SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended March 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 1-4596
GROW GROUP, INC.
________________________________________________________________________
(Exact name of registrant as specified in its charter)
New York 11-1665588
________________________________________________________________________
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
200 Park Avenue, New York, New York 10166
________________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone no., including area code: (212) 599-4400
________________
Not Applicable
_________________________________________________________________________
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
_____ ______
The number of shares of Common Stock, $.10 par value per
share, outstanding as of May 10, 1995 was 16,101,712.
GROW GROUP, INC.
INDEX
_____
PART I. FINANCIAL INFORMATION PAGE NUMBER
___________
Item 1. Financial Statements
Consolidated Condensed Balance Sheet 3
(Unaudited) - March 31, 1995 and
June 30, 1994
Consolidated Condensed Statement of 4
Operations (Unaudited) - Nine Month
and Three Month Periods Ended
March 31, 1995 and March 31, 1994
Consolidated Condensed Statement of 5
Cash Flows (Unaudited) - Nine Months
Ended March 31, 1995 and
March 31, 1994
Notes to Consolidated Condensed 6
Financial Statements (Unaudited)
Item 2. Management's Discussion and 7
Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 15
PART I: FINANCIAL INFORMATION
GROW GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE
SHEET (UNAUDITED)
March June
31, 30,
1995 1994
____________ __________
(In thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 5,084 $38,816
Accounts receivable less allowances
of $4,814 and $3,667 69,745 69,622
Inventories, at lower of cost or market:
Finished and in-process products 68,794 48,490
Materials, containers and supplies 17,530 14,413
____________ ___________
86,324 62,903
Prepaid expenses and other current
assets 16,958 16,052
___________ ___________
Total current assets 178,111 187,393
PROPERTY, PLANT AND EQUIPMENT, at cost 136,119 99,331
Less allowance for depreciation 52,740 48,524
___________ ___________
83,379 50,807
OTHER ASSETS 25,058 9,721
___________ ___________
TOTAL ASSETS $286,548 $247,921
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 37,810 $ 37,532
Accrued expenses 36,497 29,036
Income taxes 5,562 10,180
Dividend payable 1,127 1,128
Current installments on long-term debt 4,343 2,270
__________ ___________
Total current liabilities 85,339 80,146
DEFERRED INCOME TAXES AND OTHER LIABILITIES 28,168 28,178
LONG-TERM DEBT 32,834 914
STOCKHOLDERS' EQUITY
Common stock, par value $.10 per share:
Authorized 50,000,000 shares;
issued 16,271,831 shares 1,627 1,627
Less treasury stock at cost
(170,118 and 168,493 shares) (1,384) (1,345)
Paid-in-capital 123,432 123,428
Equity adjustments 39 (49)
Deferred compensation (2,601) (2,907)
Retained earnings 19,094 17,929
__________ ___________
140,207 138,683
__________ ___________
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $286,548 $247,921
__________ ___________
GROW GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
(In thousands except per share data)
Nine Months Ended Three Months Ended
March 31 March 31
__________________ __________________
1995 1994 1995 1994
__________________ __________________
Revenues $364,063 $288,566 $117,824 $91,180
Costs and expenses:
Cost of products sold 234,510 184,135 77,210 59,436
Research and development 4,497 3,539 1,511 1,226
Storage and delivery 13,329 11,856 4,624 4,019
Selling and administrative 101,858 76,490 34,965 24,288
Interest expense 1,928 683 764 235
Corporate interest income (259) (710) (51) (227)
Unusual Item 79 0 19 0
________ ________ ________ ________
Total costs and expenses 355,942 275,993 119,042 88,977
________ ________ ________ ________
Income before income taxes 8,121 12,573 (1,218) 2,203
Income taxes 3,573 5,281 (350) 925
________ ________ ________ _______
Net Income $ 4,548 $ 7,292 $ ($868) $ 1,278
======== ======== ======== =======
Net income per common and
common equivalent share $.28 $.45 $(.05) $.08
========== ========== =========== =========
Average number of shares 16,150,000 16,100,000 16,144,000 16,155,000
========== ========== ========== ==========
Cash dividends per share
(common) $.21 $.21 $.07 $.07
========== ========== ========== =========
GROW GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
Nine Months Ended
March 31
___________________
1995 1994
___________________
(In thousands)
Operating Activities
Net income $ 4,548 $ 7,292
Adjustments to reconcile net income
to net cash provided (used)
by operating activities:
Depreciation, amortization and
provision for doubtful accounts 8,048 7,048
Changes in operating assets and
liabilities-net (15,140) ( 2,361)
Other (218) (557)
_____________________
Net cash provided (used) by
operating activities $ (2,762) $11,422
Investing Activities
Purchase of property, plant and
equipment - net of disposals (5,764) (3,847)
Acquisition of Sinclair (FY1995) and
Zynolyte and Havco (FY1994) (55,781) (17,389)
_____________________
Net cash used by
investing activities $(61,545) $ (21,236)
Financing Activities
Proceeds from borrowing/payments of
debt - net 33,993 (5,123)
Proceeds from issuance of common stock -
net of purchases (35) 898
Cash dividends (3,383) (3,419)
_____________________
Net cash provided (used) by
financing activities $ 30,575 $ (7,644)
_____________________
(Decrease) in cash and
cash equivalents (33,732) (17,458)
Cash and cash equivalents at beginning
of period $ 38,816 $ 56,015
_____________________
Cash and cash equivalents at end
of period $ 5,084 $ 38,557
====================
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
a. The accompanying unaudited consolidated condensed financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Regulation S-X.
Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the three month and nine month periods
ended March 31, 1995 are not necessarily indicative of the
results that may be expected for the year ending June 30, 1995.
For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the year ended June 30, 1994.
b. Effective August 2, 1993, the Company purchased all of the
outstanding capital stock of Zynolyte Products Company
("Zynolyte") for $16,300,000 in cash. Zynolyte is a producer of
aerosol and specialty brush-applied paint products. Its annual
revenues were approximately $27 million for the year ended
January 31, 1993.
c. Effective August 1, 1994, the Company acquired substantially
all of the assets and assumed certain liabilities of Sinclair
Paint Company ("Sinclair"), a division of Insilco Corporation,
for approximately $56 million in cash. Sinclair's revenues for
calendar year 1993 were approximately $95 million. The
transaction resulted in approximately $15 million in cost in
excess of net assets acquired which is being amortized over 40
years.
The following unaudited pro forma summary presents the
consolidated results of operations as if the acquisition of
Sinclair had occurred at the beginning of the periods presented
and does not purport to be indicative of what would have occurred
had the acquisition been made as of those dates or of results
which may occur in the future.
For the Nine Months For the Three
Ended March 31 Months Ended
1995 1994 March 31, 1994
________ ________ ______________
Revenues $374,138 $361,706 $114,258
======== ======== ========
Net income $ 5,215 $ 6,141 $ 839
======== ======== ========
Net income per
common and common
equivalent share $ 0.32 $ 0.38 $ 0.05
======== ======== ========
d. To finance the acquisition, the Company's revolving loan
facility, with Chemical Bank as agent, was increased from $40
million to $60 million and $26 million was borrowed thereunder.
During the quarter ended December 31, 1994, the revolving loan
facility was further increased to $75 million and Wells Fargo
Bank became a participant. In addition, during the quarter ended
March 31, 1995, the facility was extended for one year to March
31, 1997.
e. On April 30, 1995 the Company entered into an Agreement and
Plan of Merger among the Company, Imperial Chemical Industries
PLC ("ICI") and GDEN Corporation, an indirect wholly-owned
subsidiary of ICI. Pursuant to the Agreement and Plan of Merger,
on May 4, 1995 a tender offer was commenced by GDEN Corporation
for all shares held by stockholders of the Company at $18.10 per
share. On May 8, 1995, The Sherwin-Williams Company through its
wholly-owned subsidiary, GGI Acquisition, Inc., commenced a
tender offer for all outstanding shares at $19.50 per share. See
Part II, Item 5, "Other Information" below for a more complete
description of these tender offers.
The Company has been named as a defendant in a number of law
suits (including purported class actions) in connection with the
transactions contemplated by the Agreement and Plan of Merger and
tender offers. (See Part II, Item 1, "Legal Proceedings" below).
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Quarter and Nine Months Ended March 31, 1995
Compared to Quarter and Nine Months Ended March 31, 1994
General
As more fully described in Part II, Item 5, "Other
Information" below, the Company has entered into an Agreement and
Plan of Merger and competing tender offers have been commenced.
The Company's results of operations and financial position for
the fourth quarter and future periods may be impacted by certain
costs and expenses (including cash and non-cash charges) which
are being or may be incurred in connection with such tender
offers. Such items include, but are not limited to, legal,
accounting and other fees and expenses presently estimated at
approximately $3,000,000, the write off of certain deferred
financing costs of approximately $250,000 if an offer is consummated,
a "breakup fee" of $8,000,000 which may become payable to ICI
under certain circumstances, a non cash charge to earnings related
to forgiveness of an Employee Stock Ownership Plan loan of
approximately $2,600,000 if an offer is consummated, and unusual
travel and other expenses in a presently indeterminable amount.
Certain of the foregoing legal, accounting and other charges will
be incurred whether or not the foregoing tender offers are consummated.
Results of Operations
Consolidated revenues increased $75,497,000 (26.2%) for the
nine months and $26,644,000 (29.2%) for the quarter. The
increases were primarily the result of including the revenues of
Sinclair Paint Company ("Sinclair") acquired effective August 1,
1994. Revenues of the Company's operations exclusive of Sinclair
increased $8,197,000 (2.8%) for the nine months and $4,650,000
(5.1%) for the quarter.
Revenues of the coatings and chemicals segment increased
$72,788,000 (31.0%) in the nine months and $25,710,000 (35.5%) in
the third quarter with Sinclair accounting for most of such
increases. Revenues from Architectural Paint operations, other
than Sinclair, increased 4.7% in the nine months and 5.4% in the
quarter. The increases were principally the result of higher
sales of sundries (such as brushes and rollers, wallpaper and
other accessory items and application equipment) and sales
contributed by an increased number of company-operated stores
offset, in part, by lower royalty income. In addition, for the
quarter, lower sales of both aerosols and specialties were
recorded by Zynolyte Products Company. Sales were stronger for
the Company's Devoe & Raynolds operation which sells east of the
Rocky Mountains and softer in both California (which experienced
bad weather) and Hawaii where Ameritone Paint Company operates.
Automotive Division revenues decreased 8.2% in the nine months
and 5.7% in the quarter as a result of both lower unit volume and
lower pricing due to competitive pressures. Devoe Coatings
Company Division (maintenance and marine products) revenues
declined by .9% in the nine months and increased 10.0% in the
quarter. Revenues for this Division in the current fiscal year
were adversely impacted by 4.7% in the nine months and 1.0% in
the quarter. Decreased sales in the highly competitive European
market had a negative impact in both the nine months and the
third quarter.
Revenues of the Consumer and Professional Products segment
increased $2,709,000 (5.0%) in the nine months and $934,000
(4.7%) in the quarter. Higher unit volume in sales to club
stores (including new products introduced to this market in the
second quarter) and higher unit volume for the Consumer Division
in each of the first three quarters of fiscal 1995 were offset,
in part, by lower sales of Professional Products. Revenues were
also adversely impacted by competitive price reductions.
Cost of Products Sold: Consolidated gross profit as a
percentage of revenues decreased slightly from 36.2% to 35.6% for
the nine months and from 34.8% to 34.5% for the quarter. The
impact of including Sinclair (which operates, as do the Company's
other architectural paint operations, at somewhat higher gross
profit margins than some of the Company's other operations) had
the effect of increasing the gross profit percentage by 9/10 of
one percentage point for the nine months and 1.5 percentage
points for the quarter. This was offset by lower margins in
Devoe Coatings marine and maintenance products, Consumer and
Professional Products Group and the Automotive Division. Gross
profit margins for the Devoe Coatings operations decreased by 1.3
percentage points in the nine months and 2.5 percentage points in
the quarter reflecting highly competitive conditions,
particularly in the domestic marine business, higher raw material
costs and reduced contracting and royalty revenue. The reduction
in the gross margin percentage of the Consumer and Professional
Products Group (3.0 percentage points for the nine months and 2.8
percentage points for the quarter) was related principally to
competitive price reductions and raw material cost increases.
This operation has implemented selling price increases for the
second half of fiscal 1995. The Automotive Division experienced
raw material cost increases which have not yet been passed on to
customers. Architectural paint operations have been and are
expected to continue to experience selective raw material cost
increases. Selling price increases have been implemented and
further action will be taken when feasible to maintain gross
profit margins.
Storage and Delivery: The increases of $1,473,000 (12.4%)
for the nine months and $605,000 (15.1%) for the quarter are
primarily the result of including Sinclair along with a change in
the mix of shipments in the Consumer and Professional Products
Group.
Selling, General and Administrative: The increases of
$25,368,000 (33.2%) for the nine months and $10,677,000 (44.0%)
for the quarter were primarily the result of including Sinclair
($22,284,000 for the nine months and $7,983,000 for the quarter)
in the current periods. Sinclair, as with the Company's other
architectural paint operations, has higher SG&A expenses as a
percentage of revenues than the Company as a whole. This was a
factor in the increase in the percentage of SG&A expenses to
revenues in the fiscal 1995 periods. In both the nine months and
the quarter product introduction costs for Foam & FreshTM were
incurred by the Consumer and Professional Products Group,
architectural paint operations incurred higher store operating
costs due to opening new locations (including the acquisition of
five Havco Paint stores in the Tampa area) and product
introduction costs related to AquanamelTM and DevlokTM were
experienced. Also affecting SG&A expense were expenditures
related to the start-up of the Consumer Paint Division, legal
expenses regarding a case won by a jury verdict, costs related to
a management change in the Automotive Division, and costs
incurred on the aborted proposed acquisitions of Martin Paint and
a company in Spain. In addition, the first six months of the
current year included unusual costs related to the relocation of
a large store in Honolulu. The absence of such expenses would
have resulted in lower SG&A expense including lower environmental
costs - See Environmental Matters.
Interest Expense and Corporate Interest Income: The net
increase ($1,696,000 for the nine months and $705,000 for the
quarter) in these items was primarily the result of increased
borrowings and the use of cash balances for the acquisition of
Sinclair. Increases in prevailing interest rates also
contributed to the net increase.
Environmental Matters: The Company continues to incur and
accrue costs related to compliance with environmental laws. The
provision for such costs amounted to $910,000 for the nine months
and $408,000 for the quarter ended March 31, 1995 compared to
$2,213,000 for the prior year's nine months and $602,000 for the
prior year's quarter. The Company periodically reviews its
estimates of and accrues appropriate amounts for costs of
compliance with environmental laws and the cleanup of various
sites, including sites as to which governmental agencies have
designated the Company (or have indicated a possibility of
designating the Company) a potentially responsible party. (See
the Company's Annual Report on Form 10-K for the year ended June
30, 1994). The provisions for environmental costs for the
periods ended March 31, 1995 are not necessarily indicative of
future costs.
Where a minimum cost or a reasonable estimate of the total
costs of cleanup or compliance has been established, the
applicable amount has been accrued. The related accrued liability
totalled $10,093,000 as of December 31, 1994. In many instances,
estimates cannot be made of the total costs of cleanup or
compliance, the Company's share, if any, of such costs, nor the
timing thereof; accordingly, the Company is unable to predict the
effect thereof on future results of operations. In the event of
one or more adverse determinations in any annual or interim
period, the impact on results of operations for those periods
could be material. However, based upon the Company's present
belief as to its relative involvement at these sites, other
viable entities' responsibilities for cleanup, potential
insurance coverage and the extended period over which any costs
would be incurred, the Company presently believes that these
matters will not have a material adverse effect on the Company's
consolidated financial position.
Income taxes: The effective income tax rate used for the
nine months increased from 42% to 44% due to an increase in non-
deductible losses in the Netherlands subsidiary. The change in
the quarter is the result of using the new effective tax rate for
the year-to-date calculation.
LIQUIDITY:
During the nine months, operating activities used $2,762,000
of cash flow. The Company's net income, adjusted for
depreciation, amortization and provision for doubtful accounts,
contributed $12,596,000 to cash flow. Changes in operating
assets and liabilities and other items used $15,358,000 in cash
flow. The changes in all balance sheet categories were primarily
the result of the inclusion of the operations of Sinclair and
normal seasonal patterns.
The acquisition of the assets of Sinclair for approximately
$56 million in cash and net purchases of fixed assets of
$5,764,000 resulted in a use of cash for investing activities of
$61,545,000.
To finance the acquisition of Sinclair, and for working
capital, the Company borrowed $32 million under its revolving
credit line (which has a current interest rate of approximately 8
1/8%). After giving effect to cash dividends paid of $3,383,000
and certain other items, net cash provided by financing
activities was $30,575,000.
The Company has a revolving credit facility expiring in
March 1997 with four banks to borrow, at prime (or, at the
Company's option, LIBOR plus 2%) up to $75 million less the
amount of outstanding letters of credit ($13,693,000 at March 31,
1995). Future short-term and long-term liquidity requirements,
including amounts required for acquisitions, are expected to be
satisfied from cash flow from operations, borrowings from banks
or other lenders and/or equity sources.
The Company's liquidity may be affected by the costs and
expenses described under "General" above and the Company's
lenders may be entitled to terminate the Company's revolving
credit facility as a result of the transactions contemplated by
the Agreement and Plan of Merger.
See Note d to the financial statements.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
_________________
(a) On February 14, 1995, a complaint was served on the
Company in an action entitled Hobart Walters, Sr. & Quality Paint
& Decorating v. Grow Group, Inc., Devoe & Raynolds Co., Rey Gomez
and Malcolm R. (Sonny) Dobb, which was filed in the 129th
Judicial District Court, Harris County, Texas. The action was
removed to the United States District Court for the Southern
District of Texas, Houston Division. The complaint alleges that
the Company's Devoe & Raynolds Co. Division violated the Texas
Deceptive Trade Practices Act by making certain false, misleading
and deceptive statements regarding a Dealer Agreement between
Quality Paint & Decorating and Devoe & Raynolds Co. The
complaint also alleges causes of action for common law fraud,
breach of contract, antitrust violation, negligent
misrepresentation and fraudulent concealment in connection with
the course of dealing between Quality Paint & Decorating and
Devoe & Raynolds Company. The complaint does not seek relief in
a specific dollar amount.
(b) On April 30, 1995, the Company entered into an
Agreement and Plan of Merger (the "Merger Agreement"), dated as
of April 30, 1995, with Imperial Chemical Industries PLC ("ICI"),
and GDEN Corporation, an indirect wholly-owned subsidiary of ICI
("GDEN"), which provides, among other things, for the acquisition
by ICI of all the outstanding shares of the Company's Common
Stock, $.10 par value per share (the "Shares"), through a tender
offer (the "ICI Offer") for $18.10 per Share. Corimon, S.A.C.A.
("Corimon") entered into an Option Agreement, dated as of April
30, 1995, with ICI and GDEN (the "Corimon Option Agreement")
pursuant to which Corimon granted ICI an option to purchase
4,025,841 Shares (approximately 25% of the outstanding shares of
the Company's Common Stock) at a purchase price of $17.50 per
Share. ICI's purchase of the Shares owned by Corimon is
conditioned upon ICI's prior consummation of its tender offer.
The Merger Agreement, the ICI Offer and the Option Agreement are
more fully described in Item 5 "Other Information" below. In
connection with the Merger Agreement and the ICI Offer, 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 ICI is offering for all the
outstanding Shares is insufficient and that the proposed ICI
Offer is unfair to the Company's shareholders and represents an
attempt by the defendants to enrich themselves at the expense of
the plaintiff class. The plaintiff in the 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 things, a preliminary and permanent injunction
barring defendants from taking any steps to accomplish the
proposed merger with ICI at a price that is not fair and
equitable to the plaintiffs and restraining the defendants'
ability to use their alleged voting control of the Company to
effect the transaction with ICI. The complaint also seeks
unspecified damages for losses suffered and to be suffered by the
plaintiff class as a result of the acts alleged in the complaint.
(c) On May 5, 1995, a purported class action entitled
Martin Appelbaum and Rosalyn Younger v. Grow Group, Inc., et al.,
was filed in the Supreme Court of the State of New York, New York
County (the "Appelbaum State Action") on behalf of the Company's
shareholders against the Company, all members of the Company's
Board of Directors (the "Individual Defendants"), and ICI. The
complaint alleges that the Individual Defendants have breached
and are breaching their fiduciary duties to the purported class
of the Company's shareholders by, among other things, failing to
respond in a reasonable and informed manner to an expression of
interest in the Company by The Sherwin-Williams Company
("Sherwin-Williams"); and to inform themselves as to other
potential acquirors or merger partners so as to maximize
shareholder value.
The complaint in the Appelbaum State Action seeks,
among other things, an order: requiring the defendants to carry
out their fiduciary duties to plaintiffs and other members of the
purported class; enjoining the transaction between the Company
and ICI, and rescinding any transactions effected by the
defendants in an unfair manner and for an unfair price; damages
suffered as a result of the acts and transactions alleged in the
complaint; an accounting for all profits realized as a result of
the complained of transaction; and costs, disbursements, and
reasonable attorneys' and experts' fees.
(d) On May 5, 1995, a purported class action entitled
Samuel Pill v. Grow Group, Inc., et al., was filed in the Supreme
Court of the State of New York, New York County (the "Pill State
Action") on behalf of the Company's shareholders, against the
Company and all members of the Company's Board of Directors (the
"Individual Defendants"). The complaint alleges that the
Individual Defendants breached their fiduciary duties to the
purported class of the Company's shareholders by agreeing to the
ICI transaction at a price which they knew was grossly unfair,
inadequate and not representative of the true and present value
of the Company. The complaint also alleges, among other things,
that the Individual Defendants have breached their fiduciary
duties to the purported class by failing to auction the Company
to the highest bidder. The complaint further alleges that the
option granted to ICI to purchase Corimon's 25% interest in the
Company is a breach of the fiduciary duties owed by defendant
Broslat, who is a director of the Company and the Chief Financial
Officer of Corimon.
The complaint in the Pill State Action seeks, among
other things, an order declaring that the Individual Defendants
have breached their fiduciary duties; enjoining defendant from
proceeding with the transaction; damages in an unspecified
amount; and costs, disbursements and counsel and expert fees.
(e) On May 4, 1995, the Company learned that a purported
class action entitled Miriam Sarnoff and Frederick Rand v. Grow
Group, Inc. et al., was filed on May 2, 1995 in the Supreme Court
of the State of New York, New York County (the "Sarnoff State
Action") on behalf of the Company's shareholders. In addition to
the Company, all members of the Company's Board of Directors are
named as defendants in the Sarnoff State Action. The complaint
in the Sarnoff State Action alleges that the proposed transaction
with ICI is grossly unfair and detrimental to the Company's
shareholders. The complaint asserts that the defendants agreed
to the proposed transaction with ICI in order to enable the
defendants to maintain their positions as directors and officers
of the Company, and to benefit Corimon, which allegedly had an
incentive to accept a low bid because it needed to raise cash
quickly in order to fund its recently announced acquisition of
"Standard Paints" in California. The complaint further alleges
that the Merger Agreement prohibits defendants from negotiating
with third parties, and that as a result, there was no
possibility that competition between ICI and other companies
could have driven up the purchase price. The complaint in the
Sarnoff State Action seeks, among other relief, an order
requiring defendants to announce their intention to cooperate
with any entity having a bona fide interest in proposing a
transaction that would maximize shareholder value, undertake an
evaluation of the Company's worth as a merger/acquisition
candidate, and act independently to protect the shareholders'
interest. The complaint also seeks an accounting for damages
allegedly suffered by shareholders as a result of the acts and
transaction alleged in the complaint.
(f) On May 8, 1995, an action entitled The Sherwin-Williams
Company v. Imperial Chemical Industries PLC et. al., was filed in
the United States District Court for the Northern District of
Ohio, Eastern Division by Sherwin-Williams against ICI, GDEN and
the Company (the "Sherwin-Williams' Federal Action"). The
complaint alleges, among other things, that ICI's Offer to
Purchase, dated May 4, 1995 (the "Offer to Purchase") is
materially false and misleading, in that it (i) falsely describes
the break-up fee provisions of the Merger Agreement; (ii)
misrepresents the terms and nature of the Corimon Option
Agreement; and (iii) misrepresents ICI's ability to consummate a
Merger with the Company which, according to the complaint, cannot
be consummated for five years under Section 912 of the New York
Business Corporation Law ("BCL"). The complaint also alleges
that the Company's Schedule 14D-9 is materially false and
misleading in that it (i) impliedly represents that the Board of
Directors of the Company had an informed basis upon which to
recommend the merger with ICI when, in fact, the Board did not
have such an informed basis; (ii) contains misrepresentations and
omissions concerning Sherwin-Williams' repeated indications of
interest in negotiating and consummating an acquisition of the
Company; and (iii) misrepresents the terms and nature of the
Corimon Option Agreement.
The complaint in the Sherwin-Williams' Federal Action
seeks, among other things, an order: (i) preliminarily and
permanently enjoining ICI and all other persons acting in concert
with it, from acquiring or attempting to acquire the Company's
Shares or continuing the ICI Offer; (ii) that ICI, GDEN and the
Company make appropriate disclosures to correct the alleged false
and misleading statements described above, and prohibiting ICI
from purchasing or making any tender offer for Shares for an
appropriate period to allow full dissemination of such
disclosures to the marketplace and to the Company's shareholders;
and (iii) enjoining the Company and all other persons acting in
concert with them, from taking any steps to assist or facilitate
the completion of the tender offer for the Company by GDEN or
ICI. The complaint also seeks costs, disbursements and
reasonable attorneys' fees.
(g) On May 8, 1995, Sherwin-Williams commenced an action
entitled The Sherwin-Williams Company v. Grow Group, Inc. et al.,
in the Supreme Court of the State of New York (the "New York
Action") against the Company, ICI, GDEN and members of the
Company's Board of Directors (collectively, the "Defendants").
The complaint in the New York Action alleges, among other things,
that the Company and its Board of Directors breached their
fiduciary duties to the Company's shareholders by, among other
things, entering into the Merger Agreement and agreeing to the
Corimon Option Agreement and the break-up fee without first
negotiating with Sherwin-Williams or adequately considering
potential alternative transactions available to the Company. The
complaint also alleges, among other things, that the Merger
Agreement and proposed merger violate Section 912 of the BCL,
which, according to the complaint, prevents the merger between
ICI and the Company for five years. The complaint further
alleges that the Company's Board breached its fiduciary duty to
make truthful and complete disclosures by (i) misleadingly
stating that the transaction and proposed merger are fair to, and
in the best interest of, the Company's shareholders when in fact
it had no informed basis to make such a statement; and (ii)
failing to disclose that the transaction and proposed merger
violate Section 912 of the BCL. The complaint in the New York
Action seeks, among other things, (i) an order declaring that the
Merger Agreement and the Corimon Option Agreement are null and
void and unlawful and were entered into in breach of the
fiduciary duties of the Company's Board; (ii) requiring the
Company and the Board to provide Sherwin-Williams a fair and
equal opportunity to acquire the Company; and (iii) enjoining any
further conduct by ICI intended to cause, or having the effect of
causing, the Company to forego the opportunity to enter into an
economically more favorable transaction than the merger with ICI.
The complaint also seeks costs and disbursements, including
attorneys' fees.
On May 8, 1995, Sherwin-Williams moved by order to show
cause for a hearing (the "Hearing") on a motion for a preliminary
injunction, among other things, (i) enjoining defendants from
taking any further steps to facilitate or consummate the ICI
Offer; (ii) enjoining and invalidating the break-up fee; and
(iii) directing the Company and the Board to investigate and
explore all bona fide offers and proposals to acquire the
Company, including the Sherwin-Williams' tender offer, and to
remove all impediments to the Sherwin-Williams' tender offer.
On May 8, 1995, Sherwin-Williams also moved by order to
show cause for a temporary restraining order, pending the
Hearing, (i) enjoining ICI from exercising any right under the
Corimon Option Agreement to prevent Corimon from withdrawing any
Shares that Corimon may tender into the Offer; and (ii) enjoining
and directing the Company to provide Sherwin-Williams by 10:00
a.m. on May 10, 1995 with a record of the names and addresses of
the Company's shareholders, and the number and class of Shares
held by each.
At a hearing on May 8, 1995, the Court denied Sherwin-
Williams' motion for a temporary restraining order. The Court
also scheduled a hearing for May 25, 1995 at 4:00 p.m. on
Sherwin-Williams' motion for a preliminary injunction.
(h) On May 8, 1995, a purported class action entitled A.D.
Gilhart & Co., Inc., v. Grow Group, Inc. et al., was commenced in
the Supreme Court of the State of New York, New York County (the
"Gilhart Action") against the Company and members of the
Company's Board of Directors. The complaint in the Gilhart
Action alleges, among other things, that the defendants breached
their fiduciary duties owed to the Company's shareholders in
connection with the proposed merger between the Company and ICI
by failing to pursue discussions with Sherwin-Williams about a
possible acquisition of the Company by Sherwin-Williams.
The complaint in the Gilhart Action seeks, among other
things, an order (i) enjoining defendants from enforcing the
Company's "anti-takeover procedures"; (ii) requiring defendants
to explore third party interest and accept the highest bid
obtainable for the Company's Shares; and (iii) awarding the
plaintiffs' costs and disbursements, including attorneys' fees.
(i) On May 9, 1995, a purported class action entitled Kim
J. Hammond and Jeffrey Dell v. Grow Group, Inc., et al. was
commenced in the United States District Court for the Southern
District of New York (the "Hammond Action") against the Company
and certain members of the Company's Board of Directors
(collectively, the "Defendants") on behalf of all persons who
sold the Company's securities during the period from April 29,
1995 to May 4, 1995 and who sustained damages as a result of such
sale. The complaint alleges violations of Section 10(b) of the
Exchange Act and Rule 10b-5 promulgated thereunder for, among
other things, issuing the statements contained in press releases
dated April 28, 1995 and May 1, 1995 which allegedly were
materially false and misleading for failing to adequately
disclose all material facts concerning Sherwin-Williams' contacts
with the Company regarding a proposed acquisition by Sherwin-
Williams; and for falsely creating the impression that the Board
of Directors had "shopped" the Company. The complaint further
alleges that the above-mentioned disclosures artificially
affected the market price of the Company's securities.
The complaint in the Hammond Action seeks, among other
things, monetary damages against the Defendants in an unspecified
amount for all losses suffered by the plaintiffs as a result of
the allegedly improper activity of the Defendants and costs,
reasonable attorneys' fees and expert fees and disbursements.
(j) On May 9, 1995, a purported class action entitled
Kenneth Steiner v. Grow Group, Inc., et al., was commenced in the
Supreme Court of the State of New York, New York County (the
"Steiner Action") against the Company and certain current members
and one former member of the Company's Board of Directors. The
complaint in the Steiner Action alleges, among other things, that
the individual defendants breached their fiduciary duties to the
purported class by excluding Sherwin-Williams from bidding for
the Company, by failing to seek other bona fide bids and by
failing to take adequate steps to maximize shareholder value.
The complaint in the Steiner Action seeks, among other
things, an order (i) declaring that the defendants breached their
fiduciary duties to the purported class; (ii) preliminarily and
permanently enjoining the purchase of the Company by ICI pursuant
to the Merger Agreement; (iii) requiring defendants to negotiate
with Sherwin-Williams and/or other potential acquirors to
maximize shareholder value; and (iv) awarding plaintiffs'
compensatory damages and costs and disbursements, including
attorneys' fees and expert fees.
Item 5. Other Information.
(a) On March 23, 1995, the Company entered into Amendment
No. 4 to the Credit Agreement dated as of March 31, 1993, among
the Company, Grow Group Insurance, Ltd., Cello Corp., Sinclair-
Ameritone Paint Corporation and Zynolyte Products Company,
wholly-owned subsidiaries of the Company, and Chemical Bank New
Jersey, N.A., Fleet Bank, PNC Bank, Kentucky, Inc., Wells Fargo
Bank, N.A. and Chemical Bank (collectively, the "Banks"),
pursuant to which the Bank extended the expiration date of the
Company's credit facility from March 31, 1996 to March 31, 1997.
Reference is made to the Company's Current Reports on Form 8-K
dated (date of earliest event reported) March 31, 1993 and August
3, 1994 and the Company's Current Report on Form 10-Q for the
quarter ended December 31, 1994 for further information
concerning this credit facility.
(b) As noted in Item 1, "Legal Proceedings" above, on April
30, 1995, the Company, Imperial Chemical Industries PLC, a
corporation organized under the laws of England ("ICI"), and GDEN
Corporation, a New York corporation and an indirect wholly-owned
subsidiary of ICI ("GDEN"), entered into an Agreement and Plan of
Merger, dated as of April 30, 1995 (the "Merger Agreement").
The Merger Agreement provides, among other things, for
the acquisition by ICI of all the outstanding shares of the
Company's Common Stock, $.10 par value per share (the "Shares"),
through (i) a tender offer (the "Offer") for all Shares 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, or foreign income tax
regulations and (ii) a second-step merger pursuant to which GDEN
will merge with and into the Company (the "Merger") and all
outstanding Shares (other than Shares held by the Company as
treasury stock or owned by ICI, GDEN or any other subsidiary of
ICI, and other than dissenting Shares) 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.
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 an Option
Agreement, dated as of April 30, 1995, with ICI and GDEN (the
"Corimon Option Agreement"), pursuant to which Corimon Corp. has
granted to ICI an option (the "Option") to purchase 4,025,841
Shares (the "Corimon Shares") at a purchase price of $17.50 per
Share, upon the terms and subject to the conditions set forth in
the Corimon Option Agreement.
The Merger Agreement, the Offer and the Corimon Option
Agreement were more fully described and were previously reported
in the Company's Current Report on Form 8-K dated (date of
earliest event reported) April 30, 1995, under Item 5, "Other
Events."
(c) On May 8, 1995, The Sherwin-Williams Company ("Sherwin-
Williams") commenced an unsolicited tender offer to acquire all
outstanding Shares of the Company at a price of $19.50 per Share.
On May 10, 1995, the Company announced that its Board
of Directors had authorized management of the Company and the
Company's financial and legal advisors to engage in discussions
and negotiations with Sherwin-Williams in connection with its
unsolicited tender offer.
On May 12, 1995, the Company and Sherwin-Williams
entered into a Confidentiality Agreement and Sherwin-Williams
commenced a due diligence review of the Company.
Item 6. Exhibits and Reports on Form 8-K.
________________________________
(a) Exhibits:
________
4.1 Amendment No. 4, dated March 23, 1995, to the Credit
Agreement dated as of March 31, 1993, by and among the
Company, Grow Group Insurance, Ltd., Cello Corp., Sinclair-
Ameritone Paint Corporation, Zynolyte Products Company,
Chemical Bank New Jersey, N.A., Fleet Bank, PNC Bank,
Kentucky, Inc., Wells Fargo Bank N.A. and Chemical Bank.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
____________________
During the quarter ended March 31, 1995, the Company filed
one Current Report on Form 8-K dated (date of earliest event
reported) February 14, 1995, reporting under Item 5, "Other
Events." No financial statements were filed with that Report.
On May 1, 1995, the Company filed a Current Report on Form 8-K
dated (date of earliest event reported) April 30, 1995, reporting
under Item 5, "Other Events." No financial statements were filed
with that Report.
SIGNATURES
__________
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
GROW GROUP, INC.
Date: May 12, 1995 By: /s/ R. Banks
__________________________
Russell Banks, President
(Chief Executive Officer)
By: /s/ Frank V. Esser
__________________________
Frank V. Esser, Treasurer
(Chief Financial and Chief
Accounting Officer)
EXHIBIT INDEX
_____________
EXHIBIT NO. DESCRIPTION PAGE NO.
___________ ___________ ________
4.1 Amendment No. 4, dated March 23,
1995, to the Credit Agreement
dated as of March 31, 1993, by
and among the Company, Grow
Group Insurance, Ltd., Cello
Corp., Sinclair-Ameritone
Paint Corporation, Zynolyte
Products Company, Chemical
Bank New Jersey, N.A., Fleet
Bank, PNC Bank, Kentucky, Inc.,
Wells Fargo Bank N.A. and
Chemical Bank.
27. Financial Data Schedule.
EXHIBIT 4.1
This Amendment No. 4 ("Amendment No. 4") dated March 23,
1995 to the Credit Agreement dated as of March 31, 1993, as
amended by Amendment No. 1 thereto dated August 6, 1993, Waiver,
Consent and Amendment No. 2 thereto dated August 3, 1994 and
Amendment No. 3 thereto dated December 7, 1994, is made by and
among GROW GROUP, INC., a New York corporation (the "Borrower"),
GROW GROUP INSURANCE, LTD., a Bermuda corporation ("Grow
Insurance"), CELLO CORP., a Maryland corporation ("Cello"),
SINCLAIR-AMERITONE PAINT CORPORATION, a California corporation
(f/k/a SINCLAIR ACQUISITION CORP. and f/k/a AMERITONE PAINT
CORPORATION) ("Ameritone"), ZYNOLYTE PRODUCTS COMPANY, a
California corporation ("Zynolyte"), CHEMICAL BANK NEW JERSEY,
N.A., a national banking association ("Chemical" or the "Agent"),
FLEET BANK, a New York banking corporation ("Fleet"), PNC BANK,
KENTUCKY, INC., a Kentucky banking corporation ("PNC"), WELLS
FARGO BANK, N.A., a national banking association ("Wells Fargo";
Chemical, Fleet, PNC and Wells Fargo sometimes herein each called
a "Bank" and collectively, the "Banks") and Chemical Bank, a New
York banking corporation (the "Issuing Bank").
W I T N E S S E T H:
Section 1. Recitals.
________
This Amendment No. 4 is made in contemplation of the
following matters:
1.1. The Borrower, Grow Insurance, the Banks and the
Issuing Bank have entered into a certain Credit Agreement dated
as of March 31, 1993. That original agreement was amended by
Amendment No. 1 thereto dated August 6, 1993, Waiver, Consent and
Amendment No. 2 thereto dated August 3, 1994 and Amendment No. 3
thereto dated December 7, 1994 (the original agreement, as
amended by said Amendment No. 1, Waiver, Consent and Amendment
No. 2 and Amendment No. 3, being herein called the "Existing
Credit Agreement"). Terms defined in the Existing Credit
Agreement are used herein as therein defined unless otherwise
defined herein.
1.2. The Borrower has requested, and the Banks and the
Issuing Bank have agreed, to extend the Revolving Credit
Expiration Date from March 31, 1996 to March 31, 1997, and to
amend the Existing Credit Agreement and the other Loan Documents
to reflect such extension.
1.3. The Borrower has requested, and the Banks have agreed,
to increase the permitted amount of expenditures for fixed assets
during any fiscal year as provided in Section 9.9 of the Existing
Credit Agreement, from and after March 31, 1995 until the
Revolving Credit Expiration Date, to an aggregate amount not to
exceed $37,500,000 and an aggregate amount not to exceed
$20,000,000 in any 12-month period, and to amend the Existing
Credit Agreement and the other Loan Documents to reflect such
increase.
1.4. It is a condition precedent to the Banks' agreement to
enter into this Amendment No. 4 and in consideration of the
Banks' agreement to extend the Revolving Credit Expiration Date,
that the Borrower shall pay to the Banks an extension fee (the
"Extension Fee") of $93,750, which represents one-eighth percent
(1/8%) of the aggregate amount of the Commitments, such fee to be
divided among the Banks in accordance with their Pro Rata Shares.
The Extension Fee shall be payable in full upon the execution of
this Amendment No. 4.
1.5. The Borrower has requested the Banks and the Issuing
Bank to enter into this Amendment No. 4 and the Banks and the
Issuing Bank have agreed to enter into this Amendment No. 4 for
the foregoing purposes.
Section 2. Amendments.
__________
2.1. Defined Terms. The defined term "Revolving Credit
Expiration Date" in Section 1.1 of the Existing Credit Agreement
shall be, and hereby is, amended in its entirety to read as
follows:
"Revolving Credit Expiration Date" shall mean March 31, 1997."
2.2. Section 9.9. Section 9.9 of the Existing Credit
Agreement shall be, and hereby is, amended in its entirety to
read as follows:
"Section 9.9. Capital Expenditures.
____________________
(a) During the period July 1, 1994 to and including March
30, 1995, directly or indirectly (by way of the acquisition of the
securities of a Person or otherwise), make or commit to make any
expenditure for fixed assets if, after giving effect thereto, the
aggregate amount of all such expenditures for fixed assets incurred
by the Borrower and Subsidiaries during such period would exceed
$15,000,000; provided, however, that the amount expended for the
purchase by Ameritone of the assets of Sinclair pursuant to the
Sinclair Asset Purchase Agreement shall be specifically excluded
from the limitations imposed by the provisions of this
Section 9.9(a).
(b) From and after March 31, 1995 to and including the
Revolving Credit Expiration Date, directly or indirectly (by, way
of the acquisition of the securities of a Person or otherwise),
make or commit to make any expenditure for fixed assets if, after
giving effect thereto, the aggregate amount of all such expenditures
for fixed assets incurred by the Borrower and Subsidiaries during
such period would exceed $37,500,000 in the aggregate or would
exceed $20,000,000 in the aggregate in any 12-month period."
Section 3. Representations and Warranties.
______________________________
(a) Except as provided in Section 5(a) of Wavier,
Consent and Amendment No. 2, the Borrower hereby represents and
warrants that each representation and warranty by the Borrower
set forth in Article V of the Existing Credit Agreement is true
and correct on and as of the date of this Amendment No. 4 as
though made by the Borrower on and as of such date.
(b) Except as provided in Section 5(b) of Waiver,
Consent and Amendment No. 2, each Corporate Guarantor hereby
represents and warrants that each representation and warranty by
the Corporate Guarantors set forth in Section 5 of the
Subsidiaries' Guaranty is true and correct on and as of the date
of this Amendment No. 4 as though made by such Corporate
Guarantors on and as of such date.
Section 4. Reaffirmations.
______________
(a) The Borrower and Grow Insurance each hereby
restates and reaffirms the provisions of the Credit Agreement (as
heretofore and hereby amended), confirms its absolute and
unconditional obligations thereunder and expressly acknowledges
and agrees that its obligations thereunder continue in full force
and effect from and after the date hereof. The Borrower hereby
restates and reaffirms the provisions of the Parent Guaranty, the
Pledge Agreement and the Borrower Security Agreement (as
heretofore and hereby amended), confirms its absolute and
unconditional guaranty and pledge (of the stock of Cello,
Ameritone and Zynolyte) and grant of security interests and other
obligations thereunder, and expressly acknowledges and agrees
that its guaranty, pledge and grant of security interests and
other obligations thereunder continue in full force and effect
from and after the date hereof. Cello, Ameritone and Zynolyte
each hereby restates and reaffirms the provisions of the
Subsidiaries' Guaranty and the Corporate Guarantors' Security
Agreement (as heretofore and hereby amended), confirms its
absolute and unconditional guaranty and grant of security
interests and other obligations thereunder, and expressly
acknowledges and agrees that its guaranty and grant of security
interests and other obligations thereunder continue in full force
and effect from and after the date hereof.
(b) The Borrower expressly acknowledges that the
execution of this Amendment No. 4 or any actions taken by the
Borrower, the Banks or the Issuing Bank in connection therewith
shall not be deemed a release or waiver of any of the Borrower's
obligations pursuant to the Parent Guaranty.
(c) Each of the Corporate Guarantors expressly
acknowledges that the execution of this Amendment No. 4 or any
actions taken by the Corporate Guarantors, the Banks or the
Issuing Bank in connection therewith shall not be deemed a
release or waiver of any of the Corporate Guarantors' obligations
pursuant to the Subsidiaries' Guaranty.
Section 5. General.
_______
This Amendment No. 4 is made pursuant to Section 14.1 of the
Existing Credit Agreement, Section 8 of the Subsidiaries'
Guaranty and Section 12 of the Corporate Guarantors' Security
Agreement, and the Borrower, Grow Insurance, the Corporate
Guarantors, the Banks and the Issuing Bank acknowledge that all
provisions of the Existing Credit Agreement and the other Loan
Documents, as amended or waived hereby, are and shall remain in
full force and effect, and nothing herein contained shall be
deemed a waiver of, or impair the effectiveness or enforceability
of, any other terms or conditions of the Existing Credit
Agreement or any of the other Loan Documents except as expressly
stated herein. From and after the date of this Amendment No. 4,
each and every reference in any of the Loan Documents to the
Credit Agreement or any other Loan Document is hereby amended to
mean the Existing Credit Agreement or such other Loan Document as
heretofore amended and as amended by this Amendment No. 4.
Nothing in Amendment No. 1, Waiver, Consent and Amendment No. 2,
Amendment No. 3 or Amendment No. 4 shall be deemed to constitute
the Borrower, Grow Insurance, Cello, Ameritone or Zynolyte a
party to, or to make the respective Person obligated under, or to
require the consent or signature of the respective Person for,
any amendment, supplement, consent or waiver with respect to, any
of the Credit Agreement, Parent Guaranty, Pledge Agreement,
Borrower Security Agreement, Subsidiaries' Guaranty or Corporate
Guarantors' Security Agreement, unless the particular Person was
a party to the particular Loan Document on the Closing Date (or,
as to Zynolyte, except for the Subsidiaries' Guaranty and
Corporate Guarantors' Security Agreement, as to which it is a
guarantor, pledgor and obligor as fully as though an original
party thereto).
Section 6. Effectiveness.
_____________
Anything in this Amendment No. 4 to the contrary
notwithstanding, this Amendment No. 4 shall become effective
when, and only when: (a) it shall have been signed and delivered
on behalf of all of the parties hereto; and (b) each Bank shall
have received its Pro Rata Share of the Extension Fee.
Section 7. Expenses of the Agent and the Banks. Pursuant to
Section 16.3 of the Existing Credit Agreement, the Borrower shall
pay on demand to the Agent and the Banks, the reasonable out-of-
pocket expenses of the Agent and each Bank, including, but not
limited to the reasonable fees and expenses of Special Counsel
and counsel for each Bank.
Section 8. Counterparts.
____________
This Amendment No. 4 may be executed in any number of
counterparts, each of which shall be an original and all of which
shall constitute one agreement. It shall not be necessary in
making proof of this Amendment No. 4 or of any document required
to be executed and delivered in connection herewith or therewith
to produce or account for more than one counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 4 to be executed by their respective officers
thereunto duly authorized, as of the date first above written.
GROW GROUP, INC.
By: _________________________________
GROW GROUP INSURANCE, LTD.
By: _________________________________
CELLO CORP.
By: __________________________________
SINCLAIR-AMERITONE PAINT CORPORATION
(f/k/a Sinclair Acquisition Corp. and
f/k/a Ameritone Paint Corporation)
By: __________________________________
ZYNOLYTE PRODUCTS COMPANY
By: __________________________________
CHEMICAL BANK NEW JERSEY, N.A.
By: __________________________________
FLEET BANK
By: __________________________________
PNC BANK, KENTUCKY, INC.
By: __________________________________
WELLS FARGO BANK, N.A.
By: __________________________________
CHEMICAL BANK
By: ___________________________________
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