company is not and has not been within five years of the date hereof a "United
States real property holding corporation" as defined in Section 897 of the Code;
(vii) neither the Company nor any Subsidiary owns (excluding any leasehold
interest) any interest in real property in the State of New York; and (viii)
there is no claim, action, suit or proceeding now pending or threatened in
writing against or in respect of any Tax or "tax asset" of the Company or any
Subsidiary the resolution of which would as proposed, or audit or investigation
now pending or threatened in writing against or in respect of any Tax or "tax
asset" of the Company or any Subsidiary the resolution of which the Company
believes would (taking into account any changes, accruals and reserves referred
to in clause (iv) above), individually or in the aggregate, have a material
adverse effect on the financial position of the Company and its Subsidiaries
taken as a whole. (The term "TAX ASSET" means any net operating loss, net
capital loss, investment tax credit, foreign tax credit, charitable deduction or
any other credit or tax attribute which could reduce Taxes).
(b) As used in this Section 4.14, "TAXES" mean (i) all Federal, state,
local and foreign income, franchise, alternative or add-on minimum tax, gross
receipts, transfer, withholding on amounts paid to or by the Company or any of
its Subsidiaries, payroll, employment, license, property, sales, use, excise and
other taxes, tariffs or governmental charges of any nature whatsoever, together
with any interest, penalty or additional tax attributable to such
18
<PAGE>
taxes; (ii) liability of the Company or any Subsidiary for the payment of any
amounts of the type described in clause (i) of this paragraph as a result of
being a member of an affiliated, consolidated, combined or unitary group, or
being a party to any agreement or arrangement whereby liability of the Company
or any Subsidiary for payments of such amounts was determined or taken into
account with reference to the liability of any other person; and (iii) liability
of the Company or any Subsidiary for the payment of any amounts as a result of
being party to any tax sharing agreement or with respect to the payment of any
amounts of the type described in clauses (i) or (ii) of this paragraph as a
result of any express or implied obligation to indemnify any other person.
"PRE-CLOSING TAX PERIOD" means any Tax period (or portion thereof)
ending on or before the close of business on the Closing Date.
SECTION 4.15. Employee Matters. (a) For purposes of this Section,
----------------
the following terms shall have the meanings set forth below:
(A) "BENEFIT ARRANGEMENT" means any contract (other than the Employee
Agreements), arrangement or policy, or any plan or arrangement (whether or
not written) providing for severance benefits, insurance coverage
(including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits, deferred compensation, profit-sharing, bonuses, stock
options, stock appreciation rights or other forms of incentive compensation
or post-retirement insurance, compensation or benefits that (i) is not an
Employee Plan, (ii) is entered into or maintained, as the case may be, by
the Company or any of its affiliates and (iii) covers any employee or
former employee of the Company or any of its Subsidiaries.
(B) "EMPLOYEE AGREEMENT" means all written employment agreements and
severance agreements with employees of the Company or any of its
Subsidiaries
(C) "EMPLOYEE PLAN" means any "employee benefit plan", as defined in
Section 3(3) of ERISA, that (i) is subject to any provision of ERISA, (ii)
is maintained, administered or contributed to by the Company, any
Subsidiary or any of their ERISA Affiliates for employees or former
employees of the Company or any of its Subsidiaries and (iii) covers any
employee or former employee of the Company or any of its Subsidiaries.
19
<PAGE>
(D) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto, and the rules and
regulations promulgated thereunder.
(E) "ERISA AFFILIATE" of any entity means any other entity which,
together with such entity, would be treated as a single employer under
Section 4001(b)(1) of ERISA.
(F) "MULTIEMPLOYER PLAN" means each Employee Plan that is a
multiemployer plan, as defined in Section 3(37) of ERISA.
(G) "TITLE IV PLAN" means an Employee Plan, other than any
Multiemployer Plan, subject to Title IV of ERISA.
(b) Schedule 4.15 identifies each Employee Plan. The Company has
furnished or made available to Buyer copies of the Employee Plans (and, if
applicable, related trust agreements) and all amendments thereto and written
interpretations thereof together with (i) the three most recent annual reports
prepared in connection with any material Employee Plan (Form 5500 including, if
applicable, Schedule B thereto) and (ii) the most recent actuarial valuation
report prepared in connection with any Employee Plan. No Employee Plan is (i)
except as set forth in Schedule 4.15, a Multiemployer Plan, (ii) a Title IV Plan
or (iii) maintained in connection with any trust described in Section 501(c)(9)
of the Code. Except for the Supplemental Retirement and Death Benefit
Agreements with the employees or former employees of the Company or its
Subsidiaries who are identified on Schedule 4.15, no Employee Plan is a plan
described in Section 401(a)(1) of ERISA.
(c) With respect to each Employee Plan, except as disclosed in
Section 4.15: (i) no "prohibited transaction", as defined in Section 406 of
ERISA or Section 4975 of the Code, has, to the knowledge of the officers of the
Company, occurred with respect to any Employee Plan, excluding transactions
effected pursuant to a statutory or administrative exemption; (ii) neither (A)
disputes in the ordinary course of the operation of an Employee Plan that might
reasonably be expected to have a Material Adverse Effect nor (B) disputes
outside the ordinary course of the operation of an Employee Plan, are pending,
or to the knowledge of the Company, threatened; and (iii) all contributions
required to be made to each Employee Plan as of the date hereof (taking into
account any extensions permitted by the Code or the IRS) have been made in full.
20
<PAGE>
(d) No liability under Title IV of ERISA has been incurred by the
Company or any ERISA Affiliate that has not been satisfied in full and except as
disclosed in Schedule 4.15, to the knowledge of officers of the Company, no
condition exists that presents a material risk to the Company or its ERISA
Affiliates of incurring any liability to the PBGC, Department of Labor, or the
plan participants. No Employee Plan has incurred an accumulated funding
deficiency, as defined in Section 302 of ERISA or Section 312 of the Code,
whether or not waived.
(e) If a "complete withdrawal" by the Company, all its Subsidiaries
and all of their ERISA Affiliates were to occur as of the Closing Date with
respect to all Multiemployer Plans, to the knowledge of the officers of the
Company, based on information received by such officers as of the date hereof,
none of the Company, any of its Subsidiaries nor any of their ERISA Affiliates
would incur any material withdrawal liability under Title IV of ERISA.
(f) Each Employee Plan that is intended to be qualified under Section
401(a) of the Code has been determined by the Internal Revenue Service to be so
qualified and no event has occurred since the date of such determination that,
to the knowledge of the officers of the Company, would adversely affect such
qualification, and each trust created under any such Employee Plan has been
determined by the Internal Revenue Service to be exempt from tax under Section
501(a) of the Code and no event has occurred since the date of such
determination that, to the knowledge of the officers of the Company, would
adversely affect such exemption. The Company has provided Buyer with the most
recent determination letter of the Internal Revenue Service relating to each
such Employee Plan. Each Employee Plan has been maintained in substantial
compliance (to include timely, complete and substantially correct filing of Form
5500 and any attachments) with its terms and with the requirements prescribed by
any and all applicable statutes, orders, rules and regulations, including but
not limited to ERISA and the Code. Except as disclosed on Schedule 4.15, no
Employee Plan is or has been audited or is or has been under investigation by
the Department of Labor or the Internal Revenue Service.
(g) Schedule 4.15 identifies each material Benefit Arrangement. The
Company has furnished or made available to Buyer copies or descriptions of each
material Benefit Arrangement. Each such Benefit Arrangement has been maintained
in substantial compliance with its terms and with the requirements prescribed by
any and all applicable statutes, orders, rules and regulations.
21
<PAGE>
(h) Schedule 4.15 identifies by name all Employee Agreements in
effect or committed to be put in effect as of the date hereof and provides the
following information with respect to each Employee Agreement:
(1) 1995 compensation rate used in determining change of control
severance payment;
(2) 1994, 1993, and 1992 bonuses, if any, used to calculate change of
control severance payment;
(3) Period used to calculate change of control severance payment; and
(4) Good faith estimate of total severance payment due each employee
with an Employee Agreement; provided that in no event will the
estimate have more than a 5% margin of error.
No changes have been made to any Employee Agreement on or after January 1, 1995
and no new Employee Agreements will be entered into by the Company after May 1,
1995 and before the Effective Time, the effect of which is not disclosed on
Schedule 4.15.
(i) Except as disclosed on Schedule 4.15, neither the Company nor any
of its ERISA Affiliates has any current or projected liability in respect of
post-employment or post-retirement health or medical or life insurance benefits
for retired or former employees of the Company, except as required to avoid
excise tax under Section 4980B of the Code.
(j) Except as disclosed in Schedule 4.15, there has been no amendment
or announcement by the Company or any of its ERISA Affiliates relating to, or
change in benefits, employee participation or coverage under, any Employee Plan
or Benefit Arrangement, that would increase materially the expense of
maintaining such Employee Plan or Benefit Arrangement above the level of the
expense incurred in respect thereof for the fiscal year ended prior to the date
hereof.
(k) Except as set forth in Schedule 4.15, the Company is not aware of
any Employee Agreement or other contract, agreement, plan or arrangement
covering any employee or former employee of the Company that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible pursuant to the terms of Section 280G of the Code.
22
<PAGE>
(l) Except as disclosed in Schedule 4.15, no excise tax under Section
4980B or other provision of the Code has been incurred by the Company or an
ERISA Affiliate in respect of any Employee Plan.
(m) Schedule 4.15 lists by policy number and issuer all corporate
owned life insurance policies owned by the Company or an ERISA Affiliate and
with respect to each such policy lists the (1) current cash surrender value, net
of any loan, (2) name of insured and (3) the face amount. Each policy so
identified is a life insurance contract within the meaning of Code Section 7702.
(n) The Supplemental Retirement and Death Benefit Agreements
identified in Schedule 4.15 do not permit any employee or former employee of the
Company or an ERISA Affiliate who is over age 65 to receive an undiscounted lump
sum payment of any installment payments due under said agreements.
SECTION 4.16. Labor Matters. Except as set forth in Schedule 4.16
-------------
and except to the extent the failure of this representation and warranty to be
true would not have a Material Adverse Effect, (i) there are no controversies
pending or, to the best knowledge of the Company, threatened between the Company
or any Subsidiary and any of their respective employees; and (ii) neither the
Company nor any Subsidiary is a party to any collective bargaining agreement or
other labor union contract applicable to persons employed by the Company or any
Subsidiary (any such agreement or contract a "CBA"), nor, to the knowledge of
the Company, are there any activities or proceedings of any labor union to
organize any such employees. The Company has furnished or made available, to
Buyer true and complete copies of all CBAs.
SECTION 4.17. Compliance with Laws. Except as set forth in Schedule
--------------------
4.17, neither the Company nor any Subsidiary is in violation of, or has
violated, any applicable provisions of any laws, statutes, ordinances or
regulations except where such violations would not have a Material Adverse
Effect or a material adverse effect on the reputation of the Company and any of
its Subsidiaries taken as a whole.
SECTION 4.18. Finders' Fees. Except for Wertheim Schroder & Co.
-------------
Inc., a true copy of whose engagement agreement has been provided to Buyer,
there is no investment banker, broker, finder or other intermediary which has
been retained by or is authorized to act on behalf, of the Company or any
Subsidiary who would be entitled to any fee or commission from the Company, any
Subsidiary, Buyer or any
23
<PAGE>
of its affiliates upon consummation of the transactions contemplated by this
Agreement.
SECTION 4.19. Environmental Matters. (a) Except as set forth in the
---------------------
Company SEC Documents or in Schedule 4.19:
(i) since June 30, 1994, the Company has not received any written
communication from any person or entity (including any Governmental Entity)
stating that it or its Subsidiaries may be a potentially responsible party under
Environmental Law (as defined in (c) below) with respect to any actual or
alleged environmental contamination; neither the Company nor its Subsidiaries
nor, to the Company's knowledge, any Governmental Entity is conducting or has
conducted any environmental remediation or environmental investigation which
could reasonably be expected to result in liability for the Company or its
Subsidiaries under Environmental Law; and the Company and its Subsidiaries have
not received any request for information under Environmental Law from any
Governmental Entity with respect to any actual or alleged environmental
contamination, except, in each case, for communications, environmental
remediation and investigations and requests for information which would not,
individually or in the aggregate, have a Material Adverse Effect;
(ii) since June 30, 1994, the Company and its Subsidiaries have not
received any written communication from any person or entity (including any
Governmental Entity) stating or alleging that the Company or its Subsidiaries
may have violated any Environmental Law, or that the Company or its Subsidiaries
has caused or contributed to any environmental contamination that has caused any
property damage or personal injury under Environmental Law, except, in each
case, for statements and allegations of violations and statements and
allegations of responsibility for property damage and personal injury which
would not, individually or in the aggregate, have a Material Adverse Effect;
(iii) all underground storage tanks ("UST'S") on property currently
owned or leased by the Company comply with applicable Environmental Law, except
for failures to comply which would not, individually or in the aggregate, have a
Material Adverse Effect.
(iv) with respect to UST's other than those covered by section
4.19(a)(iii), to the Company's knowledge, all obligations for which the Company
and its Subsidiaries have retained liability either contractually or by
operation of law would not have a Material Adverse Effect; and
24
<PAGE>
(v) to the Company's knowledge, the Company and its Subsidiaries have
no liabilities under Environmental Law that, individually or in the aggregate,
have had or may reasonably be expected to result in a Material Adverse Effect.
(b) (i) The Company has not knowingly withheld from Buyer any
material environmental investigation, study, audit, test, review and other
analysis in the possession of the Company or its Subsidiaries conducted in
relation to the business of the Company or any property or facility now or
previously owned, operated or leased by the Company or any Subsidiary; and (ii)
the Company has not knowingly withheld from Buyer any consent decree, consent
order or similar document in force and to which it is a party relating to any
property currently owned, leased or operated by the Company or its Subsidiaries.
(c) For purposes of this Section 4.19, "ENVIRONMENTAL LAW" means all
applicable state, federal and local laws, regulations and rules, including
common law, judgments, decrees and orders relating to pollution, the
preservation of the environment, and the release of material into the
environment.
SECTION 4.20. Property. The Company and the Subsidiaries have good
--------
and marketable title to, or in the case of leased property, have valid leasehold
interests in all properties and assets necessary to conduct the business of the
Company as currently conducted except to the extent the failure of this
representation and warranty to be true would not have a Material Adverse Effect.
There are no developments affecting any of such properties or assets pending or,
to the knowledge of Seller threatened, which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
SECTION 4.21. Trademarks. (a) The Company and the Subsidiaries own
----------
or possess adequate licenses or other valid rights to use all trademarks,
trademark rights, trade names and trade name rights which are material to the
Company's business and operations (collectively, "MATERIAL TRADEMARKS") used or
held for use in connection with the business of the Company and the Subsidiaries
as currently conducted in all material respects. All Material Trademarks are
validly registered or registrations have been applied for.
(b) The Company, except as set forth in Schedule 4.21, is unaware of
any assertion or claim challenging the validity of any Material Trademark.
Except as set forth in Schedule 4.21, the conduct of the business of the Company
and the Subsidiaries as currently conducted does not
25
<PAGE>
conflict with any trademark, trademark right, trade name or trade name right of
any third party in a manner that could reasonably be expected to have a Material
Adverse Effect. To the best knowledge of the Company, there are no material
infringements of any Material Trademarks.
SECTION 4.22. Material Contracts. (a) Except as set forth in
------------------
Schedule 4.22, the Company 10-K lists each material contract or agreement
(including, but not limited to, all material leases, licensing agreements,
manufacturing, production or distribution contracts and any material contracts
or agreements pursuant to which the Company or any Subsidiary has licensed
intellectual property to a third party) (collectively, the "MATERIAL CONTRACTS")
to which the Company or any of its Subsidiaries is a party.
(b) To the knowledge of the Company, each Material Contract is in full
force and effect and is enforceable in all material respects against the parties
thereto (other than the Company and the Subsidiaries) in accordance with its
terms and no condition or state of facts exist that, with notice or the passage
or time, or both, would constitute a material default by the Company or any
Subsidiary or, to the best knowledge of the Company, any third party under any
Material Contract.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BUYER AND MERGER SUBSIDIARY
Buyer and Merger Subsidiary represent and warrant to the Company that:
SECTION 5.01. Corporate Existence and Power. Each of Buyer and
-----------------------------
Merger Subsidiary is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation. Since the
date of its incorporation, Merger Subsidiary has not engaged in any activities
other than in connection with or as contemplated by this Agreement.
SECTION 5.02. Corporate Authorization. The execution, delivery and
-----------------------
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated
hereby are within the corporate powers of Buyer and Merger Subsidiary and have
been duly authorized by all necessary corporate action. This Agreement,
assuming due and valid authorization, execution and delivery by the other
parties hereto, constitutes a valid and binding agreement of each of
26
<PAGE>
Buyer and Merger Subsidiary except that (i) enforcement may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws, now or hereafter in effect, affecting creditors' rights generally, and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
SECTION 5.03. Governmental Authorization. The execution, delivery and
---------------------------
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated by
this Agreement require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than (i) the filing of a
certificate of merger in accordance with New York Law; (ii) compliance with any
applicable requirements of the HSR Act; (iii) compliance with any applicable
requirements of the Exchange Act; (iv) compliance with any applicable
requirements of ISRA; (v) compliance with any applicable requirements of the
Security Takeover Disclosure Act; and (vi) compliance with any applicable
requirements of the Exon-Florio Provision.
SECTION 5.04. Non-Contravention. The execution, delivery and
-----------------
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated
hereby do not and will not (i) contravene or conflict with the certificate of
incorporation or bylaws of Merger Subsidiary or the charter documents of Buyer,
(ii) assuming compliance with the matters referred to in Section 5.03,
contravene or conflict with any provision of law, regulation, judgment, order or
decree binding upon Buyer or Merger Subsidiary, or (iii) constitute a default
under or give rise to any right of termination, cancellation or acceleration of
any right or obligation of Buyer or Merger Subsidiary or to a loss of any
benefit to which Buyer or Merger Subsidiary is entitled under any agreement,
contract or other instrument binding upon Buyer or Merger Subsidiary, except in
the case of clauses (ii) and (iii) as would not materially impair the
consummation of the Offer or the Merger.
SECTION 5.05. Disclosure Documents. (a) The information with respect
--------------------
to Buyer and its subsidiaries and Merger Subsidiary that Buyer and Merger
Subsidiary furnish to the Company in writing specifically for use in any Company
Disclosure Document will not contain, any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading (i) in the case of the Company Proxy Statement at the time the
Company Proxy Statement or any
27
<PAGE>
amendment or supplement thereto is first mailed to stockholders of the Company,
at the time the stockholders vote on adoption of this Agreement and at the
Effective Time, and (ii) in the case of any Company Disclosure Document other
than the Company Proxy Statement, at the time of the filing thereof and at the
time of any distribution thereof.
(b) The SEC Offer Documents, when filed, will comply as to form in
all material respects with the applicable requirements of the Exchange Act and
the New York Disclosure Documents, when filed, will comply as to form in all
material respects with the applicable requirements of the New York Disclosure
Act. The Offer Documents will not at the time of the filing thereof, at the
time of any distribution thereof or at the time of consummation of the Offer,
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading; provided that this
--------
representation and warranty will not apply to statements or omissions in the
Offer Documents based upon information furnished to Buyer or Merger Subsidiary
in writing by the Company specifically for use therein.
SECTION 5.06. Finders' Fees. Except for Goldman, Sachs & Co., whose
-------------
fees will be paid by Buyer, there is no investment banker, broker, finder or
other intermediary who might be entitled to any fee or commission from the
Company or any of its affiliates upon consummation of the transactions
contemplated by this Agreement.
SECTION 5.07. Financing. Buyer has or will have, prior to the
---------
expiration of the Offer, sufficient funds available to purchase all of the
Shares outstanding on a fully diluted basis and to pay all related fees and
expenses pursuant to the Offer and this Agreement.
SECTION 5.08. Share Ownership. As of the date hereof, Buyer and
---------------
Merger Subsidiary do not beneficially own any Shares.
SECTION 5.09. Merger Subsidiary's Operations. Merger Subsidiary was
------------------------------
formed solely for the purpose of engaging in the transactions contemplated
hereby and has not engaged in any business activities or conducted any
operations other than in connection with the transactions contemplated hereby.
28
<PAGE>
ARTICLE VI
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 6.01. Conduct of the Company. From the date hereof until the
----------------------
Effective Time, the Company and the Subsidiaries shall conduct their business in
the ordinary course consistent with past practice and shall use their best
efforts to preserve intact their business organizations and relationships with
third parties and to keep available the services of their present officers and
employees. Without limiting the generality of the foregoing, from the date
hereof until the Effective Time:
(a) the Company will not adopt or propose any change in its
certificate of incorporation or bylaws;
(b) except for the Merger, the Company will not, and will not permit
any Subsidiary to, merge or consolidate with any other Person or acquire a
material amount of assets of any other Person;
(c) the Company will not, and will not permit any Subsidiary to,
sell, lease, license or otherwise dispose of any material assets or
property except (i) pursuant to existing contracts or commitments and (ii)
inventory in the ordinary course consistent with past practice;
(d) the Company will not, and will not permit any Subsidiary to,
agree or commit to do any of the foregoing; or
(e) the Company will not, and will not permit any Subsidiary to,
willfully and knowingly (i) take or agree or commit to take any action that
would make any representation and warranty of the Company hereunder
inaccurate in any material respect at, or as of any time prior to, the
Effective Time or (ii) omit, or agree or commit to omit, to take any action
necessary to prevent any such representation or warranty from being
inaccurate in any material respect at any such time.
SECTION 6.02. Stockholder Meeting; Proxy Material. The Company shall
-----------------------------------
cause a meeting of its stockholders (the "COMPANY STOCKHOLDER MEETING") to be
duly called and held as soon as reasonably practicable for the purpose of voting
on the approval and adoption of this Agreement and the Merger unless a vote of
stockholders of the Company is not required by New York Law. The Directors
29
<PAGE>
of the Company shall, subject to their fiduciary duties as advised by counsel,
recommend approval and adoption of this Agreement and the Merger by the
Company's stockholders. In connection with such meeting, the Company (i) will
promptly, after the consummation of the Offer, prepare and file with the SEC,
will use its best efforts to have cleared by the SEC and will thereafter mail to
its stockholders as promptly as practicable the Company Proxy Statement and all
other proxy materials for such meeting, (ii) will use its best efforts to obtain
the necessary approvals by its stockholders of this Agreement and the
transactions contemplated hereby and (iii) will otherwise comply with all legal
requirements applicable to such meeting.
SECTION 6.03. Access to Information. From the date hereof until the
---------------------
Effective Time, the Company will give Buyer, its counsel, financial advisors,
auditors and other authorized representatives reasonable access during normal
business hours to the offices, properties, books and records of the Company and
the Subsidiaries, will furnish to Buyer, its counsel, financial advisors,
auditors and other authorized representatives such financial and operating data
and other information as such Persons may reasonably request and will instruct
the Company's employees, counsel and financial advisors to cooperate with Buyer
in its investigation of the business of the Company and the Subsidiaries;
provided that all requests for information, to visit plants or facilities or to
- --------
interview the Company's employees or agents should be directed to and
coordinated with an executive officer of the Company or one of the five general
managers of the Company's operations; and provided further that no investigation
--------
pursuant to this Section shall affect any representation or warranty given by
the Company to Buyer hereunder and any information received by Buyer or its
representatives shall remain subject to the Confidentiality Agreement dated
December 1, 1994 between Buyer and the Company (the "CONFIDENTIALITY
AGREEMENT").
SECTION 6.04. Other Offers. From the date hereof until the
------------
termination hereof, the Company and the Subsidiaries and the officers,
directors, employees or other agents of the Company and the Subsidiaries will
not, directly or indirectly, (i) take any action to solicit, initiate or
encourage any Acquisition Proposal or (ii) subject to the fiduciary duties of
the Board of Directors under applicable law as advised by counsel, engage in
negotiations with, or disclose any nonpublic information relating to the Company
or any Subsidiary or afford access to the properties, books or records of the
Company or any Subsidiary to, any Person that may be considering making, or has
made, an Acquisition Proposal. The Company will promptly notify Buyer after
receipt of any Acquisition Proposal or any indication that any Person is
considering
30
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making an Acquisition Proposal or any request for nonpublic information relating
to the Company or any Subsidiary or for access to the properties, books or
records of the Company or any Subsidiary by any Person that may be considering
making, or has made, an Acquisition Proposal and will keep Buyer fully informed
of the status and details of any such Acquisition Proposal, indication or
request. For purposes of this Agreement, "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 this Agreement.
Furthermore, nothing contained in this Section 6.04 shall prohibit the Company
or its Board of Directors from taking and disclosing to the Company's
shareholders a position with respect to a tender or exchange offer by a third
party pursuant to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or
from making such disclosure to the Company's shareholders or otherwise which, in
the judgment of the Board of Directors with the advice of independent legal
counsel, may be required under applicable law or rules of any stock exchange.
SECTION 6.05. Notices of Certain Events. The Company shall promptly
-------------------------
notify Buyer of:
(i) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(ii) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against, relating to
or involving or otherwise affecting the Company or any Subsidiary which, if
pending on the date of this Agreement, would have been required to have
been disclosed pursuant to Section 4.13 or which relate to the consummation
of the transactions contemplated by this Agreement.
SECTION 6.06. Amendment of Rights Agreement. The Company agrees that
-----------------------------
promptly after the date hereof, and in any event within five days of the date
hereof, it will amend, to the extent necessary, its Amended and Restated
Shareholder Rights Agreement, dated as of August 7, 1992, between the Company
and the Bank of New York, as Rights Agent (the "RIGHTS AGREEMENT"), to permit
the commencement
31
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and closing of the Offer and the consummation of the Merger without any such
event or the passage of time resulting in the occurrence of the Distribution
Date (as defined in the Rights Agreement), and upon the written request of
Buyer, will redeem, in accordance with the terms of the Rights Agreement all
outstanding rights issued pursuant to the Rights Agreement (the "RIGHTS") at a
redemption price of $.01 per Right. Except as set forth above, the Company
shall not redeem the Rights other than in connection with a merger,
consolidation, business combination, acquisition of Shares or sale of assets or
similar transaction that a majority of the Board of Directors of the Company
(excluding directors who are designees of the Buyer or who are employees of the
Company) determines in the exercise of its fiduciary responsibilities is more
favorable to the Company's stockholders than the transactions contemplated
hereby.
SECTION 6.07. Conveyance Taxes. The Company shall timely pay any
----------------
real property transfer or gains, sales, use, transfer, value added, stock
transfer and stamp taxes, any transfer, recording, registration and other fees,
and any similar taxes which become payable prior to the Effective Time in
connection with the transactions contemplated hereunder that are required to be
paid in connection therewith.
ARTICLE VII
COVENANTS OF BUYER
Buyer agrees that:
SECTION 7.01. Obligations of Merger Subsidiary. Buyer will take all
--------------------------------
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Merger on the terms and conditions set
forth in this Agreement.
SECTION 7.02. Voting of Shares. Buyer agrees to vote all Shares
----------------
beneficially owned by it or by its Subsidiaries in favor of adoption of this
Agreement at the Company Stockholder Meeting.
SECTION 7.03. Director and Officer Liability. For six years after
------------------------------
the Effective Time, Buyer will, and will cause the Surviving Corporation to, (i)
indemnify and hold harmless the present and former officers, directors,
employees and agents of the Company in respect of acts or omissions occurring
prior to the Effective Time (including, without limitation, in respect of acts
or omissions in connection with this Agreement and the transactions
32
<PAGE>
contemplated hereby) and (ii) advance to such Persons expenses incurred in
defending any action or suit with respect to such matters, in each case to the
extent such Persons are entitled to indemnification or advancement of expenses
under the Company's or any Subsidiary's certificate of incorporation and bylaws
in effect on the date hereof and subject to the terms of such certificates of
incorporation and bylaws. In the event any claim or claims are asserted or made
within such six year period, all rights to indemnification in respect of any
such claim or claims shall continue until disposition of any and all such
claims. Buyer and the Company agree that all rights to indemnification and all
limitations on liability existing in favor of any such officer, director,
employee or agent as provided in the Company's Certificate of Incorporation and
By-laws as in effect as of the date hereof shall survive the Merger and shall
continue in full force and effect. Any determination required to be made with
respect to whether any of the foregoing Persons is entitled to indemnification
as set forth above shall be made by independent legal counsel selected mutually
by such Person and Buyer. For six years after the Effective Time, Buyer will
cause the Surviving Corporation to use its best efforts to provide officers' and
directors' liability insurance in respect of acts or omissions occurring prior
to the Effective Time covering each such Person currently covered by the
Company's officers' and directors' liability insurance policy on terms with
respect to coverage and amount no less favorable than those of such policy in
effect on the date hereof; provided that in satisfying its obligation under this
--------
Section, Buyer shall not be obligated to cause the Surviving Corporation to pay
premiums in excess of $400,000 per annum; provided further that if the premiums
would exceed $400,000 in a given year, the Surviving Corporation shall use its
best efforts to purchase coverage that in the opinion of the Surviving
Corporation is the best available for $400,000 per year. Buyer shall cause the
Surviving Corporation to continue to indemnify in accordance with the Company's
past practices each of the employees listed on Schedule 7.03 in respect of the
lawsuit set forth opposite such employee's name on Schedule 7.03.
ARTICLE VIII
COVENANTS OF BUYER
AND THE COMPANY
The parties hereto agree that:
SECTION 8.01. Best Efforts. Subject to the terms and conditions of
------------
this Agreement, each party will use its best efforts to take, or cause to be
taken, all actions and
33
<PAGE>
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate the transactions contemplated by
this Agreement; provided that Buyer and its affiliates shall not be required to
--------
agree to any consent decree or order in connection with any objections of the
Department of Justice or Federal Trade Commission (each an "HSR AUTHORITY") to
the transactions contemplated by this Agreement or in connection with any
objections of any governmental authority in respect of the Exon-Florio Provision
to the transactions contemplated by this Agreement.
SECTION 8.02. Certain Filings. The Company and Buyer shall cooperate
---------------
with one another (a) in connection with the preparation of the Company
Disclosure Documents and the Offer Documents, and (b) in determining whether any
action by or in respect of, or filing with, any governmental body, agency or
official, or authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts, in
connection with the consummation of the transactions contemplated by this
Agreement and (c) in seeking any such actions, consents, approvals or waivers or
making any such filings, furnishing information required in connection therewith
or with the Company Disclosure Documents or the Offer Documents and seeking
timely to obtain any such actions, consents, approvals or waivers.
SECTION 8.03. Public Announcements. Buyer and the Company will
--------------------
consult with each other before issuing any press release or making any public
statement with respect to this Agreement and the transactions contemplated
hereby and, except as may be required by applicable law or any listing agreement
with any national securities exchange or foreign securities exchange, will not
issue any such press release or make any such public statement prior to such
consultation.
SECTION 8.04. Conveyance Taxes. Buyer and the Company shall
----------------
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications, or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions contemplated
hereunder that are required or permitted to be filed on or before the Effective
Time.
SECTION 8.05. Further Assurances. At and after the Effective Time,
------------------
the officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
34
<PAGE>
Subsidiary, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Subsidiary, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under any
of the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger.
SECTION 8.06. Employee Matters. (a) Except as provided in (c),
----------------
Buyer and Merger Subsidiary agree that, effective as of the Effective Time and
for a six month period following the Effective Time, the Surviving Corporation
and its Subsidiaries and successors shall continue for those persons who,
immediately prior to the Effective Time, were employees of the Company or its
Subsidiaries ("RETAINED EMPLOYEES") the Employee Plans and material Benefit
Arrangements or provide benefits that are not less favorable in the aggregate to
such Employee Plans and Benefit Arrangements. With respect to such benefits,
service accrued by such Retained Employees during employment with the Company
and its Subsidiaries prior to the Effective Time shall be recognized to the
extent and for the purposes such service was recognized prior to the Effective
Time by the applicable Employee Plan or Benefit Arrangements. Nothing contained
in the foregoing is intended to preclude the Surviving Corporation from
terminating the employment of any Retained Employee after the Effective Time.
Further, none of Buyer, the Merger Subsidiary or the Surviving Corporation shall
be required to recognize service with the Company or its Subsidiaries prior to
the Effective Time after the end of such six month period except as required by
law; provided that with respect to Retained Employees who are participants in a
--------
nonunion Employee Plan, the Buyer and the Merger Subsidiary agree to cause its
nonunion employee benefit plans ("BENEFIT PLANS") to recognize, for purposes of
vesting and eligibility to participate only, service which is recognized for
such purposes by the comparable Employee Plan with respect to Retained Employees
who otherwise become eligible to participate in a Benefit Plan.
(b) Buyer and Merger Subsidiary agree to honor, and cause the
Surviving Corporation to honor, without modification, the Employee Agreements on
the same terms as disclosed in Schedule 4.15 hereof (whether or not executed as
of the date hereof), and all Supplemental Retirement and Death Benefit
Agreements, as amended through December 31, 1994, between the Company and
certain officers (collectively, "Retirement Agreements") which Employee
Agreements and Retirement Agreements are listed on Schedule 4.15 hereto. Buyer
and Merger Subsidiary acknowledge that the consummation of the Offer shall
constitute a "change in
35
<PAGE>
control" for purposes of the Employee Agreements and Retirement Agreements.
(c) For the fiscal year of the Company ending June 30, 1995, the
Company shall determine the bonus pools for the short term bonus arrangements of
the Company using the same objective criteria that were used to determine such
bonus pools for the fiscal year of the Company ended June 30, 1994. The Buyer
shall, to the extent said bonus arrangements call for a discretionary allocation
of the bonus pool, allocate the entire bonus pool and consult with Messrs.
Banks, Frank, and Keane to ascertain their views with respect to the appropriate
allocation of said bonus pool.
(d) As of the Effective Time, all participants in the Company's
Employee Stock Ownership and Savings Plan ("ESOP") shall become fully vested in
their account balances under the ESOP. Buyer and Merger Subsidiary acknowledge
that, prior to the consummation of the Offer, the Company may make such
contribution to the ESOP as may be necessary to permit the ESOP to repay any
remaining debt of the ESOP and may allocate, as of the Effective Time (as if the
Effective Time were the last day of the ESOP's plan year), the remainder of its
Shares to the ESOP accounts of ESOP participants in accordance with the
provisions of the ESOP, Buyer and Merger Subsidiary agree that the Company may
cause the ESOP to be terminated as of the Effective Time and may take such steps
as may be necessary (including amending the ESOP and its related trust) to cause
the trustee of the ESOP to offer each ESOP participant the opportunity to
receive his or her account balance under the ESOP in a lump sum distribution as
soon as practicable after the date the amounts described herein have been
allocated or to have such account balance transferred to an individual
retirement account.
(e) Buyer and Merger Subsidiary agree to honor, and cause the
Surviving Corporation to honor, without modification, for such directors and/or
former directors and in such amounts as are set forth in Schedule 4.15, the
Company's Non-Employee Director Fee Continuation Plan and the individual fee
continuation agreement set forth on such Schedule 4.15, which provides certain
benefits to non-employee directors, and agrees and acknowledges that
consummation of the Offer shall constitute a "Change in Control" for purposes of
such Plan.
(f) In the event Buyer or Merger Subsidiary or the Surviving
Corporation or any of their successors or assigns (i) consolidates with or
merges into any other person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger, or
36
<PAGE>
(ii) transfers or conveys all substantially all of its properties and assets to
any person, then, and in each such case, to the extent necessary to effectuate
the purposes of this Section 8.05, proper provision shall be made so that the
successors and assigns of Buyer, Merger Subsidiary or the Surviving Corporation,
as the case may be, assume the obligations set forth in this Section 8.05 and
none of the actions described in clauses (i) and (ii) shall be taken until such
provision is made.
ARTICLE IX
CONDITIONS TO THE MERGER
SECTION 9.01. Conditions to the Obligations of Each Party. The
-------------------------------------------
obligations of the Company, Buyer and Merger Subsidiary to consummate the Merger
are subject to the satisfaction of the following conditions:
(i) if required by New York Law, this Agreement shall have been
adopted by the stockholders of the Company in accordance with such Law;
(ii) any applicable waiting period under the HSR Act relating to the
Merger shall have expired;
(iii) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger;
(iv) Buyer shall have purchased Shares pursuant to the Offer;
(v) any applicable waiting period under the Exon-Florio Provision
relating to the Merger shall have expired; and
(vi) Buyer shall have received or be reasonably satisfied that it will
receive all consents and approvals contemplated by Section 4.04 or other
material consents necessary in connection with the consummation of the
Merger or to enable the Surviving Corporation to continue to carry on the
business of the Company and the Subsidiaries as presently conducted in all
material respects.
37
<PAGE>
ARTICLE X
TERMINATION
SECTION 10.01. Termination. This Agreement may be terminated and the
-----------
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the stockholders of the Company):
(i) by mutual written consent of the Company and Buyer;
(ii) by either the Company or Buyer if the Offer has not been
consummated by August 31, 1995 (as such date may be extended pursuant to
the proviso to this sentence, the "OUTSIDE TERMINATION DATE"); provided
--------
that if an HSR Authority shall have requested additional information from
any of the parties hereto or any of their affiliates pursuant to 15 U.S.C.
(S) 18a(e)(1) or the rules and regulations thereunder on or prior to August
31, 1995, Buyer may elect to change the Outside Termination Date to a date
not later than October 31, 1995 if this Agreement has not been terminated
by the Company pursuant to the terms of this Agreement prior to the date of
such election; provided, however, that the right to terminate this
--------
Agreement under this paragraph shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure to meet the date requirements of this
paragraph;
(iii) by either the Company or Buyer, if there shall be any law or
regulation that makes consummation of the Merger illegal or if any
judgment, injunction, order or decree enjoining Buyer or the Company from
consummating the Merger is entered and such judgment, injunction, order or
decree shall become final and nonappealable;
(iv) by Buyer, upon the occurrence of any Trigger Event described in
Section 11.04(b);
(v) by the Company, upon the occurrence of the Trigger Event
described in clause (i) or (ii) of Section 11.04(b);
(vi) by the Company if Buyer or Merger Subsidiary breaches or fails in
any material respect to perform or comply with any of its material
covenants and agreements contained herein or breaches its representations
and warranties in any material respect; or
38
<PAGE>
(vii) by Buyer, if Buyer shall have received any communication from an
HSR Authority (which communication shall be confirmed to the other parties
by the HSR Authority) that causes such party to reasonably believe that any
HSR Authority has authorized the institution of litigation challenging the
transactions contemplated by this Agreement under the U.S. antitrust laws,
which litigation will include a motion seeking an order or injunction
prohibiting the consummation of any of the transactions contemplated by
this Agreement.
The party desiring to terminate this Agreement pursuant to clauses (ii), (iii),
(iv), (v), (vi) or (vii) shall give written notice of such termination to the
other party.
SECTION 10.02. Effect of Termination. If this Agreement is
---------------------
terminated pursuant to Section 10.01, this Agreement shall become void and of no
effect with no liability on the part of any party hereto, except that the
agreements contained in Section 11.04 and the Confidentiality Agreement shall
survive the termination hereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Notices. All notices, requests and other
-------
communications to any party hereunder shall be in writing (including telecopy or
similar writing) and shall be given,
if to Buyer or Merger Subsidiary, to:
Imperial Chemical Industries PLC
9 Millbank
London SW1P 3JF
England
Telecopy: (071) 798-5878
Attention: Company Secretary
with a copy to:
Paul R. Kingsley, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telecopy: (212) 450-4800
39
<PAGE>
if to the Company, to:
Grow Group, Inc.
Metropolitan Life Building
200 Park Avenue
New York, NY 10166
Telecopy: (212) 286-0940
Attention: Mr. Russell Banks, President and
Chief Executive Officer
with a copy to:
Parker Chapin Flattau & Klimpl
1211 Avenue of the Americas
New York, New York 10036
Telecopy: (212) 704-6288
Attention: Lloyd Frank, Esq.
and a copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Telecopy: (212) 735-2000
Attention: Daniel E. Stoller, Esq.
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective (i) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section and the
appropriate telecopy confirmation is received or (ii) if given by any other
means, when delivered at the address specified in this Section.
SECTION 11.02. Survival of Representations and Warranties. The
------------------------------------------
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Time or the
termination of this Agreement. All covenants and agreements contained herein
which by their terms are to be performed in whole or in part subsequent to the
Effective Time shall survive the Merger in accordance with their terms. Nothing
contained in this Section 11.02 shall relieve any party from liability for any
willful breach of this Agreement.
SECTION 11.03. Amendments; No Waivers. (a) Any provision of this
----------------------
Agreement may be amended or waived prior to the Effective Time if, and only if,
such amendment or waiver is in writing and signed, in the case of an amendment,
by the Company, Buyer and Merger Subsidiary or in the case of a waiver, by the
party against whom the waiver
40
<PAGE>
is to be effective; provided that after the adoption of this Agreement by the
--------
stockholders of the Company, no such amendment or waiver shall, without the
further approval of such stockholders, alter or change (i) the amount or kind of
consideration to be received in exchange for any shares of capital stock of the
Company or (ii) any of the terms or conditions of this Agreement if such
alteration or change could adversely affect the holders of any shares of capital
stock of the Company.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 11.04. Expenses. (a) Except as otherwise provided in this
--------
Section, all costs and expenses incurred in connection with this Agreement shall
be paid by the party incurring such cost or expense.
(b) The Company agrees to pay Buyer in respect of its expenses an
amount in immediately available funds equal to $8,000,000 promptly, but in no
event later than two business days, after the occurrence of any of the events
set forth below (a "TRIGGER EVENT"):
(i) the Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement or an agreement in
principle with respect to any Acquisition Proposal other than the
transactions contemplated by this Agreement;
(ii) the Board of Directors of the Company shall have withdrawn or
materially modified its approval or recommendation of the Offer or this
Agreement other than as a result of Buyer's breach of this Agreement; or
(iii) any person or group (as defined in Section 13(d)(3) of the
Exchange Act) (other than Buyer or any of its affiliates) shall have become
the beneficial owner (as defined in Rule 13d-3 promulgated under the
Exchange Act) of at least 25% of any class or series of capital stock of
the Company (including the Shares), or shall have acquired, directly or
indirectly, at least 25% of the assets of the Company other than
acquisitions of securities for bona fide arbitrage purposes only and other
than Corimon or its affiliates;
41
<PAGE>
or Corimon and its affiliates shall beneficially own more than 28% of the
Shares.
SECTION 11.05. Successors and Assigns. The provisions of this
----------------------
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that no party may assign,
--------
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto except that Buyer may
transfer or assign, in whole or from time to time in part, to one or more of its
direct or indirect wholly owned subsidiaries, the right to purchase Shares
pursuant to the Offer, but any such transfer or assignment will not relieve
Buyer of its obligations under the Offer or prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
SECTION 11.06. Governing Law. This Agreement shall be construed in
-------------
accordance with and governed by the law of the State of New York without regard
to conflicts of laws.
SECTION 11.07. Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated herein is not affected in any manner
materially adverse to any party hereto. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner.
SECTION 11.08. Third Party Beneficiaries. No provision of this
-------------------------
Agreement other than Sections 7.03 and 8.05 is intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder.
SECTION 11.09. Entire Agreement. This Agreement, including any
----------------
exhibits or schedules hereto and the Confidentiality Agreement constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof and supersede all other prior agreements or undertaking with respect
thereto, both written and oral.
SECTION 11.10. Counterparts; Effectiveness. This Agreement may be
---------------------------
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
42
<PAGE>
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto.
SECTION 11.11. Jurisdiction. Any legal action or proceeding with
------------
respect to this Agreement or any matters arising out of or in connection with
this Agreement, and any action for enforcement of any judgment in respect
thereof shall be brought exclusively in the courts of the State of New York or
of the United States of America for the Southern District of New York, and, by
execution and delivery of this Agreement, the Company, Buyer and Merger
Subsidiary each hereby accepts for itself and in respect of its property,
generally and unconditionally, the exclusive jurisdiction of the aforesaid
courts and appellate courts thereof. The Company, Buyer and Merger Subsidiary
irrevocably consent to service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, or by recognized international
express carrier or delivery service, to the Company, Buyer or Merger Subsidiary
at their respective addresses referred to in Section 11.01 hereof. In addition,
each of Buyer and Merger Subsidiary hereby designates ICI American Holdings Inc.
("AGENT"), Olympic Towers, 645 Fifth Avenue, 12th Floor, New York, New York
10022 as its respective agent for service of process, and service upon Buyer or
Merger Subsidiary shall be deemed to be effective upon service of Agent as
aforesaid or of its successor designated in accordance with the following
sentence. If Agent changes its address, Buyer will provide the Company with not
less than 30 days advance notice of such change. Buyer and Merger Subsidiary
shall maintain an agent for service of process in the Borough of Manhattan.
Buyer or Merger subsidiary may designate another corporate agent or law firm
reasonably acceptable to the Company and located in the Borough of Manhattan, in
the City of New York, as successor agent for service of process upon 30-days
prior written notice to the Company. The Company, Buyer and Merger Subsidiary
each hereby irrevocably waives any objection which it may now or hereafter have
to the laying of venue of any of the aforesaid actions or proceedings arising
out of or in connection with this Agreement or otherwise brought in the courts
referred to above and hereby further irrevocably waives and agrees, to the
extent permitted by applicable law, not to plead or claim in any such court that
any such action or proceedings brought in any such court has been brought in an
inconvenient forum. Nothing herein shall affect the right of any party hereto
to serve process in any other manner permitted by law.
43
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective authorized officers as of
the day and year first above written.
GROW GROUP, INC.
By: /s/ Russell Banks
---------------------------
Name: Russell Banks
Title: President
IMPERIAL CHEMICAL INDUSTRIES PLC
By: /s/ John Thompson
---------------------------
Name: John Thompson
Title: Attorney in Fact
GDEN CORPORATION
By: /s/ John Danzeisen
---------------------------
Name: John Danzeisen
Title: Attorney in Fact
44
<PAGE>
ANNEX I
CONDITIONS TO THE OFFER
-----------------------
Notwithstanding any other provisions of the Offer, and in addition to
(and not in limitation of) Buyer's rights to extend and amend the Offer at any
time in its sole discretion (subject to the provisions of the Merger Agreement),
Buyer shall not be required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to the Buyer's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for, and may delay
the acceptance for payment of or, subject to the restriction referred to above,
the payment for, any tendered Shares, and may terminate the Offer if (i) any
applicable waiting period under the HSR Act or Exon-Florio Provision has not
expired or terminated prior to the expiration of the Offer, (ii) the Minimum
Condition has not been satisfied, (iii) the Rights under the Rights Agreement
shall have become exercisable, or (iv) at any time on or after April 30, 1995
and before the time of acceptance of Shares for payment pursuant to the Offer,
any of the following conditions shall exist:
(a) there shall be instituted and pending by any domestic or foreign
federal or state governmental regulatory or administrative agency or authority
or court or legislative body or commission ("Governmental Entity") (or the staff
of any HSR Authority shall have recommended the commencement of) any action or
proceeding which (1) seeks to prohibit, or impose any material limitations on,
Buyer's or Merger Subsidiary's ownership or operation of all or a material
portion of the businesses or assets of the Company and its Subsidiaries, taken
as a whole, or to compel Buyer or any of its subsidiaries or affiliates to
dispose of or hold separate all or any material portion of the business or
assets of the Company and its Subsidiaries, taken as a whole, or of Buyer or its
subsidiaries, (2) seeks to prohibit, or make illegal, the acceptance for
payment, payment for or purchase of Shares or the consummation of the Offer or
the Merger, (3) challenges or seeks to make illegal, to delay materially or to
restrain or prohibit, the making of the Offer, or seeks to restrain or limit the
ability of Buyer, or renders Buyer unable, to accept for payment, pay for or
purchase some or all of the Shares, or to consummate the Merger, or seeks
material damages relating to the transactions contemplated by the Offer or the
Merger or (4) imposes material limitations on the ability of Merger Subsidiary
or Buyer effectively to exercise full rights of ownership of the Shares,
including without limitation, the
<PAGE>
right to vote the Shares purchased by it on all matters properly presented to
the Company's shareholders;
(b) there shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction promulgated, entered, enforced,
enacted, issued or applicable to the Offer or the Merger by any Governmental
Entity that results in any of the consequences referred to in clauses (1)
through (4) of paragraph (a) above;
(c) unless the Shares properly tendered constitute not less than two-
thirds of the outstanding Shares on a fully diluted basis, any event or action
shall have occurred that shall materially impair, restrain or prohibit or to
materially delay the acquisition by Buyer of the Corimon Shares in accordance
with the terms of the Corimon Option Agreement;
(d) the representations and warranties of the Company set forth in the
Merger Agreement (without giving effect to any qualification as to materiality
or Material Adverse Effect contained therein) shall not be true and correct as
of the date of consummation of the Offer as though made on or as of such date or
the Company shall have breached or failed to perform or comply with any
obligation, agreement or covenant required by the Merger Agreement to be
performed or complied with by it except, in each case, (i) for changes
specifically permitted by the Merger Agreement and (ii) (A) those
representations and warranties that address matters only as of a particular date
which are true and correct as of such date or (B) where the failure of such
representations and warranties to be true and correct, or the performance or
compliance with such obligations, agreements or covenants, individually or in
the aggregate, do not have, and could not reasonably be expected to have, a
Material Adverse Effect or a material adverse effect on the ability of Buyer to
consummate the Offer or the Merger;
(e) the Merger Agreement shall have been terminated in accordance with
its terms;
(f) any person, entity or "group" (as defined in Section 13(d)(3) of
the Exchange Act), shall have acquired beneficial ownership (determined pursuant
to Rule 13d-3 promulgated under the Exchange Act) of more than 25% of any class
or series of capital stock of the Company (including the Shares), through the
acquisition of stock, the formation of a group or otherwise, other than Corimon
or its affiliates; or Corimon and its affiliates shall have acquired beneficial
ownership of more than 28% of the outstanding Shares or (ii) the Company shall
have entered into a definitive agreement or agreement in principle with
<PAGE>
any person with respect to an Acquisition Proposal or similar business
combination with the Company;
(g) the Company's Board of Directors shall have withdrawn, or
modified or changed in a manner adverse to Buyer or Merger Subsidiary (including
by amendment of the Schedule 14D-9) its recommendation of the Offer, the Merger
Agreement, or the Merger, or recommended another proposal or offer, or shall
have resolved to do any of the foregoing; or
(h) Buyer shall not have received and shall not be satisfied that it
will receive the consents and approvals required under ISRA or the Credit
Agreement in connection with the consummation of the Offer or the Merger;
which in the sole judgment of Buyer or Merger Subsidiary, in any such case, and
regardless of the circumstances giving rise to such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for payment or
payments.
The foregoing conditions are for the sole benefit of Merger Subsidiary
and Buyer and may be waived by Buyer or Merger Subsidiary, in whole or in part
at any time and from time to time in the sole discretion of Buyer or Merger
Subsidiary. The failure by Buyer at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right; the waiver of any such
right with respect to particular facts and other circumstances shall not be
deemed a waiver with respect to any other facts and circumstances; and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
<PAGE>
EXHIBIT 99.2
OPTION AGREEMENT
OPTION AGREEMENT, dated as of April 30, 1995 (this "AGREEMENT"), among
Imperial Chemical Industries PLC, a corporation organized under the laws of
England ("BUYER"), GDEN Corporation, a New York corporation and an indirect
wholly owned subsidiary of Buyer ("MERGER SUBSIDIARY"), Corimon Corporation, a
Delaware corporation ("STOCKHOLDER" OR "CORIMON CORP."), and Corimon, S.A.C.A.,
a Venezuelan corporation ("CORIMON").
WHEREAS, Buyer and Merger Subsidiary have entered into an Agreement
and Plan of Merger, dated as of the date hereof (the "MERGER AGREEMENT"), with
Grow Group, Inc., a New York corporation (the "COMPANY"), which provides, among
other things, for the acquisition by Buyer or its assignee of all the
outstanding shares of Common Stock, par value $0.10 per share, of the Company
(the "COMPANY COMMON STOCK") through (a) a tender offer (the "OFFER") for all
shares of the Company Common Stock for $18.10 per share, net to the sellers
thereof in cash (the "PER SHARE AMOUNT"), subject to any amounts required to be
withheld under applicable federal, state, local or foreign income tax
regulations and (b) a second-step merger pursuant to which Merger Subsidiary
will merge with and into the Company (the "MERGER") and all outstanding shares
of the Company Common Stock other than shares of the Company Common Stock held
by the Company as treasury stock or owned by Buyer, Merger Subsidiary or any
other subsidiary of Buyer will be converted into the right to receive the Per
Share Amount in cash, subject to any amounts required to be withheld under
applicable federal, state, local or foreign income tax regulations; and
WHEREAS, as of the date hereof, Stockholder owns beneficially
4,025,841 shares of Company Common Stock (the "SHARES");
WHEREAS, as a condition to the willingness of Buyer and Merger
Subsidiary to enter into the Merger Agreement, Buyer and Merger Subsidiary have
required that the Stockholder agree, and in order to induce Buyer and Merger
Subsidiary to enter into the Merger Agreement, the Stockholder has agreed, to
grant Buyer an option to purchase the Shares in accordance with the terms of
this Agreement; and
WHEREAS, members of the Board of Directors of the Company who are not
designees of Corimon, in accordance with the Standstill Agreement between the
Company, Corimon and Stockholder, dated July 21, 1992, as amended, have adopted
a resolution permitting Stockholder and Corimon to enter into and perform their
obligations under this Agreement;
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
OPTION
Section 1.1. Grant of Stock Option. Stockholder hereby irrevocably
---------------------
grants to Buyer an option (the "OPTION") to purchase the Shares at a purchase
price of $17.50 per Share (the "PURCHASE PRICE").
Section 1.2. Exercise of Option. (a) Subject to the satisfaction of
------------------
the conditions set forth in Section 1.4 hereof, the Option may be exercised by
Buyer in whole but not in part at any time prior to the earlier of (i) November
5, 1995 and (ii) five business days after the Outside Termination Date (as
defined in the Merger Agreement); provided that Buyer may exercise the Option
only if the Minimum Condition has been satisfied. Upon exercise of the Option,
Buyer shall send a written notice (the "EXERCISE NOTICE") to Stockholder
specifying the places, the dates (which (a) in the case of 2,173,362 Shares,
shall be two business days after the date of the Exercise Notice; (b) in the
case of 1,336,360 Shares, shall be a business day not less than 10 calendar
days, nor more than 15 calendar days after the date of the Exercise Notice; and
(c) in the case of 516,129 Shares, shall be a business day not less than 15
calendar days nor more than 20 calendar days after the date of the Exercise
Notice), and the times for the closings of such purchases. The closings of the
purchases of the Shares (the "CLOSINGS") shall take place in New York, New York
at the places, on the dates and at the times designated by Buyer in its Exercise
Notice, provided that if, at the date of any Closing herein provided for, the
--------
conditions set forth in Section 1.4 shall not have been satisfied or waived by
Stockholder, Buyer may postpone such Closing until a date within two business
days after such conditions are satisfied. For purposes of this Agreement, the
"MINIMUM CONDITION" shall have been satisfied only if (i) Buyer has paid for or
accepted for payment all shares of Company Common Stock properly tendered and
not withdrawn pursuant to the Offer (the "TENDERED SHARES") in accordance with
the terms of the Offer and the Merger Agreement and (ii) the Tendered Shares
plus the Shares constitute not less than a majority of the outstanding Shares of
Company Common Stock on a fully diluted basis.
(b) Buyer shall not be under any obligation to deliver any Exercise
Notice and may allow the Option to
2
<PAGE>
expire without purchasing the Shares hereunder; provided however that once Buyer
--------
has delivered to the Stockholder an Exercise Notice, subject to the terms and
conditions of this Agreement, Buyer shall be bound to effect the purchase as
described in such Exercise Notice; and provided further that if the Minimum
--------
Condition is satisfied, Buyer shall thereafter be bound to exercise the Option
within two business days following the date of such satisfaction.
(c) Stockholder shall not, and shall 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 of Company Common Stock, except pursuant to, and at the price
per share payable in, such offer or proposal.
Section 1.3. Closing. At each Closing, (a) the Stockholder shall
-------
deliver or cause to be delivered to Buyer a certificate or certificates (the
"CERTIFICATES") representing the number of Shares to be purchased at such
Closing duly endorsed, or accompanied by stock powers duly executed in blank,
with all required transfer tax stamps affixed thereto and (b) Buyer shall
deliver to the Stockholder or its designee(s) a certified or bank cashier's
check or checks payable to or upon the order of the Stockholder, or, at the
option of Stockholder, a wire transfer to an account in the United States
designated by Stockholder, in an amount equal to (i) the number of Shares to be
purchased at such Closing multiplied by (ii) the Purchase Price (the "PURCHASE
AMOUNT").
Section 1.4. Conditions to the Stockholder's Obligations. The
-------------------------------------------
obligation of the Stockholder to sell Shares at any Closing 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 (the "HSR ACT") applicable to the exercise of the
Option shall have expired or been terminated.
(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 Shares
pursuant thereto.
3
<PAGE>
Section 1.5. Adjustment Upon Certain Changes. (a) In the event of
-------------------------------
any change in the Company's capital stock by reason of stock dividends, stock
splits, mergers, consolidations, recapitalizations, combinations, conversions,
exchanges of shares, extraordinary or liquidating dividends, or other changes in
the corporate or capital structure of the Company, which would have the effect
of diluting or changing the Buyer's rights hereunder, the number and kind of
shares or securities subject to the Option and the purchase price per Share
shall be appropriately and equitably adjusted so that the Buyer shall receive
upon exercise of the Option the number and class of shares or other securities
or property that the Buyer would have received in respect of the Shares
purchasable upon exercise of the Option if the Option had been exercised
immediately prior to such event.
(b) In the event the consideration per Share paid by Buyer pursuant
to the Offer or the Merger Agreement is increased, the Purchase Price shall be
increased by an amount equal to the amount of such increase.
ARTICLE II
COVENANTS OF THE STOCKHOLDER
Section 2.1. No Disposition or Encumbrance of Shares. Except as
---------------------------------------
contemplated by Article I above, and except for any Lien (as defined below)
existing as of the date hereof, Stockholder hereby covenants and agrees, that,
except as contemplated by this Agreement, it shall not, and shall 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 Shares. For the avoidance of doubt,
Stockholder hereby agrees that it will not tender the Shares into the Offer
unless directed to do so by Buyer; provided that if it is so directed by Buyer,
--------
Stockholder will, to the extent permitted by the Permitted Liens (as defined
below), properly tender or cause to be tendered the Shares into the Offer and,
so long as the Option is outstanding, not withdraw such Shares; and provided
--------
further that if the Shares are purchased pursuant to the Offer, Stockholder will
pay, subject to applicable law, to Buyer a fee in cash equal to $.60 multiplied
by the number of Shares (such fee to be paid by Stockholder upon payment by
Buyer of the consideration for the Shares).
4
<PAGE>
Section 2.2. No Solicitation of Transactions. (a) Each of
-------------------------------
Stockholder and Corimon agrees that it shall not, and shall 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 (as defined below) 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, each of Stockholder and
Corimon agrees that it shall cease and cause to be terminated all existing
discussions or negotiations in which it or any of its agents or other
representatives is or has been engaged with any Person with respect to any of
the foregoing. Stockholder and Corimon shall notify Buyer and the Company
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 Buyer fully informed of the status
and details of any such Acquisition Proposal, indication or request.
For the purposes of this Agreement, (i) "PERSON" means an individual,
a corporation, limited liability company, a partnership, an association, a trust
or any other entity or organization, including a government or political
subdivision or any agency or instrumentality thereof other than Buyer or any of
its affiliates and (ii) "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 of the Company or the acquisition of any
equity interest in, or a substantial portion of the assets of, the Company or
any subsidiary of the Company, other than the transactions contemplated by the
Merger Agreement.
5
<PAGE>
(b) If there shall be a conflict between the terms of this Agreement
and the terms of the Merger Agreement with respect to the actions that may or
shall be taken by any person pursuant to such person's fiduciary duties, the
terms of the Merger Agreement shall supersede the terms of this Agreement.
Section 2.3. Voting Agreement. Stockholder hereby agrees that prior
----------------
to the time, if any, that the Merger Agreement is terminated, at any meeting of
the stockholders of the Company, however called, and in any action by consent of
the stockholders of the Company, Stockholder shall vote the Shares: (a) in favor
of the Merger, the Merger Agreement (as amended from time to time) or any of the
transactions contemplated by the 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 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 Merger
Agreement or which could result in any of the conditions to any party's
obligations under the Merger Agreement not being fulfilled. Stockholder
acknowledges receipt of a copy of the Merger Agreement.
Section 2.4. Certain Claims. Each of Corimon and Stockholder agrees
--------------
that it 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 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 of Company Common Stock for consideration not in
excess of $18.10 per share. Subject to the consummation of the 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 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.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of Corimon and
---------------------------------------------
Stockholder.
- -----------
(a) Each of Stockholder and Corimon hereby jointly and severally represents and
warrants that:
6
<PAGE>
(i) it is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and it
has all corporate power, authority, capacity and right to enter into
this Agreement and to consummate the transactions contemplated hereby;
(ii) the execution and delivery of this Agreement and the performance by it
of its obligations hereunder are within its corporate powers and have
been duly authorized by all necessary corporate action on its part;
this Agreement has been duly executed and delivered by it and
constitutes a valid and binding agreement enforceable by Buyer and
Merger Subsidiary against it in accordance with its terms, except as
the enforceability hereof may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally and except for limitations imposed by
general principles of equity;
(iii) assuming compliance with the matters set forth in subsection (iv), no
approval, authorization, consent or filing is required in connection
with the execution, delivery and performance of this Agreement by it;
(iv) assuming the applicable waiting periods under the HSR Act have expired
or been terminated and assuming compliance with the Exchange Act and
the Permitted Liens, the execution, delivery and performance of this
Agreement by it does not and will not contravene or conflict with or,
with the passage of time, the serving of notice or both, violate or
constitute a default under any agreement, contract or other
instrument, or any law, rule, regulation, order or decree, binding
upon or applicable to it;
(v) Stockholder is the sole beneficial owner of the Shares subject to no
Liens except as set forth on Schedule A hereto (the "PERMITTED
LIENS"), and the Shares are the only shares of Company Common Stock
which Stockholder or Corimon owns, has any rights to acquire or over
which Stockholder or Corimon exercises control or direction either
alone or in concert with third parties;
(vi) Shareholder has provided Buyer with a true and correct copy of all
agreements relating to the Permitted Liens;
7
<PAGE>
(vii) Stockholder has the right to dispose of and vote its Shares as
provided in this Agreement subject to the Permitted Liens; and,
(viii) at each Closing, Stockholder will convey to Buyer good and valid title
to the Shares to be purchased at such Closing free and clear of any
Liens, including without limitation, the Permitted Liens.
Section 3.2. Representations and Warranties of Buyer. Buyer hereby
---------------------------------------
represents and warrants that Buyer and Merger Subsidiary are each corporations
duly incorporated and validly existing under the laws of their jurisdictions of
incorporation, Buyer and Merger Subsidiary each has all necessary corporate
power, authority, capacity and right to enter into this Agreement and to
consummate the transactions contemplated hereby and this Agreement has been duly
executed and delivered by Buyer and Merger Subsidiary and constitutes a valid
and binding agreement enforceable by Stockholder and Corimon against Buyer and
Merger Subsidiary in accordance with its terms except as the enforceability
hereof may be limited by bankruptcy, insolvency, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and except for
limitations imposed by general principles of equity.
ARTICLE IV
MISCELLANEOUS
Section 4.1. Expenses. Except as otherwise provided herein or in the
--------
Merger Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
Section 4.2. Further Assurances. Subject to any applicable limits on
------------------
Buyer's and Merger Subsidiary's obligations under the Merger Agreement, each of
Stockholder, Corimon, Buyer and Merger Subsidiary will execute and deliver all
such further documents and instruments and take all such further action as may
be necessary in order to permit the consummation of the transactions
contemplated hereby and to coordinate a mutually convenient closing.
Stockholder and Corimon agree to use their best efforts to take all necessary
actions, and to obtain all necessary consents and amendments, with respect to
the Permitted Liens (i) to permit each of the Closings to take place as promptly
as possible after the satisfaction of the Minimum Condition and (ii) if
requested by Buyer, to permit Stockholder to tender the Shares into the Offer in
accordance with Section
8
<PAGE>
2.1; Buyer agrees to cooperate with and assist Stockholder and Corimon with
respect to the foregoing.
Section 4.3. Specific Performance. The parties hereto agree that
--------------------
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
Section 4.4. Entire Agreement. This Agreement constitutes the entire
----------------
agreement among Buyer, Merger Subsidiary, Stockholder and Corimon with respect
to the subject matter hereof and supersedes all prior agreements and
understandings, both written and oral, among Buyer, Merger Subsidiary,
Stockholder and Corimon with respect to the subject matter hereof.
Section 4.5. Assignment. This Agreement shall not be assigned,
----------
except that Buyer may assign all or any of its rights and obligations hereunder
to any affiliate of Buyer, provided that no such assignment shall relieve Buyer
--------
of its obligations hereunder if such assignee does not perform such obligations.
Section 4.6. Parties in Interest. This Agreement shall be binding
-------------------
upon, inure solely to the benefit of, and be enforceable by, the parties hereto
and the Company and their respective successors and permitted assigns. Nothing
in this Agreement, express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
Section 4.7. Amendment; Waiver. This Agreement may not be amended
-----------------
and no provision of this Agreement may be waived except by an instrument in
writing signed by the parties hereto and the Company.
Section 4.8. Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of this Agreement is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
terms of this Agreement remain as originally contemplated to the fullest extent
possible.
9
<PAGE>
Section 4.9. Notices. All notices, requests and other communications
-------
to any party hereunder shall be in writing (including telecopy or similar
writing) and shall be given,
if to Buyer or to Merger Subsidiary, to:
Imperial Chemical Industries PLC
9 Millbank
London SW1P 3JF
England
Telecopy: 011-44-171-798-5878
Attention: The Secretary
with a copy to:
Paul R. Kingsley, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telecopy: (212) 450-4800
if to Stockholder or Corimon, to:
Corimon, S.A.C.A.
Calle Hans Neumann Edf. Corimon
Los Cortijos de Lourdes
Caracas, Venezuela 0171
Telecopy: 582-203-5707
Attention: Arthur Broslat
with a copy to:
David M. Kies, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Telecopy: (212) 558-3588
In addition, copies of all notices hereunder shall be given to the Company in
accordance with Section 11.01 of the Merger Agreement.
Section 4.10. Termination; Survival. This Agreement shall terminate
---------------------
upon termination of the Merger Agreement, provided that a party will not be
relieved from liability for any breach of this Agreement. All representations
and warranties contained in this Agreement shall survive delivery of and payment
for the Shares.
Section 4.11. Corimon Guaranty. Corimon hereby confirms the
----------------
representations and warranties of Stockholder contained herein and irrevocably
and unconditionally
10
<PAGE>
guarantees to Buyer and Merger Subsidiary the prompt and full discharge by
Stockholder of all of Stockholder's covenants, agreements, obligations and
liabilities under this Agreement (collectively, the "STOCKHOLDER OBLIGATIONS"),
in accordance with the terms hereof, in each case as if the Stockholder
Obligations were direct and primary obligations of Corimon. If Stockholder
shall default in the due and punctual performance of any Stockholder
Obligations, Corimon will forthwith perform or cause to be performed such
Stockholder Obligation at its sole cost and expense. The guaranty evidenced
hereby is a guaranty of payment and performance and not a guaranty of
collection. Corimon agrees to pay the expenses and costs (including, without
limitation, reasonable attorneys' fees and expenses) incurred by Buyer in
connection with any action, suit or proceeding brought or maintained against
Corimon to enforce this guaranty. Corimon hereby agrees that its obligations
under this guaranty shall be unconditional, irrespective of (a) any change in
the time, manner or place of payment, time or manner of performance or any other
term of the Stockholder Obligations or (b) any other circumstance that might
otherwise constitute a legal or equitable discharge or defense of a guarantor,
other than payment or satisfaction of the Stockholder Obligations in full.
Section 4.12. Governing Law. This Agreement shall be governed by,
-------------
and construed in accordance with, the laws of the State of New York applicable
to contracts executed in and to be performed in that State.
Section 4.13. Jurisdiction. Any suit, action or proceeding seeking
------------
to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby shall
only be brought in the United States District Court for the Southern District of
New York or any other New York State court sitting in New York City, and each of
the parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient form. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 4.9 shall be deemed
effective service of process on such party.
11
<PAGE>
Section 4.14. Headings. The descriptive headings contained in this
--------
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
Section 4.15. Counterparts. This Agreement may be executed in one of
------------
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
12
<PAGE>
IN WITNESS WHEREOF, Buyer, Merger Subsidiary, Corimon and Corimon
Corp. have caused this Agreement to be executed by their duly authorized
officers as of the date first written above.
Imperial Chemical Industries PLC
By: /s/ John Thompson
---------------------------
Name: John Thompson
Title: Attorney in Fact
GDEN Corporation
By: /s/John Danzeisen
---------------------------
Name: John Danzeisen
Title: Attorney-in-Fact
Corimon, S.A.C.A.
By: /s/ Philippe Erard
---------------------------
Name: Philippe Erard
Title: President
By: /s/ Arthur Broslat
---------------------------
Name: Arthur Broslat
Title: Executive Vice
President
Corimon Corporation
By: /s/ Arthur Broslat
---------------------------
Name: Arthur Broslat
Title: President
By:
---------------------------
Name:
Title:
13
<PAGE>
Schedule A
----------
Stock Purchase Agreement, dated July 21, 1992, among Corimon Corporation,
Corimon, S.A.C.A. and Grow Group, Inc.
Standstill Agreement, dated July 21, 1992, among Corimon Corporation, Corimon,
S.A.C.A. and Grow Group, Inc., as amended on February 14, 1995
Credit Agreement, dated as of August 10, 1994, between Corimon Corporation and
The Chase Manhattan Bank (National Association), as amended in February 1995
(the only material effect of such amendment is that it extended the termination
of the Credit Agreement to May 10, 1995)
Stock and Note Purchase Agreement, dated as of February 14, 1995, among Corimon,
S.A.C.A., Corimon Corporation and Fidelity Capital & Investment Fund
Certificate of Designations of Series A Preferred Stock of Corimon Corporation,
filed on February 13, 1995
Put Note due 2000 issued on February 14, 1995
Escrow Agreement, dated February 14, 1995, between Corimon Corporation and
United States Trust Company of New York
Pledge Agreement, dated as of February 14, 1995, between Corimon Corporation and
United States Trust Company of New York.
Collateral Agent Agreement, dated February 14, 1995, among Corimon Corporation,
Fidelity Capital & Income Fund and United States Trust Company of New York
Security Agreement, dated as of August 10, 1994, between Corimon Corporation and
the Chase Manhattan Bank (National Association)
14
<PAGE>
EXHIBIT 99.3
Grow Group, Inc.
200 Park Avenue
New York, New York 10155-0224
December 1, 1994
NON-DISCLOSURE AGREEMENT
------------------------
Dear Sirs:
In connection with your possible interest in the acquisition of Grow Group, Inc.
("Grow"), we are furnishing you or your representatives with certain information
which may be either non-public, confidential or proprietary in nature. The
information furnished to you or your representatives, together with analyses,
compilations, forecasts, studies or other documents prepared by you, your
agents, representatives (including attorneys, accountants and financial
advisors) or employees which contain or otherwise reflect such information or
your review of, or interest in, Grow, is hereinafter referred to as the
"Information."
In consideration of our furnishing you with the Information, you agree that:
1. The Information will be kept confidential and shall not, without our prior
written consent, be disclosed by you, or by your agents, representatives or
employees, in any manner whatsoever, in whole or in part, and shall not be
used by you, your agents, representatives or employees, other than in
connection with the transaction described above. Moreover, you agree to
reveal the Information only to your agents, representatives and employees
who need to know the Information for the purpose of evaluating the
transaction described above, who are informed by you of the confidential
nature of the Information and who shall agree in writing to act in
accordance with the terms and conditions of this Agreement. You shall be
responsible for any breach of this agreement by your agents,
representatives or employees.
<PAGE>
NON-DISCLOSURE
AGREEMENT
PAGE 2
2. Without our prior written consent, except as required by law, you and your
agents, representatives and employees will not disclose to any person or
entity the fact that the Information has been made available, that
discussions or negotiations are taking place or have taken place concerning
a possible transaction involving Grow or any of the terms, conditions or
other facts with respect to any such possible transaction, including the
status thereof.
3. You shall keep a record of the written Information furnished to you and of
the location of such Information. All copies of the Information, along
with your notes on, summaries and compilations of, or excerpts from, the
Information, except for that portion of the Information which consists of
analyses, compilations, forecasts, studies or other documents prepared by
you, your agents, representatives or employees, will be returned to us
immediately upon our request. That portion of the Information which
consists of analyses, compilations, forecasts, studies or other documents
prepared by you, your agents, representatives or employees, will be held by
you and kept confidential and subject to the terms of the this Agreement or
destroyed upon our request, and any oral Information will continue to be
subject to the terms of this Agreement. Such destruction will be confirmed
in writing to us by you and the person or persons who prepared such
documents.
4. The term Information shall not include such portions of the Information
which (i) are or become generally available to the public other than as a
result of a disclosure by you, your agents, representatives or employees,
or (ii) become available to you on a non-confidential basis from a source
(other than us or our agents) which is not prohibited from disclosing such
information to you by a legal, contractual or fiduciary obligation to us or
(iii) information which you have developed independently through conducting
your own competitive business.
2
<PAGE>
NON-DISCLOSURE
AGREEMENT
PAGE 3
5. Without our prior written consent, you and your representatives will not
communicate with any person or entity that is a party to any agreement with
Grow or its subsidiaries or affiliates concerning Grow or any possible
transaction between you and Grow.
6. Without our prior written consent, you and your representatives will not
for a period of two years from the date hereof directly or indirectly
solicit for employment any person who is now employed by us or any of our
subsidiaries who is identified by you as a result of your investigation of
Grow.
7. You acknowledge that we make no express or implied representation or
warranty as to the accuracy or completeness of the Information, and we
expressly disclaim any and all liability that may be based on the
Information, errors therein or omission therefrom. You agree that you are
not entitled to rely on the accuracy or completeness of the Information and
that you shall be entitled to rely only on the representations and
warranties made to you by Grow in any final written purchase agreement
regarding an acquisition.
8. In the event that you or anyone to whom you transmit the Information
pursuant to this Agreement becomes legally compelled to disclose any of the
Information, you will provide us with prompt written notice and oral notice
so that we may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this Agreement. In the event that
such protective order or other remedy is not obtained, or that Grow waives
compliance with the provisions of this Agreement, you will furnish only
that portion of the Information which you are advised by Grow or Grow's
attorney you are legally required to furnish and you will exercise the
efforts directed by Grow to obtain reliable assurances that confidential
treatment will be accorded the Information. All costs for actions taken
3
<PAGE>
NON-DISCLOSURE
AGREEMENT
PAGE 4
at the direction of Grow shall be subject to indemnification and
reimbursement by Grow.
9. Save that you will at all times be entitled to maintain for investment
purposes only any common stock of Grow as listed on the New York Stock
Exchange provided always that interest is no greater than 15% of all the
issued securities of Grow, you agree that, for a period of two years from
the date of this letter, neither you nor any of your affiliates, including
any person or entity directly or indirectly through one or more
intermediaries, controlling you or controlled by or under common control
with you, will purchase, offer or agree to purchase any securities or
assets of Grow, enter, or agree to enter into any acquisition or other
business combination, relating to Grow, or make, or induce any other entity
to make or negotiate or otherwise deal with others for a tender or exchange
offer of Common Stock of Grow, solicit proxies, votes or consents other
than for nominees selected by Grow's Board of Directors, and proposals
recommended by Grow's Board of Directors, or otherwise seek to acquire
control of Grow unless such purchase, transaction, offer, agreement or
proposal shall have previously been approved by the Board of Directors of
Grow.
10. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
4
<PAGE>
NON-DISCLOSURE
AGREEMENT
PAGE 5
11. You acknowledge that remedies at law may be inadequate to protect against
breach of this Agreement, and you hereby agree in advance to the granting
of injunctive relief in our favor without proof of actual damages.
Very truly yours,
By: /s/ Russell Banks
-------------------------
Title: President
Date: December 1, 1994
Agreed to and Accepted by:
COMPANY: Imperial Chemical Industries PLC
By: /s/ John Thompson
---------------------------
Title: Chief Planner, ICI Paints
Date: December 2, 1994
5
<PAGE>
EXHIBIT 99.4
[LETTERHEAD OF GROW GROUP, INC.]
May 4, 1995
Dear Shareholder:
I am pleased to inform you that on April 30, 1995, Grow Group, Inc. ("Grow")
entered into an Agreement and Plan of Merger (the "Merger Agreement") with
Imperial Chemical Industries PLC ("ICI") and GDEN Corporation ("Purchaser"), an
indirect wholly-owned subsidiary of ICI. Pursuant to the Merger Agreement,
Purchaser today commenced a tender offer to purchase all outstanding shares of
Grow's Common Stock for $18.10 per share in cash. Under the Merger Agreement,
the tender offer will be followed by a merger of Purchaser into Grow. In the
merger, each outstanding share of Grow Common Stock will be converted into the
same consideration as is paid in the tender offer.
Your Board of Directors has unanimously approved the Merger Agreement, the
tender offer and the merger and determined that the tender offer and merger are
fair to, and in the best interests of, Grow and its shareholders. Accordingly,
the Board of Directors recommends that shareholders accept the offer and tender
their shares. In addition, I would like to note that in order to facilitate the
transaction, Corimon, S.A.C.A., which owns approximately 25% of Grow's shares,
has agreed to sell its shares to ICI at a price of $17.50 per share if the
tender offer is consummated.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors which are described in the enclosed
Schedule 14D-9, including among other things, the opinion of Wertheim Schroder
& Co. Incorporated, the Company's financial advisor, that the cash
consideration of $18.10 per share to be received by the shareholders in the
offer and the merger is fair to such shareholders from a financial point of
view.
Additional information with respect to the transaction is contained in the
enclosed Schedule 14D-9, including a copy of the full text of the opinion of
Wertheim Schroder. Also enclosed is the Offer to Purchase and related
materials, including a Letter of Transmittal to be used for tendering your
shares. We urge you to read the enclosed material and consider this information
carefully.
Sincerely,
/s/ Russell Banks
Russell Banks
President and
Chief Executive Officer
<PAGE>
EXHIBIT 99.5
GROW GROUP IN MERGER AGREEMENT WITH ICI
---------------------------------------
NEW YORK, NEW YORK, May 1, 1995... Grow Group, Inc. ("Grow")
(NYSE:GRO) announced today that it has entered into a definitive merger
agreement pursuant to which Imperial Chemical Industries, PLC, an English
company ("ICI"), would offer to purchase all the outstanding shares of Grow for
$18.10 per share. Grow had announced on April 28, 1995, that it was in
negotiations with a third party concerning the acquisition of Grow at such
price. Grow has approximately 16.1 million shares outstanding.
The merger agreement provides for a subsidiary of ICI to make a cash
tender offer promptly for all outstanding shares of common stock of Grow at a
price of $18.10 per share. The tender offer will be followed as soon as
possible by a second-step cash merger in which each share of Grow not acquired
in the tender offer or otherwise, will be converted into the right to receive
$18.10 in cash.
Grow also stated that Corimon, a Venezuelan corporation which owns
approximately 25% of Grow's shares, had entered into a separate Option Agreement
with ICI in which Corimon agreed to sell its Grow shares to ICI at a price of
$17.50 per share. ICI's purchase of the shares owned by Corimon is conditioned
upon ICI's prior consummation of the tender offer.
The Board of Directors of Grow unanimously approved the transaction
based upon, among other things, an opinion as to the fairness of the offer and
the merger from Wertheim Schroder & Co. Incorporated.
The tender offer is conditioned on, among other things, the valid
tender of a number of shares which, when added to the shares owned by Corimon,
would represent two-thirds of the outstanding shares on a fully diluted basis
and the expiration or termination of any applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976. The tender offer is
scheduled to commence later this week. The merger is expected to be completed
as promptly as practicable following completion of the tender offer.
<PAGE>
In announcing the execution of the Merger Agreement, Russell Banks,
President and Chief Executive Officer of Grow, said "We are extremely pleased to
be able to propose to shareholders what we believe represents an attractive
opportunity. At the same time, we are confident that our employees and
customers will be well served by an association with an organization of the
reputation and quality of ICI."
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.
# # #
2
<PAGE>
EXHIBIT 99.6
[LETTERHEAD OF WERTHEIM SCHRODER & CO. INCORPORATED]
April 30, 1995
The Board of Directors
Grow Group, Inc.
200 Park Avenue
New York, NY 10166
Members of the Board:
We understand that, pursuant to the terms and conditions set forth in the
Agreement and Plan of Merger among Imperial Chemical Industries PLC ("ICI"),
GDEN Corporation and Grow Group, Inc. ("Grow Group" or the "Company") dated as
of April 30, 1995 (the "Merger Agreement"), ICI is contemplating the
acquisition of (i) all of the outstanding shares of Grow Group Common Stock,
$0.10 par value per share ("Grow Group Common Stock"), of which there are
16,101,712 shares issued and outstanding as of the date hereof; and (ii)
options to acquire 318,699 shares of Grow Group Common Stock exercisable at an
average price of $12.74 per share which are outstanding under an incentive
stock option plan (the "Transaction"). The terms of the Merger Agreement
provide, among other things, that either pursuant to a tender offer to be made
by ICI or at the closing of the Transaction, the shareholders of the Grow Group
Common Stock, other than Corimon Corporation ("Corimon"), would receive $18.10
in cash in exchange for each share of Grow Group Common Stock and option
holders (excluding option holders who exercise their options prior to the
closing of the Transaction) would receive in cash the positive difference, if
any, between $18.10 and the exercise price of each option (the "Merger
Consideration"). The shareholders of the Grow Group Common Stock other than
Corimon are referred to herein as the "Public Shareholders".
In accordance with the terms of the engagement letter dated as of April 27,
1995, you have requested that Wertheim Schroder & Co. Incorporated ("Wertheim
Schroder") render an opinion (the "Opinion"), as investment bankers, as to the
fairness, from a financial point of view, of the Merger Consideration to be
received by Grow Group's Public Shareholders. It is understood that (i) the
Opinion shall be used by the Company solely in connection with its
consideration of the Transaction, and (ii) the Company will not furnish the
Opinion or any other material prepared by Wertheim Schroder (including this
letter) to any other person or persons or use or refer to the Opinion or this
letter for any other purposes without Wertheim Schroder's prior written
approval; provided, however, that the Company may furnish the Opinion to ICI in
its entirety and publish the Opinion in its entirety in any documents
distributed to its shareholders in connection with the Transaction.
<PAGE>
WERTHEIM SCHRODER & CO.
INCORPORATED
Grow Group, Inc.
April 30, 1995
Page Two
Wertheim Schroder, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, secondary distributions of
listed and unlisted securities, private placements and valuations for estate,
corporate and other purposes. Wertheim Schroder has acted as financial advisor
to Grow Group in its negotiations with ICI.
In connection with the Opinion set forth herein, we have, among other things:
(i) reviewed the Merger Agreement;
(ii) reviewed the recent published financial statements of Grow Group,
including its Forms 10K (1990, 1991, 1992, 1993 and 1994) and Forms 10Q
(quarters ended September 30, 1994, and December 31, 1994), and its
filings on Form 8K since June 30, 1994;
(iii) reviewed historical financial results of Grow Group by operating
division prepared by management;
(iv) reviewed forecasts and projections of Grow Group prepared by Grow Group
management for the fiscal years ending June 30, 1995 through 1997;
(v) had discussions with Grow Group management regarding the business,
operations and prospects of the Company and reviewed management's
financial projections for the fiscal years ending June 30, 1995 through
1997;
(vi) reviewed research reports and news articles on Grow Group;
(vii) performed various valuation analyses, as we deemed appropriate, of Grow
Group using generally accepted analytical methodologies, including: (i)
the application of the public trading multiples of comparable companies
to the financial results of Grow Group; (ii) the application of the
multiples reflected in recent mergers and acquisitions for comparable
businesses to the financial results of Grow Group; and (ii) discounted
cash flow, leveraged buyout and leveraged recapitalization analyses of
Grow Group's operations;
(viii) reviewed the historical trading prices and volumes of Grow Group
Common Stock; and
(ix) performed such other financial studies, analyses, inquiries and
investigations as we deemed appropriate.
In rendering the Opinion, we have relied upon the accuracy and completeness
of all information supplied or otherwise made available to us by Grow Group or
obtained by us from other sources, and we have not assumed any responsibility
for independently verifying such information, undertaken an independent
appraisal of the assets or liabilities (contingent or otherwise) of Grow Group,
or been furnished with any such appraisals. With respect to financial forecasts
for Grow Group, we have been advised by Grow Group, and we have assumed,
without independent investigation, that they have been reasonably prepared and
reflect the best currently available estimates and judgment as to the expected
future financial performance of Grow Group.
<PAGE>
WERTHEIM SCHRODER & CO.
INCORPORATED
Grow Group, Inc.
April 30, 1995
Page Three
The Opinion is necessarily based upon financial, economic, market and other
conditions as they exist, and the information made available to us, as of the
date hereof. We disclaim any undertaking or obligation to advise any person of
any change in any fact or matter affecting the Opinion which may come or be
brought to our attention after the date of the Opinion unless specifically
requested to do so.
Our advisory services and the opinion expressed herein are provided solely
for the use of Grow Group's Board of Directors in evaluating the Transaction.
The opinion is not being rendered on behalf of, and is not intended to confer
rights or remedies upon, ICI, any stockholder of Grow Group or ICI, or any
other person other than Grow Group's Board of Directors. The Opinion relates
solely to the question of the fairness, from a financial point of view, to Grow
Group's Public Shareholders of the Merger Consideration. We have not been asked
to express, and we have not expressed, any opinion as to the fairness of the
consideration to be received by Corimon.
Based upon and subject to all the foregoing, we are of the opinion, as
investment bankers, that as of the date hereof, the Merger Consideration is
fair, from a financial point of view, to Grow Group's Public Shareholders.
Very truly yours,
Wertheim Schroder & Co. Incorporated
<PAGE>
EXHIBIT 99.7
AMENDMENT TO RIGHTS AGREEMENT
AMENDMENT, dated as of April 30, 1995, to the Amended and Restated Rights
Agreement, dated as of August 7, 1992, between Grow Group, Inc., a New York
corporation (the "Company"), and The Bank of New York, a New York banking
corporation, as Rights Agent (the "Rights Agent") (the "Rights Agreement").
WHEREAS, the Company and the Rights Agent entered into the Rights Agreement
specifying the terms of the Rights (as defined therein); and
WHEREAS, the Company and the Rights Agent desire to amend the Rights
Agreement in accordance with Section 27 of the Rights Agreement;
THEREFORE, in consideration of the premises and mutual agreements set forth
in the Rights Agreement and this Amendment, the parties hereby agree as follows:
1. Section 1(a) is amended by adding the following at the end of said
Section:
; provided, however, that none of Imperial Chemical Industries plc., a
-------- -------
corporation organized under the laws of England ("ICI"), GDEN Corporation,
a New York corporation and an indirect wholly-owned subsidiary of ICI (the
"Purchaser") and their Affiliates (the "ICI Persons") shall be deemed to be
an Acquiring Person by virtue of (x) the execution of the Agreement and
Plan of Merger, dated as of April 30, 1995 (the "Merger Agreement," which
term shall include any amendments thereto) by and among the Company, ICI
and the Purchaser, or (y) the consummation of any of the transactions
contemplated thereby or by the Corimon Option Agreement (as defined
therein), including, without limitation, the publication or other
announcement of the Offer (as defined therein), the consummation of the
Offer and the Merger (as defined therein) or the entering into, or the
consummation of, the transactions contemplated by the Corimon Option
Agreement; (the items set forth in (x) and (y) are referred to herein as
the "ICI Transactions").
2. Section 1(b) is amended by adding the following at the end of said
Section:
<PAGE>
;provided that none of the ICI Persons shall be declared an Adverse
Person as a result of the announcement or consummation of the ICI
Transactions.
3. Section 1(q) is amended by adding the following at the end of said
Section:
; provided, however that the public announcement of any of the ICI
Transactions shall not constitute a Stock Acquisition Date.
4. Section 1(s) is amended by adding the following at the end of said
Section:
Notwithstanding anything to the contrary contained in this Agreement,
none of the ICI Transactions shall constitute a Triggering Event or an
event described in Section 11(a)(ii) or Section 13.
5. Section 3(a) is amended by adding the following at the end of said
Section:
Notwithstanding anything to the contrary contained in this Agreement,
neither the announcement nor the consummation of any of the ICI
Transactions shall constitute or result in the occurrence of a Distribution
Date.
6. Section 13 is amended by adding the following at the end of said
Section:
Notwithstanding any other provision of this Agreement, nothing herein
shall preclude the consummation of the ICI Transactions, and upon
consummation of the Merger pursuant to, and in accordance with, the terms
of the Merger Agreement, all Rights shall expire and be of no further force
or effect.
7. The term "Agreement" as used in the Rights Agreement shall be
deemed to refer to the Rights Agreement as amended hereby.
8. The foregoing amendment shall be effective as of the date first
above written, and, except as set forth herein, the Rights Agreement shall
remain in full force and effect and shall be otherwise unaffected hereby.
9. This Amendment may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of this 30th day of April, 1995.
GROW GROUP, INC.
By: /s/ Russell Banks
----------------------------
Name: Russell Banks
Title: President
THE BANK OF NEW YORK
By: /s/ Richard Hanrahan
----------------------------
Name: Richard Hanrahan
Title: Assistant Vice
President
3
<PAGE>
EXHIBIT 99.8
CONSULTING AGREEMENT
--------------------
CONSULTING AGREEMENT, dated as of April 30, 1995, between GROW GROUP,
INC., a New York corporation (the "Company"), and Russell Banks (the
"Consultant").
WHEREAS, the Consultant is currently employed by the Company as
President and Chief Executive Officer;
WHEREAS, pursuant to the Agreement and Plan of Merger by and among the
Company, Imperial Chemical Industries PLC, a corporation organized under the
laws of England ("Parent"), and GDEN Corporation, a New York corporation and an
indirect, wholly owned subsidiary of Parent (the "Subsidiary"), dated as of
April 30, 1995 (the "Merger Agreement"), the Parent will or will cause
Subsidiary to commence a tender offer (the "Offer") for all outstanding shares
of common stock, par value $.10 per share, of the Company (the "Shares") and
will thereafter merge with the Company in a merger in which the Company will be
the surviving corporation; and
WHEREAS, the Company desires to induce the Consultant following the
termination of his full-time employment with the Company to act as a consultant
to the Company and the Consultant desires to commit himself to act as a
consultant to the Company.
NOW THEREFORE, in order to effect the foregoing, the Company and the
Consultant wish to enter into a consulting agreement upon the terms and subject
to the conditions set forth below. Accordingly, in consideration of the
premises and the respective covenants and agreements of the parties herein
contained, and intending to be legally bound hereby, the parties hereto agree as
follows:
1. Term and Services to be Provided.
--------------------------------
(a) Commencing on the date on which the Consultant ceases to be a
full-time employee of the Company following consummation of the Offer (the
"Commencement Date") and continuing until the first anniversary thereof (the
"Term"), the Consultant agrees to provide consulting services to the Company
from time to time upon reasonable notice and at the reasonable request
<PAGE>
of the person then serving as Chief Executive Officer of the Company or by the
Board of Directors of the Company. The Consultant will make himself available
to consult and cooperate with and advise the Chief Executive Officer and other
members of senior management of the Company with respect to such matters
involving the business of the Company as may be requested. The Consultant, at
his discretion, may perform his duties hereunder from the office space provided
to him by the Company pursuant to Section 2(e) hereof, from his place of
residence, or from another location of his choosing.
(b) During the Term, the Consultant may pursue other personal or
business interests, provided, however, that such interests do not interfere with
his duties as set forth in Section 1(a) hereof.
2. Compensation.
------------
(a) During the Term, the Company shall pay the Consultant consulting
fees at the rate of $400,000 per annum, payable on a monthly basis.
(b) During the Term, the Company shall provide or make available to
the Consultant and his spouse at the Company's expense the same medical and
health plans or coverage as the Consultant currently enjoys, or plans or
coverage providing the Consultant and his spouse with at least substantially
equivalent benefits, with the understanding that (i), to the extent the
Consultant or his spouse is eligible for Medicare, Medicare shall be the assumed
primary medical coverage provided to Consultant, (ii) the Company shall
reimburse the Consultant for any Medicare payments he or his spouse is required
to make, and (iii) the Consultant shall have the responsibility of enrolling for
any Medicare coverage for which he is eligible, including Medicare Parts A and
B. In addition, on the last day of the Term, the Company shall pay the
Consultant, in a lump sum, an amount equal to the actuarial equivalent of the
cost of the continuation for the lives of the Consultant and his spouse of
coverage under the AARP Medcap program, or a similar plan selected by the
Consultant providing supplemental Medicare coverage. Such actuarial equivalent
shall be determined by using an 8.25% interest assumption and the mortality
tables set forth in the regulations issued under Section 79 of the Internal
Revenue Code of 1986, as
2
<PAGE>
amended. The coverage provided during the Term and payment of the above-
described lump sum shall relieve the Company of the obligation of providing
Consultant and his spouse with medical and health benefits under the employment
agreement referred to in Section 10 hereof.
(c) During the Term, the Company shall continue to provide the
Consultant with the automobile currently provided to the Consultant by the
Company (such automobile to contain a car phone and to be leased or purchased by
the Company, as it may elect). With the exception of gasoline, the Company
shall pay for all expenses relating to the operation of the automobile
including, without limitation, the cost of repairs, insurance and garaging the
automobile in New York City. At the end of the Term the Consultant shall have
the option to purchase said automobile from the Company at a price of $1.
(d) During the Term and for the immediately following two-year period,
the Company shall reimburse the Consultant for (i) dues for membership in the
Metropolitan Club and the Sky Club, and (ii) reasonable expenses, not to exceed
$25,000 in the aggregate, incurred by the Consultant in connection with
obtaining professional financial counseling, including but not limited to tax,
financial planning and estate planning.
(e) During the Term, the Company shall provide the Consultant with
suitable office space at the Company's executive offices, a secretary and
related support services for so long as the Company maintains executive offices
in the City of New York.
(f) During the Term, the Company shall promptly reimburse the
Consultant for all reasonable expenses incurred by him in performing services
pursuant to the terms hereof, provided he properly accounts therefor in
accordance with Company policy as in effect from time to time and of which the
Consultant is made aware. To the extent that the Consultant is required to
travel on behalf of the Company, he shall be entitled to use first class
accommodations.
(g) Any payments made hereunder shall be made subject to applicable
federal, state and local withholding obligations. All payments and other
benefits
3
<PAGE>
hereunder (including pursuant to Section 3 hereof) shall be made without set-off
for any reason whatever.
3. Termination.
-----------
(a) Death. If the Consultant dies during the Term, the Consultant's
-----
consulting relationship with the Company hereunder shall terminate upon his
death, provided that the Company shall pay to the Consultant's spouse (or to
such other beneficiary as may be designated by the Consultant by written notice
to the Company), the compensation provided in Section 2(a) hereof that would
have been paid to Consultant hereunder for the remainder of the Term. Such
compensation shall be paid in monthly installments of substantially equal
amounts.
(b) Disability. If, as a result of the Consultant's incapacity due to
----------
physical or mental illness, Consultant shall be unable to perform the consulting
services described herein for a continuous period of six months, the Company may
terminate the Consultant's consulting relationship with the Company. In such
event, Company shall continue to pay to the Consultant the compensation provided
in Section 2(a) hereof in monthly installments of substantially equal amounts
through the end of the Term.
4. Noncompetition; Confidentiality.
-------------------------------
(a) The Consultant agrees that during the Term and for one year
following termination of his services as a consultant hereunder, he will not:
(i) directly or indirectly, either as owner, partner, officer,
employee, agent or consultant or in any other capacity, engage in or be
employed in any way by any business that is in material competition with
the business of the Company and its subsidiaries wherever conducted;
provided, however, that the Consultant may own up to five percent of any
-------- -------
class of stock of a publicly traded company;
(ii) whether for his own account or for the account of any other
person, willfully and intentionally interfere with the relationship of the
Company or any of its subsidiaries) with any person
4
<PAGE>
who at any time during the Term was an employee, customer or supplier of
the Company, and/or any of its subsidiaries;
(b) The Consultant recognizes and acknowledges that, either during or
after the Term, the Consultant will not, except as may otherwise be required by
law, directly or indirectly, willfully or knowingly disclose or make available
to any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, or willfully or knowingly use or cause to be used in any
manner adverse to the interests of the Company any Confidential Information (as
defined below). The Consultant agrees that, upon termination of services as a
consultant of the Company, all Confidential Information in his possession that
is in written or other tangible form (together with all copies or duplicates
thereof) shall forthwith be returned to the Company and shall not be retained by
the Consultant or furnished to any third party, either by sample, facsimile,
film, audio or video cassettes, electronic data, verbal communication or any
other means of communication; provided, however, that the Consultant shall not
-------- -------
be obligated to treat as confidential, or return to the Company copies of, any
Confidential Information that (1) was publicly known at the time of disclosure
to the Consultant, (2) becomes publicly known or available thereafter other than
by action of the Consultant in violation of this Consulting Agreement, or (3) is
lawfully disclosed to the Consultant by a third party.
(c) In the event that the Consultant is requested or required (by oral
questions, interrogatories, requests for information or documents, subpoena,
Civil Investigative Demand or similar process) to disclose any Confidential
Information, it is agreed that the Consultant will provide the Company with
prompt notice of such request(s) so that it may seek an appropriate protective
order and/or waive the Consultant's compliance with the provisions of this
Consulting Agreement. It is further agreed that if, in the absence of a
protective order or the receipt of a waiver hereunder, the Consultant is
nonetheless, in the reasonable opinion of his counsel, compelled to disclose
information concerning the Company to any court or governmental agency or
authority or to a civil litigant or any other party or else stand liable for
contempt or suffer other censure or penalty,
5
<PAGE>
the Consultant may disclose such information to such tribunal without liability
hereunder.
(d) As used in this Consulting Agreement the term "Confidential
Information" means information disclosed to Consultant or known by the
Consultant as a consequence of or through his relationship with the Company not
generally known about the Company or the Company's clients, business methods,
organization, procedures or finances, including, without limitation, information
of or relating to contracts, arrangements, research, trade secrets, information
regarding trademarks or other intellectual property rights, customer lists,
product and service lines, marketing data and any related or other technical,
corporate or trade information.
(e) The Consultant understands that the agreements contained in this
Section 4 are necessary to protect, among other things, the trade secrets,
proprietary information, confidential information, customer and supplier lists
and know-how by preventing the Consultant from engaging in activities that would
inherently create a risk of the Consultant engaging in unfair trade practices.
5. Remedies; Cessation of Payment Obligation.
-----------------------------------------
In the event of a claimed breach by a party to this Consulting
Agreement of the terms of this Consulting Agreement, the other party shall,
after giving notice and a reasonable opportunity to cure such claimed breach, be
entitled to institute legal proceedings to obtain damages for any such breach,
or, in case of a claimed breach by the Consultant of Section 4 of this
Consulting Agreement, to enforce the specific performance of Section 4 of this
Consulting Agreement and to enjoin any further violation of Section 4.
6. Notice. For the purposes of this Consulting Agreement, notices,
------
demands and all other communications provided for in this Consulting Agreement
shall be in writing and shall be deemed to have been duly given when delivered
or (unless otherwise specified) mailed by United States certified mail, return
receipt requested, postage prepaid, addressed as follows:
6
<PAGE>
If to the Consultant:
Mr. Russell Banks
14 East 75 Street
New York, New York 10021
If to the Company:
Grow Group, Inc.
MetLife Building
200 Park Avenue
New York, New York 10166
Attention: Chief Executive Officer
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
7. Consultant's Independence and Discretion.
----------------------------------------
(a) Nothing herein contained shall be construed to constitute the
parties hereto as partners or as joint venturers, or either as agent of the
other, or as employer and employee. By virtue of the relationship described
herein, the Consultant's relationship to the Company during the Term shall only
be that of an independent contractor and the Consultant shall perform all
services pursuant to this Consulting Agreement as an independent contractor.
(b) Subject only to such specific limitations as are contained in
this Consulting Agreement, the manner, means, details or methods by which the
Consultant performs his obligations under this Consulting Agreement shall be
solely within his discretion.
8. Modifications; Waiver Discharge. This Consulting Agreement is
-------------------------------
entered into between the Company and the Consultant for the benefit of each of
the Company and the Consultant. No provisions of this Consulting Agreement may
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing signed by the Consultant and the Company's Chief
Executive Officer or such other officer as may be specifically designated by the
Board of Directors of the Compa-
7
<PAGE>
ny. No waiver by any party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Consulting
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
9. Validity. The invalidity or unenforceability of any provision or
--------
provisions of this Consulting Agreement shall not affect the validity or
enforceability of any other provision of this Consulting Agreement, which shall
remain in full force and effect; provided, however, that if any one or more of
-------- -------
the terms contained in Section 4 hereto shall for any reason be held to be
excessively broad with regard to time, duration, geographic scope or activity,
that term shall not be deleted but shall be reformed and construed in a manner
to enable it to be enforced to the extent compatible with applicable law.
10. Entire Agreement. This Consulting Agreement sets forth the
----------------
entire agreement of the parties hereto in respect of the subject matter
contained herein and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties whether oral or
written, by any officer, employee or representative of any party hereto;
provided, however, nothing in this Consulting Agreement shall, except as
specifically set forth in Section 2(b) hereof, affect the validity or the terms
of (a) the employment agreement first executed effective October 31, 1992
between the Consultant and the Company, which agreement has since been amended
and extended and which continues in full force and effect in accordance with its
terms and (b) any provision of the Merger Agreement.
11. Assignment. This Consulting Agreement may not be assigned by the
----------
Consultant, but may be assigned by the Company to any successor to its business
and will inure to the benefit and be binding upon any such successor.
12. Counterparts. This Consulting Agreement may be executed in
------------
several counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
8
<PAGE>
13. Headings. The headings contained herein are for reference
--------
purposes only and shall not in any way affect the meaning or interpretation of
this Consulting Agreement.
14. Governing Law. The validity, interpretation, construction and
-------------
performance of this Consulting Agreement shall be governed by the laws of the
State of New York without regard to principles of conflicts of laws.
IN WITNESS WHEREOF, the parties have executed this Consulting
Agreement on the date and year first above written.
GROW GROUP, INC.
By: /s/ Lloyd Frank
-------------------------------
Name: Lloyd Frank
Title: Secretary
/s/ Russell Banks
-------------------------------
Russell Banks
9
<PAGE>
EXHIBIT 99.9
AMENDMENT AND EXTENSION AGREEMENT
---------------------------------
AGREEMENT made as of April 27, 1995, between GROW GROUP, INC., a New
York corporation (the "Company"), and Russell Banks ("Mr. Banks").
Mr. Banks is employed by the Company as its President and Chief
Executive Officer pursuant to an employment agreement first executed effective
October 31, 1992, which agreement, as extended, currently expires October 31,
1996 (such agreement, as so extended, being hereinafter referred to as the
"Current Agreement").
The parties desire to memorialize such extension of the Current
Agreement and to amend the Current Agreement in certain respects. Capitalized
terms used herein shall, unless otherwise defined herein, have the meanings
ascribed to such terms in the Current Agreement.
NOW, THEREFORE, in consideration of the foregoing,
the parties hereby agree as follows:
1. Employment Period. The Employment Period is extended to October 31, 1996.
-----------------
Each reference in the Current Agreement to "October 31, 1995" shall be deemed a
reference to October 31, 1996.
2. Insurance. Section 6 of the Current Agreement shall be restated in its
---------
entirety to read as follows:
The Company shall provide Mr. Banks with a death benefit equal to Mr.
Banks' annual Fixed Compensation. Such death benefit shall be paid to the
person or persons designated by Mr. Banks, or, in absence of any such
designation, to Mr. Banks' spouse. The death benefit described herein
shall be considered "life insurance coverage" referred to in Section
9.03(c)(ii).
3. Termination for Good Reason. Notwithstanding anything in the Current
---------------------------
Agreement to the contrary, Mr. Banks may voluntarily terminate his employment
during the period commencing on the day after the occurrence of a Change in
Control and terminating six months after such Change in Control, upon a
determination by him that, as a result of the Change in Control, he is unable to
discharge his duties effectively. Such termination shall for all purposes of
the Current Agreement be treated as termination of employment pursuant to
Section 9.02(a)(iv) of the Current Agreement. The Termination Date in such
circumstances shall be the date Mr. Banks gives the Notice of Termination
hereunder.
<PAGE>
4. Clarification and Amendment of Termination Compensation. Section
-------------------------------------------------------
9.03(c)(i)(A) of the Current Agreement shall be restated to read as follows:
(A) an amount equal to three times the sum of (a) the Fixed Compensation in
effect at the time his employment is terminated and (b) the higher of the
average annual Additional Compensation paid to Mr. Banks in the three years
preceding that in which the Termination Date occurs or the average annual
Additional Compensation paid in the three years preceding that in which the
Change in Control occurs; and a pro rata portion of Additional Compensation
for the fiscal year in which the termination of employment occurs, computed
as provided in subsection 9.03(b) above, and
5. Clarification of Certain Calculations of Additional Compensation. The
----------------------------------------------------------------
portion of the Termination Compensation described in Section 9.03(c)(i)(B) of
the Current Agreement which refers to "compensation under Section 4 of this
Employment Agreement" is calculated by reference to the higher of the average
annual Additional Compensation paid to Mr. Banks in the three years preceding
that in which the Termination Date occurs or the average annual Additional
Compensation paid in the three years preceding that in which the Change in
Control occurs. The provision of Section 5(a) which refers to the "Additional
Compensation for the full fiscal year during which such termination occurs"
shall be calculated by reference to the average annual Additional Compensation
paid to Mr. Banks in the three years preceding that in which the Termination
Date occurs.
6. Status of Current Agreement. Except as specifically amended hereby, the
---------------------------
terms and conditions of the Current Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seals as of the day and year first above written.
GROW GROUP, INC.
By /s/ Grow Group, Inc.
------------------------------
/s/ Russell Banks
------------------------------
Russell Banks
2
<PAGE>
EXHIBIT 99.10
GROW GROUP, INC.
MetLife Building Telephone: 212-599-4400
200 Park Avenue TWX: 710-581-3686
New York, New York 10166 Telecopier: 212-286-0940
April 27, 1995
John F. Gleason
Corporate Office
Dear Mr. Gleason:
Grow Group, Inc. (the "Company") considers it essential to the best
interests of its stockholders to foster the continuous employment of key
management personnel. In this connection, the Board of Directors of the Company
(the "Board") recognizes that, as is the case with many publicly held companies,
the possibility of a change in control of the Company may exist and that such
possibility, and the uncertainty and questions which it may raise, may result in
the departure or distraction of key personnel to the detriment of the Company
and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of certain
employees of the Company, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company.
In order to induce you to remain in the employ of the Company, the
Company agrees that you shall receive the severance benefits set forth in this
letter agreement (the "Agreement") in the event your employment with the Company
is terminated under the circumstances described below subsequent to a Change in
Control (as defined in Section 2) of the Company.
The execution of this Agreement constitutes cancellation of any prior
---------------------------------------------------------------------
employment, severance or termi-
- -------------------------------
<PAGE>
John F. Gleason
April 27, 1995
Page 2
nation agreement between you and the Company ("Prior Agreement"), and the Prior
- --------------------------------------------------------------------------------
Agreement shall be of no force and effect after the date this Agreement is
- --------------------------------------------------------------------------
executed by you, as set forth on the last page of this Agreement ("Effective
- ----------------------------------------------------------------------------
Date").
- ------
1. TERM OF AGREEMENT This Agreement shall commence on the Effective
-----------------
Date and shall continue in effect through December 31, 1995, provided, however,
that commencing on January 1, 1996 and each January 1 thereafter, the term of
this Agreement shall automatically be extended for one additional year unless,
not later than October 1 of the preceding year, the Company shall have given
notice that it does not wish to extend this Agreement; and provided, further,
that if a Change in Control of the Company shall have occurred during the
original or extended term of this Agreement, this Agreement shall continue in
effect for a period of not less than twenty-four (24) months beyond the month in
which such Change in Control occurred.
2. CHANGE IN CONTROL No benefits shall be payable hereunder unless
-----------------
there shall have been a Change in Control of the Company, as set forth below.
For purposes of this Agreement, a "Change in Control" shall have occurred if:
(a) any "person", as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power
of the Company's then outstanding securities;
2
<PAGE>
John F. Gleason
April 27, 1995
Page 3
(b) during any period of not more than two consecutive years (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in clause (a), (c) or (d) of
this Section) whose election by the Board or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof;
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 30% of the combined voting
power of the Company's then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
3. TERMINATION OF EMPLOYMENT FOLLOWING CHANGE IN CONTROL
-----------------------------------------------------
(a) Your employment may be terminated subsequent to a Change in
Control of the Company in the following cases:
3
<PAGE>
John F. Gleason
April 27, 1995
Page 4
(i) Your employment shall terminate on your death.
(ii) The Company may terminate your employment in the event of your
disability; provided, however, that for purposes of this Agreement for the right
of the Company to terminate your employment by reason of disability
("Disability") you must, by reason of illness or physical or mental disability,
be totally unable to perform, or, in the judgment of the Company evidenced by a
resolution adopted in good faith by a majority of the Board, unable adequately
to perform, your duties with the Company for a period of 180 consecutive days,
and provided, further, that at the end of such 180 day period the Company must
have received the certificates of two qualified doctors, one selected by the
Company and one selected by you or on your behalf, stating that in their opinion
you are and will continue to be by reason of such illness or physical or mental
disability totally unable, or unable adequately, to perform your duties with the
Company. If the two doctors so selected are unable to reach agreement on the
question of your ability to perform such services, they shall promptly designate
a third doctor to make such determination and the decision of such third doctor
shall be binding on the Company and you. If the two doctors are unable to agree
upon a third doctor for such purpose, they shall request the Dean of the School
of Medicine of Columbia University to choose such third doctor. The fees of
such doctors shall be borne by the Company.
(iii) The Company may terminate your employment for Cause. For
purposes of this Agreement, Cause is defined to be (A) the willful engaging by
you in misconduct materially and demonstrably injurious to the Company, or (B)
the willful and continued failure by you to substantially perform your duties
(other than any such failure resulting from your incapacity due to physical or
mental illness or any such actual or anticipated failure after the issuance of a
Notice of Termination (as hereinafter defined) by you for Good Reason (as
hereinafter defined) after a written demand for substan-
4
<PAGE>
John F. Gleason
April 27, 1995
Page 5
tial performance is delivered to you by the Board, which demand specifically
identifies the manner in which the Board believes that you have not
substantially performed your duties, which failure results in demonstrable
material injury to the Company, if you shall have failed to remedy such alleged
failure to substantially perform your duties within 30 days of your receipt of
written notice thereof from the Board. For purposes of this Section 3(a)(iii),
no act or failure to act on your part shall be considered "willful" unless done,
or omitted to be done, by you not in good faith and without reasonable belief
that your action or omission was in the best interests of the Company.
Notwithstanding the foregoing, you shall not be deemed to have been terminated
for Cause unless and until there shall have been delivered to you a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
(3/4) of the entire membership of the Board at a meeting of the Board (after
reasonable notice to you and an opportunity for you, together with your counsel,
to be heard before the Board), finding that in the good faith opinion of the
Board you were guilty of conduct set forth above in this Subsection and
specifying the particulars thereof in detail.
(iv) You may voluntarily terminate your employment for Good Reason.
For purposes of this Agreement, "Good Reason" shall mean, without your express
written consent, the occurrence after a Change in Control of the Company of any
of the following circumstances unless, in the case of paragraphs (A), (E), (F),
(G), or (H) such circumstances are fully corrected prior to the Termination Date
(as hereinafter defined) specified in the Notice of Termination given in respect
thereof:
(A) the assignment to you of any duties substantially
inconsistent with the position in the Company that you held
immediately prior to the Change in Control of the Company,
or a significant adverse alteration in the nature or status
of your responsibilities or the conditions of your
employment
5
<PAGE>
John F. Gleason
April 27, 1995
Page 6
from those in effect immediately prior to such Change in
Control; provided however, that a mere change in job title
which does not result in the assignment to you of
substantially inconsistent duties or which does not
constitute a significant adverse alteration in the nature or
status of your responsibilities or the conditions of your
employment, as described herein above, shall not constitute
"Good Reason" hereunder;
(B) a reduction by the Company in your annual base salary as in
effect on the date hereof or as the same may be increased
from time to time except for across-the-board salary
reductions similarly affecting all key personnel of the
Company and all key personnel of any person in control of
the Company;
(C) the relocation of the Company's offices at which you are
principally employed immediately prior to the date of the
Change in Control of the Company to a location more than 35
miles from such location, or the Company's requiring you to
be based anywhere other than the Company's offices at such
location except for required travel on the Company's
business to an extent substantially consistent with your
business travel obligations immediately prior to the Change
in Control;
(D) the failure by the Company to pay to you any portion of your
current compensation or to pay to you any portion of an
installment of deferred
6
<PAGE>
John F. Gleason
April 27, 1995
Page 7
compensation under any deferred compensation program of the
Company within seven (7) days of the date such compensation
is due;
(E) the failure by the Company to continue to provide you with
benefits substantially similar to those enjoyed by you under
any of the Company's life insurance, medical, accident,
disability or other employee benefit or compensation plans
in which you were participating at the time of the Change in
Control of the Company, the taking of any action by the
Company which would directly or indirectly materially reduce
any of such benefits, or the failure by the Company to
provide you with the number of paid vacation days to which
you are entitled on the basis of years of service with the
Company in accordance with the Company's normal vacation
policy in effect at the time of the Change in Control of the
Company, unless such failure or taking of action similarly
affects all key personnel of the Company and all key
personnel of any person in control of the Company;
(F) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform
this Agreement, as contemplated in section 8 hereof;
(G) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the
requirements of Subsection 3(b) hereof (and, if applica-
7
<PAGE>
John F. Gleason
April 27, 1995
Page 8
ble, the requirements of Subsection 3(a)(iii) hereof), which
purported termination shall not be effective for purposes of
this Agreement; or
(H) a breach by the company of any provision of this Agreement
not embraced in the foregoing clauses (A), (B), (C), (D),
(E), (F) and (G).
(b) Your employment will not be considered to have been terminated by
the Company if the employment is discontinued due to the sale of a facility of
the Company in which you work if you are offered substantially equivalent
employment by the purchaser of the facility (or an affiliated company of the
purchaser); and the purchaser (or an affiliated company) agrees to assume the
Company's responsibilities under this Agreement with respect to you as if the
purchaser (or an affiliated companny) were the Company hereunder and no such
sale had occurred.
(c) Any termination by the Company or by you pursuant to this
Agreement shall be communicated by written Notice of Termination to the other
party hereto in accordance with Section 10. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon, and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provisions so indicated
(d) "Termination Date" shall mean (i) if your employment is terminated
for Disability, thirty (30) days after Notice of Termination is given (provided
that you shall not have returned to the full-time performance of your duties
during such thirty (30)-day period), and (ii) if your employment is terminated
pursuant to Subsections 3(a)(iii) or (iv) hereof or for any other reason (other
than Disability), the date specified in the Notice of Termination (which, in the
case of a termination for
8
<PAGE>
John F. Gleason
April 27, 1995
Page 9
Cause shall not be less than thirty (30) days from the date such Notice of
Termination is given, and in the case of a termination for Good Reason shall not
be less than fifteen (15) nor more than sixty (60) days from the date such
Notice of Termination is given); provided, however, that if within fifteen (15)
days after any Notice of Termination is given, or, if later, prior to the
Termination Date (as determined without regard to this proviso), the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, then the Termination Date shall be the date
on which the dispute is finally determined, either by mutual written agreement
of the parties, by a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not appealable or with
respect to which the time for appeal therefrom has expired and no appeal has
been perfected); and provided, further, that the Termination Date shall be
extended by a notice of dispute only if such notice is given in good faith and
the party giving such notice pursues the resolution of such dispute with
reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay your full compensation in effect when the notice
giving rise to the dispute was given (including, but not limited to, base
salary) and continue you as a participant in all compensation, benefit and
insurance plans in which you were participating when the notice giving rise to
the dispute was given, until the dispute is finally resolved in accordance with
this Subsection. Amounts paid under this Subsection are in addition to all
other amounts due under this Agreement, and shall not be offset against or
reduce any other amounts due under this Agreement.
4. COMPENSATION AND CERTAIN OTHER PROVISIONS
IN THE EVENT OF TERMINATION OF EMPLOYMENT
--------------------------------------------
If there is any termination of your employment after a Change in
Control, the following provisions shall apply:
9
<PAGE>
John F. Gleason
April 27, 1995
Page 10
(a) During any period that you fail to perform your full-time duties
with the Company as a result of incapacity due to physical or mental illness, or
in the event your employment shall be terminated by reason of disability or
death, your benefits shall be determined under the Company's disability,
retirement, insurance and other compensation programs then in effect in
accordance with the terms of such programs.
(b) If your employment is terminated for Cause under subsection
3(a)(iii) above, or by you other than for Good Reason, the Company shall pay you
your base salary (the "Base Salary") through the Termination Date at the annual
rate of compensation in effect immediately prior to the Termination Date, and
shall also pay you any accrued bonuses owing to you for any past fiscal years
and not previously paid. You shall also receive any bonus for the portion of
the Company's fiscal year prior to such termination (but not thereafter) that
may be awarded to you in the discretion of the Board. Such amounts due you
under this subsection 4(b) shall be paid in a lump sum within 10 days after the
Termination Date. After such payments are made, the Company shall have no
further obligation to you under this Agreement.
(c) If the Company shall terminate your employment other than pursuant
to the provisions of subsections 3(a)(i), (ii) or (iii), or if you shall
voluntarily terminate your employment pursuant to the provisions of subsection
3(a)(iv), then the Company, as liquidated damages or severance pay or both,
shall pay to you and provide you and your dependents with the following:
(i) The Company shall pay you (A) your Base Salary through the
Termination Date at the annual rate of compensation in effect immediately prior
to the Termination Date, any accrued bonuses owing to you for any past fiscal
years and not previously paid, and a bonus for the period from the first day of
the fiscal year in which the Termination Date occurs to the Termination Date,
computed at an annual rate equal to the higher
10
<PAGE>
John F. Gleason
April 27, 1995
Page 11
of (a) the average bonus paid to you for the three fiscal years of the Company
immediately preceding the fiscal year in which Change in Control occurs and (b)
the average bonus paid to you for the three fiscal years of the Company
immediately preceding the fiscal year in which the Termination Date occurs (the
"Bonus Rate"), and (B) the total Base Salary you would have earned during an
additional twenty-four (24) months of employment (the "Payout Period"), such
Base Salary to be at the annual rate of compensation in effect immediately prior
to the Termination Date (the "Termination Compensation"). For the purposes of
the foregoing payments, the annual rate of compensation shall be the rate paid
to you without regard to any purported reduction or attempted reduction of such
rate by the Company. The amount specified in clauses (A) and (B) shall be
payable in a lump sum within ten (10) days after the Termination Date.
(ii) During the Payout Period, the Company shall arrange to provide
you with life, disability, accident, group health insurance and other employee
benefits substantially similar to those which you were receiving immediately
prior to the Notice of Termination. Benefits otherwise receivable by you
pursuant to this section shall be reduced to the extent comparable benefits are
actually received by you during the Payout Period, and any such benefits
actually received by you shall be reported by you to the Company. In addition,
the remainder of the Payout Period until you reach retirement, or the period
until your death if earlier, shall be considered service with the Company for
the purpose of continued service credits under applicable pension and retirement
plans of the Company.
(iii) If and to the extent that benefits or service credits for
benefits provided under clause (ii) above shall not be payable or provided under
any such plans to you and your dependents by reason of you no longer being an
employee of the Company as the result of termination of your employment, the
Company shall itself pay or provide for payment of such benefits
11
<PAGE>
John F. Gleason
April 27, 1995
Page 12
and service credit for benefits to you and your dependents.
(iv) The termination of your employment shall not affect any vested
benefits under the Company's pension plans to which you may be entitled
(including any additional service credits for benefits as provided in
subsections (ii) and (iii) above), and you may receive retirement payments under
such pension plans on any date selected by you, which must be a date on which
retirement payments under such plans may commence.
(v) The Company shall pay the one-time individual conversion fee
required by the carrier in connection with your conversion of any insurance
policies carried by the Company on your life.
(vi) In the event that, by reason of section 280G of the Internal
Revenue Code of 1986 (the "Code"), any payment or benefit received or to be
received by you in connection with a Change in Control of the Company or the
termination of your employment (whether payable pursuant to the terms of this
Agreement ("Contract Payments") or any other plan, arrangement or agreement with
the Company, its successors, any person whose actions result in a Change in
Control or any corporation ("Affiliate") affiliated (or which, as a result of
the completion of the transactions causing a Change in Control will become
affiliated) with the Company within the meaning of section 1504 of the Code
(collectively with the Contract Payments, "Total Payments")), would not be
deductible (in whole or part) by the Company, an Affiliate or other person
making such payment or providing such benefit, the Termination Compensation
shall be reduced (and, if the Termination Compensation is reduced to zero, other
Contract Payments shall first be reduced and other Total Payments shall
thereafter be reduced) until no portion of the Total Payments is not deductible
by reason of section 280G of the Code. For purposes of this limitation, (A) no
portion of the Total Payments the receipt or enjoyment of which you shall have
effectively waived in writing prior to the date of payment of the Termina-
12
<PAGE>
John F. Gleason
April 27, 1995
Page 13
tion Compensation shall be taken into account, (B) no portion of the Total
Payments shall be taken into account which in the opinion of tax counsel
selected by the Company's independent auditors and acceptable to you does not
constitute a "parachute payment" within the meaning of section 280G(b)(2) of the
Code (without regard to subsection (A)(ii) thereof), (C) the Termination
Compensation (and, thereafter, other Contract Payments and other Total Payments)
shall be reduced only to the extent necessary so that the Total Payments (other
than those referred to in clauses (A) and (B)) in their entirety constitute
reasonable compensation for services actually rendered within the meaning of
section 280G(b)(4) of the Code, in the opinion of the tax counsel referred to in
clause (B), and (D) the value of any noncash benefit or any deferred payment or
benefit included in the Total Payments shall be determined by the Company's
independent auditors in accordance with the principles of sections 280G(d)(3)
and (4) of the Code.
(vii) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking employment or otherwise, nor shall the
amount of any payment or benefit provided for in this Section 4 be reduced by
any compensation earned by you as the result of employment by another employer,
by retirement benefits, by offset against any amount claimed to be owed by you
to the Company, or otherwise.
(viii) Any reduction in Termination Compensation pursuant to
subsection 4(c)(vi) shall, in the event of any question, be determined jointly
by the independent public accountants of the Company and a firm of independent
public accountants selected by you, and in the event such accountants are unable
to agree on a resolution of the question, such reduction shall be determined by
a third firm of independent public accountants selected jointly by the foregoing
two firms and shall be binding on you and the Company. The expense for any such
determination shall be borne by the Company.
13
<PAGE>
John F. Gleason
April 27, 1995
Page 14
5. ARBITRATION
-----------
(a) If any dispute arises between the Company and you respecting any
provisions of this Agreement, such dispute shall be submitted to arbitration in
the City of New York, State of New York. Arbitration shall be initiated by
written notice given by either party to the other. Within 30 days after such
notice, each party shall appoint an arbitrator and the two arbitrators so chosen
shall appoint a third arbitrator. If either party fails to name an arbitrator,
such arbitrator shall be designated by the then president of the American
Arbitration Association. If any arbitrator becomes disabled, resigns or is
otherwise unable to discharge his duties, his successor shall be appointed in
the same manner as such arbitrator was appointed. Any determination of the
arbitrators shall be binding and conclusive upon the parties hereto but the
arbitrators shall not have the power to add to, alter or modify the terms and
conditions of this Agreement or to decide any issue which does not arise from
the interpretation or application of the provisions of this Agreement. Except
as aforesaid, the arbitration shall be conducted under the rules of the American
Arbitration Association. Application may be made by either party to any court
having jurisdiction thereof for judicial confirmation of any determination by
the arbitrators and/or for an order of enforcement of any such decision.
(b) All legal fees and expenses of the Company and you in connection
with the arbitration or in connection with any other legal proceedings which you
must bring or defend in connection with this Agreement shall be paid by the
Company; provided, however, if any arbitration shall be determined completely
adverse to you and the arbitrators unanimously determine that you had no
reasonable basis for commencing such arbitration, you shall be responsible for
the legal fees and expenses of your own counsel. The Company hereby agrees to
pay interest on any payments to be made to you under this Agreement not paid
when due or on any money judgment of the arbitrators or otherwise obtained by
you, calculated
14
<PAGE>
John F. Gleason
April 27, 1995
Page 15
at the rate announced from time to time by Chemical Bank, New York, as its prime
rate, from the date that payments should have been made under this Agreement to
the time of actual payment.
6. NO RIGHT OF SET OFF
-------------------
The Company shall have no right of set off or counterclaim in respect
of any claim, debt or obligation against any payments to you, your dependents,
beneficiaries or estate provided in this Agreement.
7. NON-ASSIGNABILITY OF PAYMENTS
-----------------------------
The provisions of this Agreement are personal in nature and neither of
the parties hereto shall, without the consent of the other, assign or transfer
any rights or obligations hereunder. Without limiting the foregoing, your right
to receive payments hereunder shall not be assignable or transferable, whether
by pledge, creation of a security interest or otherwise, other than a transfer
by your will or by the laws of descent or distribution and in the event of any
attempted assignment or transfer contrary to the provisions of this Section 7,
the Company shall have no liability to pay any amount attempted to be so
assigned or transferred.
8. SUCCESSORS; BINDING AGREEMENT
-----------------------------
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle you to compensation from the Company in the same
amount and on the same terms to which you would be entitled hereunder if you
terminated your employment for Good
15
<PAGE>
John F. Gleason
April 27, 1995
Page 16
Reason following a Change in Control of the Company, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Termination Date. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable by
you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
9. NOTICE
------
For purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notice to the Company shall be directed to the attention of the Board
with a copy to the Secretary of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
10. MISCELLANEOUS
-------------
No provision of the Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and signed
by you and such officer as may be specifically designated by the
16
<PAGE>
John F. Gleason
April 27, 1995
Page 17
Board. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar of dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of New York without regard to its conflicts of law
principles. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding required
under federal, state of local law. The obligations of the Company under Section
4 shall survive the expiration of the term of this Agreement.
11. VALIDITY
--------
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
12. COUNTERPARTS
------------
This agreement may be executed in several counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
and the same instrument.
13. ENTIRE AGREEMENT
----------------
This Agreement sets forth the entire agreement of the parties hereto
in respect of the subject matter contained herein and supersedes all prior
agreements (including the Prior Agreement), promises, covenants, arrangements,
communications, representations or warran-
17
<PAGE>
John F. Gleason
April 27, 1995
Page 18
ties, whether oral or written, by an officer, employee or representative of any
party hereto; and any prior agreement of the parties hereto in respect of the
subject matter contained herein is hereby terminated and cancelled.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter, which
will then constitute our agreement on this subject.
Sincerely,
GROW GROUP, INC.
By: /s/ Russell Banks
-------------------------
Russell Banks
President
Agreed to this 27th day
of April, 1995.
/s/ John F. Gleason
---------------------------
18
<PAGE>
EXHIBIT 99.11
GROW GROUP, INC.
MetLife Building Telephone: 212-599-4400
200 Park Avenue TWX: 710-581-3686
New York, New York 10166 Telecopier: 212-286-0940
April 27, 1995
Lloyd Frank
Corporate Office
Dear Mr. Frank:
Grow Group, Inc. (the "Company") considers it essential to the best
interests of its stockholders to foster the continuous employment of key
management personnel. In this connection, the Board of Directors of the Company
(the "Board") recognizes that, as is the case with many publicly held companies,
the possibility of a change in control of the Company may exist and that such
possibility, and the uncertainty and questions which it may raise, may result in
the departure or distraction of key personnel to the detriment of the Company
and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of certain
employees of the Company, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company.
In order to induce you to remain in the employ of the Company, the
Company agrees that you shall receive the severance benefits set forth in this
letter agreement (the "Agreement") in the event your employment with the Company
is terminated under the circumstances described below subsequent to a Change in
Control (as defined in Section 2) of the Company.
The execution of this Agreement constitutes cancellation of any prior
---------------------------------------------------------------------
employment, severance or termination agreement between you and the Company
- ---------------------------------------------------------------------------
("Prior Agreement"), and the Prior Agreement shall be of no force and effect
- ----------------------------------------------------------------------------
after the date this Agreement is executed by you, as set forth on the last page
- -------------------------------------------------------------------------------
of this Agreement ("Effective Date").
- ------------------------------------
<PAGE>
1. TERM OF AGREEMENT This Agreement shall commence on the Effective
-----------------
Date and shall continue in effect through December 31, 1995, provided, however,
that commencing on January 1, 1996 and each January 1 thereafter, the term of
this Agreement shall automatically be extended for one additional year unless,
not later than October 1 of the preceding year, the Company shall have given
notice that it does not wish to extend this Agreement; and provided, further,
that if a Change in Control of the Company shall have occurred during the
original or extended term of this Agreement, this Agreement shall continue in
effect for a period of not less than twenty-four (24) months beyond the month in
which such Change in Control occurred.
2. CHANGE IN CONTROL No benefits shall be payable hereunder unless
-----------------
there shall have been a Change in Control of the Company, as set forth below.
For purposes of this Agreement, a "Change in Control" shall have occurred if:
(a) any "person", as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than
the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power
of the Company's then outstanding securities;
(b) during any period of not more than two consecutive years (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in clause (a), (c) or (d) of
this Section) whose election by the Board or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof;
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 30% of the combined voting
power of the Company's then outstanding securities; or
2
<PAGE>
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
3. TERMINATION OF EMPLOYMENT FOLLOWING CHANGE IN CONTROL
-----------------------------------------------------
(a) Your employment may be terminated subsequent to a Change in
Control of the Company in the following cases:
(i) Your employment shall terminate on your death.
(ii) The Company may terminate your employment in the event of
your disability; provided, however, that for purposes of this Agreement for the
right of the Company to terminate your employment by reason of disability
("Disability") you must, by reason of illness or physical or mental disability,
be totally unable to perform, or, in the judgment of the Company evidenced by a
resolution adopted in good faith by a majority of the Board, unable adequately
to perform, your duties with the Company for a period of 180 consecutive days,
and provided, further, that at the end of such 180 day period the Company must
have received the certificates of two qualified doctors, one selected by the
Company and one selected by you or on your behalf, stating that in their opinion
you are and will continue to be by reason of such illness or physical or mental
disability totally unable, or unable adequately, to perform your duties with the
Company. If the two doctors so selected are unable to reach agreement on the
question of your ability to perform such services, they shall promptly designate
a third doctor to make such determination and the decision of such third doctor
shall be binding on the Company and you. If the two doctors are unable to agree
upon a third doctor for such purpose, they shall request the Dean of the School
of Medicine of Columbia University to choose such third doctor. The fees of such
doctors shall be borne by the Company.
(iii) The Company may terminate your employment for Cause. For
purposes of this Agreement, Cause is defined to be (A) the willful engaging by
you in misconduct materially and demonstrably injurious to the Company, or (B)
the willful and continued failure by you to substantially perform your duties
(other than any such failure resulting from your incapacity due to physical or
mental illness or any such actual or anticipated failure after the issuance of a
Notice of Termination (as hereinafter defined) by you for Good Reason (as
hereinafter defined) after a written demand for substantial performance is
delivered to you by the Board, which demand specifically identifies the manner
in which the Board believes that you have not substantially performed your
duties, which failure results in demonstrable material injury to the Company, if
you shall have failed to remedy such alleged failure to substantially perform
your duties within 30 days of your receipt of written notice thereof from the
Board. For purposes of this Section 3(a)(iii), no act or failure to act on your
part shall be considered "willful" unless done, or omitted to be done, by you
not in good faith and without reasonable belief that your action or omission was
in the best interests of the Company. Notwithstanding the foregoing, you shall
not be deemed
3
<PAGE>
to have been terminated for Cause unless and until there shall have been
delivered to you a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board (after reasonable notice to you and an opportunity for you,
together with your counsel, to be heard before the Board), finding that in the
good faith opinion of the Board you were guilty of conduct set forth above in
this Subsection and specifying the particulars thereof in detail.
(iv) You may voluntarily terminate your employment for Good
Reason. For purposes of this Agreement, "Good Reason" shall mean, without your
express written consent, the occurrence after a Change in Control of the Company
of any of the following circumstances unless, in the case of paragraphs (A),
(E), (F), (G), or (H) such circumstances are fully corrected prior to the
Termination Date (as hereinafter defined) specified in the Notice of Termination
given in respect thereof:
(A) the assignment to you of any duties substantially
inconsistent with the position in the Company that you held
immediately prior to the Change in Control of the Company,
or a significant adverse alteration in the nature or status
of your responsibilities or the conditions of your
employment from those in effect immediately prior to such
Change in Control; provided however, that a mere change in
job title which does not result in the assignment to you of
substantially inconsistent duties or which does not
constitute a significant adverse alteration in the nature or
status of your responsibilities or the conditions of your
employment, as described herein above, shall not constitute
"Good Reason" hereunder;
(B) a reduction by the Company in your annual base salary as in
effect on the date hereof or as the same may be increased
from time to time except for across-the-board salary
reductions similarly affecting all key personnel of the
Company and all key personnel of any person in control of
the Company;
(C) the relocation of the Company's offices at which you are
principally employed immediately prior to the date of the
Change in Control of the Company to a location more than 35
miles from such location, or the Company's requiring you to
be based anywhere other than the Company's offices at such
location except for required travel on the Company's
business to an extent substantially consistent with your
business travel obligations immediately prior to the Change
in Control;
(D) the failure by the Company to pay to you any portion of your
current compensation or to pay to you any portion of an
install-
4
<PAGE>
ment of deferred compensation under any deferred
compensation program of the Company within seven (7) days of
the date such compensation is due;
(E) the failure by the Company to continue to provide you with
benefits substantially similar to those enjoyed by you under
any of the Company's life insurance, medical, accident,
disability or other employee benefit or compensation plans
in which you were participating at the time of the Change in
Control of the Company, the taking of any action by the
Company which would directly or indirectly materially reduce
any of such benefits, or the failure by the Company to
provide you with the number of paid vacation days to which
you are entitled on the basis of years of service with the
Company in accordance with the Company's normal vacation
policy in effect at the time of the Change in Control of the
Company, unless such failure or taking of action similarly
affects all key personnel of the Company and all key
personnel of any person in control of the Company;
(F) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform
this Agreement, as contemplated in section 8 hereof;
(G) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the
requirements of Subsection 3(b) hereof (and, if applicable,
the requirements of Subsection 3(a)(iii) hereof), which
purported termination shall not be effective for purposes of
this Agreement; or
(H) a breach by the company of any provision of this Agreement
not embraced in the foregoing clauses (A), (B), (C), (D),
(E), (F) and (G).
(b) Your employment will not be considered to have been terminated by
the Company if the employment is discontinued due to the sale of a facility of
the Company in which you work if you are offered substantially equivalent
employment by the purchaser of the facility (or an affiliated company of the
purchaser); and the purchaser (or an affiliated company) agrees to assume the
Company's responsibilities under this Agreement with respect to you as if the
purchaser (or an affiliated companny) were the Company hereunder and no such
sale had occurred.
(c) Any termination by the Company or by you pursuant to this
Agreement shall be communicated by written Notice of Termination to the other
party hereto
5
<PAGE>
in accordance with Section 10. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon, and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
your employment under the provisions so indicated
(d) "Termination Date" shall mean (i) if your employment is terminated
for Disability, thirty (30) days after Notice of Termination is given (provided
that you shall not have returned to the full-time performance of your duties
during such thirty (30)-day period), and (ii) if your employment is terminated
pursuant to Subsections 3(a)(iii) or (iv) hereof or for any other reason (other
than Disability), the date specified in the Notice of Termination (which, in the
case of a termination for Cause shall not be less than thirty (30) days from the
date such Notice of Termination is given, and in the case of a termination for
Good Reason shall not be less than fifteen (15) nor more than sixty (60) days
from the date such Notice of Termination is given); provided, however, that if
within fifteen (15) days after any Notice of Termination is given, or, if later,
prior to the Termination Date (as determined without regard to this proviso),
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, then the Termination Date shall be
the date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (which is not
appealable or with respect to which the time for appeal therefrom has expired
and no appeal has been perfected); and provided, further, that the Termination
Date shall be extended by a notice of dispute only if such notice is given in
good faith and the party giving such notice pursues the resolution of such
dispute with reasonable diligence. Notwithstanding the pendency of any such
dispute, the Company will continue to pay your full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited to,
base salary) and continue you as a participant in all compensation, benefit and
insurance plans in which you were participating when the notice giving rise to
the dispute was given, until the dispute is finally resolved in accordance with
this Subsection. Amounts paid under this Subsection are in addition to all
other amounts due under this Agreement, and shall not be offset against or
reduce any other amounts due under this Agreement.
4. COMPENSATION AND CERTAIN OTHER PROVISIONS
IN THE EVENT OF TERMINATION OF EMPLOYMENT
--------------------------------------------
If there is any termination of your employment after a Change in
Control, the following provisions shall apply:
(a) During any period that you fail to perform your full-time duties
with the Company as a result of incapacity due to physical or mental illness, or
in the event your employment shall be terminated by reason of disability or
death, your benefits shall be determined under the Company's disability,
retirement, insurance and other compensation programs then in effect in
accordance with the terms of such programs.
6
<PAGE>
(b) If your employment is terminated for Cause under subsection
3(a)(iii) above, or by you other than for Good Reason, the Company shall pay you
your base salary (the "Base Salary") through the Termination Date at the annual
rate of compensation in effect immediately prior to the Termination Date, and
shall also pay you any accrued bonuses owing to you for any past fiscal years
and not previously paid. You shall also receive any bonus for the portion of
the Company's fiscal year prior to such termination (but not thereafter) that
may be awarded to you in the discretion of the Board. Such amounts due you
under this subsection 4(b) shall be paid in a lump sum within 10 days after the
Termination Date. After such payments are made, the Company shall have no
further obligation to you under this Agreement.
(c) If the Company shall terminate your employment other than pursuant
to the provisions of subsections 3(a)(i), (ii) or (iii), or if you shall
voluntarily terminate your employment pursuant to the provisions of subsection
3(a)(iv), then the Company, as liquidated damages or severance pay or both,
shall pay to you and provide you and your dependents with the following:
(i) The Company shall pay you (A) your Base Salary through the
Termination Date at the annual rate of compensation in effect immediately prior
to the Termination Date, any accrued bonuses owing to you for any past fiscal
years and not previously paid, and a bonus for the period from the first day of
the fiscal year in which the Termination Date occurs to the Termination Date,
computed at an annual rate equal to the higher of (a) the average bonus paid to
you for the three fiscal years of the Company immediately preceding the fiscal
year in which Change in Control occurs and (b) the average bonus paid to you for
the three fiscal years of the Company immediately preceding the fiscal year in
which the Termination Date occurs (the "Bonus Rate"), and (B) the total Base
Salary and bonuses you would have earned during an additional thirty-six (36)
months of employment (the "Payout Period"), such Base Salary to be at the annual
rate of compensation in effect immediately prior to the Termination Date and
such bonuses to be at the Bonus Rate (the "Termination Compensation"). For the
purposes of the foregoing payments, the annual rate of compensation shall be the
rate paid to you without regard to any purported reduction or attempted
reduction of such rate by the Company. The amount specified in clauses (A) and
(B) shall be payable in a lump sum within ten (10) days after the Termination
Date.
(ii) During the Payout Period, the Company shall arrange to provide
you with life, disability, accident, group health insurance and other employee
benefits substantially similar to those which you were receiving immediately
prior to the Notice of Termination. Benefits otherwise receivable by you
pursuant to this section shall be reduced to the extent comparable benefits are
actually received by you during the Payout Period, and any such benefits
actually received by you shall be reported by you to the Company. In addition,
the remainder of the Payout Period until you reach retirement, or the period
until your death if earlier, shall be considered service with the Company for
the purpose of continued service credits under applicable pension and retirement
plans of the Company.
7
<PAGE>
(iii) If and to the extent that benefits or service credits for
benefits provided under clause (ii) above shall not be payable or provided under
any such plans to you and your dependents by reason of you no longer being an
employee of the Company as the result of termination of your employment, the
Company shall itself pay or provide for payment of such benefits and service
credit for benefits to you and your dependents.
(iv) The termination of your employment shall not affect any vested
benefits under the Company's pension plans to which you may be entitled
(including any additional service credits for benefits as provided in
subsections (ii) and (iii) above), and you may receive retirement payments under
such pension plans on any date selected by you, which must be a date on which
retirement payments under such plans may commence.
(v) The Company shall pay the one-time individual conversion fee
required by the carrier in connection with your conversion of any insurance
policies carried by the Company on your life.
(vi) In the event that, by reason of section 280G of the Internal
Revenue Code of 1986 (the "Code"), any payment or benefit received or to be
received by you in connection with a Change in Control of the Company or the
termination of your employment (whether payable pursuant to the terms of this
Agreement ("Contract Payments") or any other plan, arrangement or agreement with
the Company, its successors, any person whose actions result in a Change in
Control or any corporation ("Affiliate") affiliated (or which, as a result of
the completion of the transactions causing a Change in Control will become
affiliated) with the Company within the meaning of section 1504 of the Code
(collectively with the Contract Payments, "Total Payments")), would not be
deductible (in whole or part) by the Company, an Affiliate or other person
making such payment or providing such benefit, the Termination Compensation
shall be reduced (and, if the Termination Compensation is reduced to zero, other
Contract Payments shall first be reduced and other Total Payments shall
thereafter be reduced) until no portion of the Total Payments is not deductible
by reason of section 280G of the Code. For purposes of this limitation, (A) no
portion of the Total Payments the receipt or enjoyment of which you shall have
effectively waived in writing prior to the date of payment of the Termination
Compensation shall be taken into account, (B) no portion of the Total Payments
shall be taken into account which in the opinion of tax counsel selected by the
Company's independent auditors and acceptable to you does not constitute a
"parachute payment" within the meaning of section 280G(b)(2) of the Code
(without regard to subsection (A)(ii) thereof), (C) the Termination Compensation
(and, thereafter, other Contract Payments and other Total Payments) shall be
reduced only to the extent necessary so that the Total Payments (other than
those referred to in clauses (A) and (B)) in their entirety constitute
reasonable compensation for services actually rendered within the meaning of
section 280G(b)(4) of the Code, in the opinion of the tax counsel referred to in
clause (B), and (D) the value of any noncash benefit or any deferred payment or
benefit included in the Total Payments shall be determined by the Company's
independent auditors in accordance with the principles of sections 280G(d)(3)
and (4) of the Code.
8
<PAGE>
(vii) You shall not be required to mitigate the amount of any
payment provided for in this Section 4 by seeking employment or otherwise, nor
shall the amount of any payment or benefit provided for in this Section 4 be
reduced by any compensation earned by you as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by you to the Company, or otherwise.
(viii) Any reduction in Termination Compensation pursuant to
subsection 4(c)(vi) shall, in the event of any question, be determined jointly
by the independent public accountants of the Company and a firm of independent
public accountants selected by you, and in the event such accountants are unable
to agree on a resolution of the question, such reduction shall be determined by
a third firm of independent public accountants selected jointly by the foregoing
two firms and shall be binding on you and the Company. The expense for any such
determination shall be borne by the Company.
5. ARBITRATION
-----------
(a) If any dispute arises between the Company and you respecting any
provisions of this Agreement, such dispute shall be submitted to arbitration in
the City of New York, State of New York. Arbitration shall be initiated by
written notice given by either party to the other. Within 30 days after such
notice, each party shall appoint an arbitrator and the two arbitrators so chosen
shall appoint a third arbitrator. If either party fails to name an arbitrator,
such arbitrator shall be designated by the then president of the American
Arbitration Association. If any arbitrator becomes disabled, resigns or is
otherwise unable to discharge his duties, his successor shall be appointed in
the same manner as such arbitrator was appointed. Any determination of the
arbitrators shall be binding and conclusive upon the parties hereto but the
arbitrators shall not have the power to add to, alter or modify the terms and
conditions of this Agreement or to decide any issue which does not arise from
the interpretation or application of the provisions of this Agreement. Except
as aforesaid, the arbitration shall be conducted under the rules of the American
Arbitration Association. Application may be made by either party to any court
having jurisdiction thereof for judicial confirmation of any determination by
the arbitrators and/or for an order of enforcement of any such decision.
(b) All legal fees and expenses of the Company and you in connection
with the arbitration or in connection with any other legal proceedings which you
must bring or defend in connection with this Agreement shall be paid by the
Company; provided, however, if any arbitration shall be determined completely
adverse to you and the arbitrators unanimously determine that you had no
reasonable basis for commencing such arbitration, you shall be responsible for
the legal fees and expenses of your own counsel. The Company hereby agrees
to pay interest on any payments to be made to you under this Agreement not paid
when due or on any money judgment of the arbitrators or otherwise obtained by
you, calculated at the rate announced from time to time by Chemical Bank, New
9
<PAGE>
York, as its prime rate, from the date that payments should have been made under
this Agreement to the time of actual payment.
6. NO RIGHT OF SET OFF
-------------------
The Company shall have no right of set off or counterclaim in respect
of any claim, debt or obligation against any payments to you, your dependents,
beneficiaries or estate provided in this Agreement.
7. NON-ASSIGNABILITY OF PAYMENTS
-----------------------------
The provisions of this Agreement are personal in nature and neither of
the parties hereto shall, without the consent of the other, assign or transfer
any rights or obligations hereunder. Without limiting the foregoing, your right
to receive payments hereunder shall not be assignable or transferable, whether
by pledge, creation of a security interest or otherwise, other than a transfer
by your will or by the laws of descent or distribution and in the event of any
attempted assignment or transfer contrary to the provisions of this Section 7,
the Company shall have no liability to pay any amount attempted to be so
assigned or transferred.
8. SUCCESSORS; BINDING AGREEMENT
-----------------------------
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle you to compensation from the Company in the same
amount and on the same terms to which you would be entitled hereunder if you
terminated your employment for Good Reason following a Change in Control of the
Company, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Termination
Date. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable by
you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to you hereunder had you continued to live,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to your devisee, legatee or other designee or,
if there is no such designee, to your estate.
10
<PAGE>
9. NOTICE
------
For purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notice to the Company shall be directed to the attention of the Board
with a copy to the Secretary of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
10. MISCELLANEOUS
-------------
No provision of the Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and signed
by you and such officer as may be specifically designated by the Board. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar of
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of New York without regard to its conflicts of law principles. All
references to sections of the Exchange Act or the Code shall be deemed also to
refer to any successor provisions to such sections. Any payments provided for
hereunder shall be paid net of any applicable withholding required under
federal, state of local law. The obligations of the Company under Section 4
shall survive the expiration of the term of this Agreement.
11. VALIDITY
--------
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
12. COUNTERPARTS
------------
This agreement may be executed in several counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
and the same instrument.
11
<PAGE>
13. ENTIRE AGREEMENT
----------------
This Agreement sets forth the entire agreement of the parties hereto
in respect of the subject matter contained herein and supersedes all prior
agreements (including the Prior Agreement), promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by an
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein is
hereby terminated and cancelled.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter, which
will then constitute our agreement on this subject.
Sincerely,
GROW GROUP, INC.
By: /s/ Russell Banks
-------------------
Russell Banks
President
Agreed to this 27th day
of April, 1995.
/s/ Lloyd Frank
------------------------------
Lloyd Frank
12
<PAGE>
EXHIBIT 99.12
AMENDMENT OF EMPLOYMENT AGREEMENT
---------------------------------
AGREEMENT made as of April 27, 1995, between GROW GROUP, INC., a
New York corporation (the "Company"), and Frank V. Esser (the "Employee").
The Employee is employed by the Company pursuant to an employment
agreement first executed effective July 1, 1989 (such agreement being
hereinafter referred to as the "Current Agreement"). Capitalized terms
used herein shall, unless otherwise defined herein, have the meanings
ascribed to such terms in the Current Agreement.
The parties desire to amend and clarify the Current Agreement in
certain respects.
NOW, THEREFORE, in consideration of the foregoing, the parties
hereby agree as follows:
1. Clarification and Amendment of Termination Compensation. The portion
-------------------------------------------------------
of the Termination Compensation described in Section 9.03(c)(i)(B) of the
Current Agreement which is calculated by reference to the average bonus paid
to the Employee in respect of Company's fiscal years 1986, 1987 and 1988,
shall instead be calculated based on the higher of (a) the average bonus
paid to the Employee for the three fiscal years of the Company immediately
preceding the fiscal year in which Change in Control occurs and (b) the
average bonus paid to the Employee for the three fiscal years of the Company
immediately preceding the fiscal year in which the Termination Date occurs.
2. Payout Period for Termination Compensation. The Payout Period for
------------------------------------------
Termination Compensation described in Section 9.03 (c)(i)(B)(y) of the
Current Agreement shall be three years instead of two years.
3. Status of Current Agreement. Except as specifically amended hereby,
---------------------------
the terms and conditions of the Current Agreement shall remain in full force
and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto set their
hands and seals as of the day and year first above written.
GROW GROUP, INC.
By /s/ Grow Group, Inc.
---------------------
/s/ Frank V. Esser
---------------------
Employee
2
<PAGE>
EXHIBIT 99.13
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
- - - - - - - - - - - - - - - - - - - - -
GENERAL COLOR COMPANY PENSION : Index No.
PLAN, ON BEHALF OF ITSELF and ALL
OTHERS SIMILARLY SITUATED, :
Plaintiff, : CLASS ACTION COMPLAINT
----------------------
-against- :
GROW GROUP, INC., RUSSELL BANKS, :
JOSEPH M. QUINN, JOHN F. GLEASON,
PETER L. KEANE, PHILIPPE ERARD, :
TOLLY PLESSER, ROBERT J. MILANO,
ARTHUR W. BROSLAT, LLOYD FRANK, :
ANGUS N. MACDONALD, WILLIAM H.
TURNER, and HAROLD G. BITTLE, :
Defendants. :
- - - - - - - - - - - - - - - - - - - - :
Plaintiff, by its attorneys, alleges upon information and belief (said
information and belief being based, in part, upon the investigation conducted by
and through its undersigned counsel), except with respect to its ownership of
Grow Group, Inc. common stock, and its suitability to serve as a class
representative, which is alleged upon personal knowledge, as follows:
PARTIES
-------
1. Plaintiff General Color Company Pension Plan is the owner of 100 shares
of defendant Grow Group Inc. ("Grow" or the "Company").
<PAGE>
2. Defendant Grow is a corporation organized and existing under and by
virtue of the laws of the State of New York. Defendant Grow maintains its
principal offices at 200 Park Avenue, New York, New York, which is in the City,
County and State of New York. Defendant Grow also operates its extensive
business from its headquarters in the City, County and State of New York. In
addition, defendant Grow's shares are actively traded on the New York Stock
Exchange ("NYSE"), which is located in the City, County and State of New York.
3. Defendant Russell Banks ("Banks") is the President, Chief Executive
Officer and a Director of defendant Grow.
4. Defendant Joseph M. Quinn ("Quinn") is Executive Vice President, Chief
Operating Officer and a Director of defendant Grow.
5. Defendant John F. Gleason ("Gleason") is an Executive Vice President
and a Director of defendant Grow.
6. Defendant Peter L. Keane ("Keane") is a Director of defendant Grow.
7. Defendant Philippe Erard ("Erard") is a Director of defendant Grow.
8. Defendant Tolly Plesser ("Plesser") is a Director of defendant Grow.
9. Defendant Robert J. Milano ("Milano") is a Director of defendant Grow.
2
<PAGE>
10. Defendant Arthur W. Broslat ("Broslat") is a Director of defendant
Grow.
11. Defendant Lloyd Frank ("Frank") is a Director of defendant Grow.
12. Defendant Angus N. MacDonald ("MacDonald") is a Director of defendant
Grow.
13. Defendant William H. Turner ("Turner") is a Director of defendant
Grow.
14. Defendant Harold G. Bittle ("Bittle") is a Director of defendant Grow.
15. Defendants Banks, Quinn, Keane, Erard, Plesser, Milano, Gleason,
Bittle, Turner, MacDonald, Frank and Broslat are collectively referred to herein
as the Defendant Directors.
CLASS ACTION ALLEGATIONS
------------------------
16. Plaintiff brings this action on his own behalf and as a class action,
pursuant to Section 901 of the CPLR, on behalf of all shareholders of defendant
Grow (except defendants herein and any person, firm, trust, corporation or other
entity related to or affiliated with any of the defendants) or their successors
in interest, who have been or will be adversely affected by the conduct of
defendants alleged herein.
3
<PAGE>
17. This action is properly maintainable as a class action for the
following reasons:
(a) The class of shareholders for whose benefit this action is brought is
so numerous that joinder of all class members is impracticable. As of February
1, 1995, there were over 16,100,000 shares of defendant Grow's common stock
outstanding owned by more than 4,000 shareholders of record scattered throughout
the United States and foreign countries.
(b) There are questions of law and fact which are common to members of the
class and which predominate over any questions affecting any individual members.
The common questions include, inter alia, the following:
----- ----
i. Whether one or more of the defendants has engaged in a plan
and scheme to enrich themselves at the expense of defendant Grow's public
stockholders;
ii. Whether the Defendant Directors have breached their
fiduciary duties owed by them to plaintiff and members of the Class, and/or
have aided and abetted in such breach, by virtue of their participation
and/or acquiescence and by their other conduct complained of herein;
iii. Whether defendants have failed to fully disclose the true
value of defendant Grow's
4
<PAGE>
assets and earning power and the future financial benefits which they
expect to derive from the merger with Imperial Chemical Industries, PLC
("ICI");
iv. Whether the Defendant Directors have wrongfully failed and
refused to seek a purchaser of Grow at the highest possible price, and
instead have sought to chill potential offers and acquire the valuable
assets of defendant Grow for defendant ICI at an unfair and inadequate
price;
v. Whether plaintiff and the other members of the Class will be
irreparably damaged by the transactions complained of herein;
vi. Whether defendants have breached or aided and abetted the
breach of the fiduciary and other common law duties owed by them to
plaintiff and the other members of the Class; and
vii. Whether defendants are pursuing a scheme and course of
business designed to eliminate the public shareholders of defendant Grow in
violation of the laws of the State of New York.
18. Plaintiff is committed to prosecuting this action and has
retained competent counsel experienced in litigation of this nature. The claims
of plaintiff are typical of the claims of the other members of the Class and
plaintiff has the same
5
<PAGE>
interest as the other members of the Class. Accordingly, plaintiff is an
adequate representative of the Class and will fairly and adequately protect the
interests of the Class.
19. Plaintiff anticipates that there will not be any difficulty in
the management of this litigation.
20. For the reasons stated herein, a class action is superior to
other available methods for the fair and efficient adjudication of this action.
FACTUAL BACKGROUND
------------------
21. Defendant Grow manufactures and markets trade paints and
coatings, chemical automotive and industrial products, including thinners,
adhesives and plastisols, high-gloss urethane coatings and chemical coatings
designed for maritime and industrial users.
22. On May 1, 1995, it was announced that Grow and ICI, an English
company, entered into a definitive merger agreement pursuant to which ICI would
offer to purchase all the outstanding shares of Grow for $18.10 per share. The
tender offer would be followed by a second-step cash merger in which each share
of Grow not acquired in the tender offer or otherwise, would be converted into
the right to receive $18.10 in cash.
23. The $18.10 offer provides little or no premium over the trading
price of Grow common stock which closed at $17-3/8 per share on April 26, 1995,
prior to the announcement of the
6
<PAGE>
tender offer. In fact, in June 1994, Grow traded at more than $19 per share.
24. In addition to the fact that the offer does not provide a
sufficient premium for Grow shareholders, it also appears that the offer was
structured to allow Grow management to maintain its positions.
25. The proposed tender offer is wrongful, unfair and harmful to
Grow's minority stockholders, the Class members, and represents an attempt by
defendants to aggrandize their personal and financial positions and interests
and to enrich themselves at the expense of and to the detriment of the minority
stockholders of the Company. The proposed transaction will deny plaintiff and
other Class members their rights to share proportionately in the true value of
the Company's assets and future growth in profits and earnings, while usurping
the same for the benefit of defendant Grow at an unfair and inadequate price,
while permitting certain of the individual defendants to reap enormous profits
from their small initial investments in the Company without the consequences
described above which would make the price being paid unacceptable to these
defendants.
CAUSE OF ACTION AGAINST ALL DEFENDANTS
--------------------------------------
26. Defendants, acting in concert, have violated their fiduciary
duties owed to the public shareholders of Grow and put their own personal
interests and the interests of ICI ahead of
7
<PAGE>
the interests of the Grow public shareholders and have used their control
positions as officers and directors of Grow all as alleged herein, and all for
the purpose of reaping high personal profits at the expense of Grow's public
shareholders.
27. The Defendant Directors failed to (1) undertake an adequate
evaluation of Grow's worth as a potential merger acquisition candidate; (2) take
adequate steps to enhance Grow's value and/or attractiveness as a
merger/acquisition candidate; (3) effectively expose Grow to the marketplace in
an effort to create an active and open auction for Grow; or (4) act
independently so that the interests of public shareholders would be protected.
Instead, defendants have arbitrarily set an exchange ratio for the publicly held
shares of defendant Grow without an appropriate premium or recognition of the
added value of Grow that will result from it being wholly-owned by ICI.
28. Furthermore, in contemplating and implementing their plan to
obtain immediate financial rewards for themselves the Defendant Directors have
failed to (1) undertake an adequate evaluation of Grow's worth as a potential
merger/acquisition candidate; (2) adequately insure that no conflicts of
interest existed, and, instead, have resolved such conflicts in favor of
themselves and ICI, rather than ensure that all conflicts were resolved in the
best interest of Grow and its public shareholders; or (3) acted independently or
in any other way to ensure
8
<PAGE>
that the interests of Grow's public shareholders will be protected.
29. Defendants have reached understandings among themselves that they
will not solicit a proposal or initiate any discussions with any person or
entity regarding any offer or proposal for the acquisition of the business of
Grow by merger, asset sale, stock sale or otherwise, while Grow is still a
publicly-held company. While the defendant directors of Grow should seek out
other possible purchasers of the assets of Grow or its stock in a manner
designed to obtain the highest possible price for Grow's shareholders, or seek
to enhance the value of Grow for all its current shareholders, they have instead
resolved to wrongfully obtain the valuable assets of Grow for ICI at a bargain
price, which, under the circumstances here, disproportionately benefits them.
These understandings have been reached in violation of the Defendant Directors'
fiduciary duties.
30. These tactics pursued by the defendants are, and will continue to
be, wrongful, unfair and harmful to Grow's public shareholders, serve no
legitimate business purpose of Grow, and are an attempt by the defendants to
aggrandize their personal positions, interests and finances at the expense of
and to the detriment of the public stockholders of Grow. These maneuvers by the
defendants will deny members of the Class their
9
<PAGE>
right to share in the true value of Grow's valuable assets, future earnings and
profitable businesses to the same extent as they would as Grow shareholders.
31. In contemplating, planning and/or doing the foregoing specified
acts and in pursuing and structuring the transaction, the defendants are not
acting in good faith toward plaintiff and the Class, and have breached, and are
breaching, their fiduciary duties to plaintiff and the Class.
32. Because the Defendant Directors dominate and control the business
and corporate affairs of Grow and because they are in possession of private
corporate information concerning Grow's businesses and future prospects, there
exists an imbalance and disparity of knowledge and economic power between the
defendants and the public shareholders of Grow which makes it inherently unfair
to Grow's public shareholders. The proposed transaction will ensure that
defendants disproportionately benefit from the value and future financial
prospects of Grow, in contravention of defendants' fiduciary duties to assure
that Grow's shareholders receive the highest value for their shares.
33. By reason of the foregoing acts, practices and course of conduct,
the Defendant Directors have failed to use ordinary care and diligence in the
exercise of their fiduciary obligations toward Grow and its public shareholders.
10
<PAGE>
34. The acts complained of here above were willful, malicious, and
oppressive, in that the defendants, and each of them, know that their actions as
complained of herein, involve improper and illegal practices, violations of law
and other acts completely alien to the duties of officers and directors to carry
out corporate affairs in a fair, just, honest, and equitable manner. By reason
of the foregoing, the Class is entitled to exemplary damages.
35. As a result of the actions of the defendants, plaintiff and the
Class have been and will be damaged in that they will not receive the fair value
of Grow's assets and business in exchange for their Grow shares, and have been
and will be prevented from obtaining a fair price for their shares of Grow
common stock.
36. Unless enjoined by this Court, the Defendant Directors will
continue to breach their fiduciary duties owed to plaintiff and the Class, and
will exclude the Class from receiving fair value for their proportionate share
of Grow's valuable assets and businesses, all to the irreparable harm of the
Class, as aforesaid.
37. Plaintiff has no adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
(a) Declaring that this action may be maintained as a class
action pursuant to CPLR 901 et seq.;
-- ---
11
<PAGE>
(b) Declaring that defendants' attempts to freeze-out Grow's public
shareholders was unfair, unjust and inequitable to plaintiff and the other
members of the Class;
(c) Enjoining preliminary and permanently the defendants from taking
any steps necessary to accomplish or implement the proposed merger of defendant
Grow with defendant Grow at a price that is not fair and equitable;
(d) Imposing a voting trust upon the shares of Grow owned or
controlled by defendants to restrain their ability to use their voting control
of the Company to effect the transaction;
(e) Requiring defendants to compensate plaintiff and the members of
the Class for all losses and damages suffered and to be suffered by them as a
result of the acts and transactions complained of herein, together with
prejudgment interest from the date of the wrongs to the date of the judgment
herein.
(f) Awarding plaintiff the costs and disbursements of this action,
including reasonable attorneys', accountants', and experts' fees; and
12
<PAGE>
(g) Granting such other and further relief as may be just and proper.
Dated: New York, New York
May 1, 1995
WOLF HALDENSTEIN ADLER
FREEMAN & HERZ LLP
270 Madison Avenue
New York, New York 10016
(212) 545-4600
LAW OFFICES OF
CHARLES J. PIVEN
The Legg Mason Tower, Ste 2700
111 S. Calvert Street
Baltimore, MD 21202
(410) 332-0030
13
