SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
AMENDMENT NO. 1
TO
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
______________________
GROW GROUP, INC.
(Name of Subject Company)
GROW GROUP, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $0.10 PER SHARE
(Title of Class of Securities)
399820 10 9
(CUSIP Number of Class of Securities)
Lloyd Frank, Esq.
Secretary
Grow Group, Inc.
200 Park Avenue
New York, N.Y. 10166
(212) 599-4400
(Name, address and telephone number of person authorized to receive
notice and communication on behalf of the person(s) filing statement).
With a Copy to:
Daniel E. Stoller, Esq.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, N.Y. 10022
(212) 735-3000
This Amendment supplements and amends as Amendment No. 1 the
Solicitation/Recommendation Statement on Schedule 14D-9,
originally filed on May 4, 1995 (the "Schedule 14D-9"), by Grow
Group, Inc., a New York corporation (the "Company"), relating to
the tender offer by GDEN Corporation, a New York corporation (the
"Purchaser") and an indirect wholly owned subsidiary of Imperial
Chemical Industries PLC, a corporation organized under the laws
of England ("Parent"), initially disclosed in a Tender Offer
Statement on Schedule 14D-1, dated May 4, 1995, to purchase all
outstanding shares of common stock, par value $0.10 per share
(the "Common Stock" or the "Shares"), of the Company at a price
of $18.10 per Share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase,
dated May 4, 1995 and the related Letter of Transmittal.
Capitalized terms used and not otherwise defined herein shall
have the meanings set forth in the Schedule 14D-9.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
CERTAIN LITIGATION.
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
is grossly unfair and detrimental to the Company's shareholders.
The complaint asserts that the defendants agreed to the proposed
transaction 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 Parent and other companies could have driven
up the purchase price. The complaint in the Sarnoff State Action
seeks, among other relief, an order requiring defendants to
announce their intention to cooperate with any entity having a
bona fide interest in proposing a transaction that would maximize
shareholder value, undertake an evaluation of the Company's worth
as a merger/acquisition candidate, and act independently to
protect the shareholders' interests. The complaint also seeks an
accounting for damages allegedly suffered by shareholders as a
result of the acts and transaction alleged in the complaint.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit No.
Exhibit 14 Complaint entitled Miriam Sarnoff and
Frederick Rand v. Grow Group, Inc. et. al.,
filed in the Supreme Court of the State of
New York, New York County.
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 5, 1995 GROW GROUP, INC.
By /s/ Lloyd Frank
Title: Secretary
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
14 Class Action Complaint entitled Miriam Sarnoff
and Frederick Rand v. Grow Group, Inc. et. al.,
filed in the Supreme Court of the State of New
York, New York County.
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
- - - - - - - - - - - - - - - - - x
MIRIAM SARNOFF and FREDERICK
RAND, ON BEHALF OF THEMSELVES AND : Index No.
ALL PERSONS SIMILARLY SITUATED,,
:
Plaintiffs,
:
-against-
:
GROW GROUP, INC., RUSSELL BANKS, CLASS ACTION COMPLAINT
HAROLD G. BITTLE, ARTHUR W. :
BROSLAT,, PHILIPPE ERARD, LLOYD
FRANK, JOHN F. GLEASON, PETER L. :
KEANE, ANGUS N. MACDONALD, ROBERT
J. MILANO, TULLY PLESSER, JOSEPH :
M. QUINN and WILLIAM H. TURNER,
:
Defendants.
:
- - - - - - - - - - - - - - - - - x
Plaintiffs, by their attorneys, allege upon information and
belief, except as to the allegations set forth in paragraph 4,
which are alleged upon personal knowledge, as follows:
NATURE OF THE ACTION
1. This is a class action lawsuit on behalf of the
stockholders of Grow Group, Inc. ("Grow Group" or the "Company")
who have been and continue to be, deprived of the opportunity to
fully realize the benefits of their investment in Grow Group as a
result of the defendant's breach of fiduciary duty in connection
with the proposed acquisition of Grow Group by Imperial Chemicals
Industries PLC ("Imperial").
2. Plaintiffs seek relief with regard to the breaches of
fiduciary duty by the individual defendants in connection with a
buy-out agreement (the "buy-out") between Grow Group and Imperial
announced by defendant Grow Group on May 2, 1995, pursuant to
which its public shareholders will receive only $18.10 per share
even though the Company has been valued at between $22 to $24 a
share.
3. The defendants have deliberately or recklessly pursued a
wrongful course of conduct designed to prevent Grow Group
shareholders from receiving the benefits of a buy-out and change
in control of Grow Group. This course of conduct has, thus far,
consisted of agreeing to sell Grow Group under terms which
prevent Grow Group's public shareholders from receiving a
takeover premium and discouraging better offers and attempting to
confuse shareholders into cooperating by withholding material
information from the marketplace.
4. The individual defendants' authorization to pursue the
transaction was given in breach of their fiduciary duties owed to
Grow Group's public stockholders to take all necessary steps to
ensure that the stockholders will receive the maximum value
realizable for their shares in any acquisition of the Company.
5. In the context of this action, the Board of Directors
and Officers of Grow Group must take all reasonable steps to
assure the maximization of stockholder value, including the
implementation of a bidding mechanism to foster a fair auction of
the Company to the highest bidder or the exploration of strategic
alternatives which will maximize value to the plaintiffs and the
class.
6. This action seeks preliminary and permanent injunctive
relief and other equitable remedies to protect Grow Group public
shareholders from defendants' breaches of fiduciary duty and
failure to maximize shareholder value.
PARTIES
7. Plaintiffs Miriam Sarnoff and Frederick Rand are and at
all relevant times have been the owners of shares of Grow Group
common stock.
8. Grow Group is a corporation duly organized and existing
under the law of the State of New York, which maintains its
principal executive offices at 200 Park Avenue, New York, New
York.
9. Grow Group is a producer of specialty chemical coatings
and architectural paints, and detergents and maintenance cleaning
products for household, professional and industrial use.
10. As of February 1, 1995, Grow Group had approximately
16,102,713 shares of common stock outstanding and hundreds of
stockholders of record. Grow Group's stock trades on the New
York Stock Exchange.
11. Defendant Russell Banks is the President and Chief
Executive Offer, and Director of Grow Group. According to an SEC
Form 4, filed on March 10, 1995, Banks beneficially owned
approximately 424,950 outstanding shares of Grow Group common
stock.
12. Defendant Harold G. Bittle is a director of Grow Group.
13. Defendant Arthur W. Broslat is a director of Grow
Group. He also holds the positions of Executive Vice President
and Chief Financial Officer of Corimon, the Venezuelan firm which
owns about 25% of the outstanding shares of Grow Group.
14. Defendant Philipe Erard is a director of Grow Group.
He also holds the positions of Chairman, President and Chief
Executive Officer of Corimon.
15. Defendant Lloyd Frank is a director of Grow Group.
16. Defendant John F. Gleason is an Executive Vice
President of Grow Group, as well as a director of the Company.
17. Defendant Peter L. Keane is a director of Grow Group.
18. Defendant Angus N. MacDonald is a director of Grow
Group.
19. Defendant Robert J. Milano is a director of Grow Group.
20. Defendant Tully Plesser is a director of Grow Group.
21. Defendant Joseph M. Quinn is a director of Grow Group,
as well as Executive Vice President and Chief Operating Officer
of the Company.
22. Defendant Williams H. Turner is a director of Grow
Group.
23. By reason of their corporate positions and because of
their ability to control the business and internal affairs of
Grow Group, the officer and director defendants owed to Grow
Group's public shareholders, including plaintiffs and all others
similarly situated, fiduciary obligations of fidelity, trust,
loyalty and due care. Accordingly, said defendants were, and
are, required to use their utmost ability to control and manage
the Company in furtherance of the best interests of the Company's
stockholders.
24. In addition, each of the officer and director
defendants owes to Grow Group's public shareholders the fiduciary
duty to exercise due care and diligence, as well as the highest
obligations or good faith and fair dealing.
25. Each of the officer and director defendants owes to the
Company and its stockholders the fiduciary duty to assure that
all reasonable offers or overtures to purchase the Company are
conveyed to the full board of directors, to entertain, encourage,
evaluate and pursue any bona fide offers or expressions of
interest to purchase the Company's outstanding stock or other
merger transactions in a manner that will maximize shareholder
value.
26. Each defendant herein is sued individually as an aider
and abettor, as well as in his/her capacity as an officer and/or
director of the Company, and the liability of each arises from
the fact that he has engaged in all or part of the unlawful acts,
plans, schemes, or transactions complained of herein.
CLASS ACTION ALLEGATIONS
27. Plaintiffs bring this case on their own behalf, and as
a class action on behalf of all stockholders of the Company,
except defendants herein, and any person firm, trust,
corporation, or other entity related to or affiliated with any of
the defendants, or any of the Company's principal stockholders,
who will be threatened with injury arising from defendants'
actions as is described more fully below.
28. This action is properly maintainable as a class action.
29. The class is so numerous that joinder of all members is
impracticable. The Company has at least hundreds of stockholders
who are scattered through the United States.
30. There are questions of law and fact common to the class
that predominate over questions affecting any individual class
member. The common questions include, inter alia, whether:
(a) The defendants have breached their fiduciary
duties owned by them to plaintiffs and the other members of the
Class by failing and refusing to attempt in good faith to
maximize shareholder value in connection with the sale of control
of Grow Group;
(b) Grow Group's Poison Pill was defensively enacted
and implemented to entrench defendants in their office and give
them the power to sell control only to an entity that will
provide management with continued perquisites;
(c) The defendants have breached or aided and abetted
the breach of the fiduciary duties owed by them to plaintiffs and
other members of the Class;
(d) The defendants engaged in a plan and scheme to
thwart and reject offers and proposals from third parties other
than Imperial; and
(e) Plaintiffs and the other members of the Class are
being and will continue to be injured by the wrongful conduct
alleged herein, and, if so, what is the proper remedy and/or
measure of damages.
31. Plaintiffs are committed to prosecuting this action and
have retained competent counsel experienced in litigation of this
nature, Plaintiffs' claims are typical of the claims of the other
members of the Class and plaintiffs have the same interests as
the other members of the Class. Plaintiffs are adequate
representative of the Class.
SUBSTANTIVE ALLEGATIONS
32. In February 1988, Grow Group adopted what it called a
Shareholder Rights Plan but what is more appropriately called a
Poison Pill. The Poison Pill has the effect of making it
extraordinarily difficult, expensive and/or impossible for any
potential acquiror not approved by the individual defendants to
acquire control of Grow Group.
33. Under the plan, each Right issued to shareholders under
the plan entitles that shareholder to purchase the Company's
common stock at a 50% discount upon the acquisition by an
Acquiring Person of 30% or more of the then outstanding shares of
common stock of the Company or a greater than 20% of Grow Group
common stock if the acquiror is deemed to be an "Adverse Person"
by the Board of Directors. The plan further provides that the
Company is entitled to redeem the Rights, under certain
conditions, at $.01 per Right.
34. The Poison Pill has the effect of precluding successful
completion of even the most attractive offers for Grow Group
unless the Grow Group board acquiesces, thus deterring bona fide
bids to purchase the Company for adequate consideration and
denying the Company's shareholders an opportunity to make their
own choice as to the fate of the Company that they own.
35. As reported by the Dow Jones/News Retrieval Service on
May 2, 1995, the proposed transaction calls for the acquisition
of Grow Group by Imperial for about $290 million, or $17.50 cents
per share for the 25% stake in Grow Group held by the Venezuelan
firm Corimon and $18.10 per share for those shares held by all
other shareholders.
36. The proposed transaction is grossly unfair to Grow
Group's public shareholders:
(a) According to article in the New York Post dated
May 2, 1995, an analyst from Gerard Klauer Mattison & Co. valued
the Company at between $22 to $24 per share earlier this year.
(b) On February 3, 1994, analyst J. Putterman of
Stephens Inc. issued a report in which the Company was valued at
$24 - $25 per share.
(c) On January 25, 1994, analyst J. Melin of Gerard
Klauer Mattison & Co. issued a report in which the Company was
valued at $22 - $26 per share.
37. Defendants have failed to disclose why they have
accepted such a low bid. However, the New York Post reported, on
May 2, 1995, that defendant Russell Banks, age 75, stated that he
did not plan on "moving anywhere" and had no plans to retire.
Therefore, the reasonable inference may be drawn that the buy-out
agreement was reached in order to allow the all of the defendants
to keep their positions as directors as well as to permit Banks
to maintain his position as President and Chief Executive
Officer, Gleason to maintain his position as Executive Vice
President, and Quinn to maintain his position as Executive Vice
President and Chief Operating Officer.
38. Moreover, Corimon, holder of a 25% stake in Grow Group
is under pressure to quickly raise $18 million dollars in order
to fund its acquisition of Standard Paints in California,
announced early this year. Defendants Arthur W. Broslat and
Philippe Erard, who hold key positions in that Company, had an
incentive to accept a low bid now rather than to wait for a
higher offer.
39. The existence of Grow Group's Poison Pill plan prevents
competing bids. Thus, Imperial had no incentive to make its best
possible offer and every incentive to make a low offer.
40. Because the terms of the merger agreement prohibit
defendants from negotiating with third parties, there was no
possibility that competition between Imperial and other companies
could have driven up the purchase price.
41. The interests of the public shareholders are best
served by a deal which provides for the acquisition of Grow Group
shares at the highest possible price.
42. The defendants owe fiduciary obligations to the
Company's shareholders to take all necessary and appropriate
steps to maximize the value of Grow Group's shares. In addition,
the individual defendants have the responsibility to act
independently so that the interests of Grow Group's public
stockholders will be protected, to seriously consider any bona
fide offers for the Company, and to conduct fair and active
bidding procedures or other mechanisms for checking the market to
assure that the highest price is achieved.
43. The existence of a Poison Pill heightens this duty and
requires the individual defendants to pursue a third party's
interest in acquiring the Company and to negotiate in good faith
with a bidder on behalf of the Company's shareholders.
44. The individual defendants must adequately ensure that
no conflict of interest exists between their own interests and
their fiduciary obligations to maximize shareholder value or, if
such conflicts exist, to ensure that all such conflicts will be
resolved in the best interests of the Company's public
stockholders.
45. The individual defendants have breached their fiduciary
and other common law duties owed to plaintiffs and other members
of the class in that they have not and are not exercising
independent business judgment and have acted and are acting to
the detriment of the Class in order to benefit themselves, Grow
Group's senior management, and Corimon.
46. As a result of defendants' actions, plaintiffs and the
other members of the Class have been, and will be, damaged in
that they have not and will not receive their fair proportion of
the value of Grow Group's assets and businesses and/or have been
and will be prevented from obtaining a fair and adequate price
for their shares of Grow Group's common stock.
47. Plaintiffs seek preliminary and permanent injunctive
relief and declaratory relief preventing defendants from
inequitably and unlawfully depriving plaintiffs and the Class of
their rights to realize a full and fair value for their stock at
a material premium over the market price and to compel defendants
to carry out their fiduciary duties to maximize shareholder value
in selling Grow Group.
48. Only through the exercise of this Court's equitable
powers can plaintiffs be fully protected from the immediate and
irreparable injury which the defendants' action threaten to
inflict.
49. Unless enjoined by the Court, defendants will continue
to breach their fiduciary duties owed to plaintiffs and the
members of the class, and/or aid and abet and participate in such
breaches of duty, and will prevent the outright sale of Grow
Group at a material premium, all to the irreparable harm of
plaintiffs and the other members of the Class.
50. Plaintiffs and the Class have no adequate remedy at
law.
WHEREFORE, plaintiffs demand judgment as follows:
A. Declaring this to be a proper class action and
certifying plaintiffs as class representative and their counsel
as class counsel;
B. Ordering the individual defendants to carry out their
fiduciary duties to plaintiffs and the other members of the Class
by announcing their intention to:
1. cooperate fully with any entity or person having a
bona fide interest in proposing any transaction that would
maximize shareholder value, including but not limited to, a full
buy-out or takeover of the Company;
2. immediately undertake an appropriate evaluation of
Grow Group's worth as a merger/acquisition candidate;
3. take all appropriate steps to enhance Grow Group's
value and attractiveness as a merger/acquisition candidate;
4. take all appropriate steps effectively to expose
Grow Group to the marketplace in an effort to create an active
auction of the Company;
5. act independently so that the interests of the
Company's public shareholders will be protected; and
6. adequately ensure that no conflicts of interest
exist between the individual defendants' own interest and their
fiduciary obligation to maximize shareholder value or, in the
event such conflicts exist, to ensure that all conflicts of
interest are resolved in the best interests of the public
shareholders of the Grow Group;
C. Ordering the individual defendants jointly and severally
to account to plaintiffs and the Class for all damages suffered
and to be suffered by them as a result of the acts and
transaction alleged herein;
D. Declaring that Grow Group aided and abetted and
substantially participated in the individual defendants' breach
of fiduciary duties;
E. Awarding plaintiffs the cost and disbursements of this
action, including a reasonable allowance for plaintiffs'
attorneys' and experts' fees; and
F. Granting such other and further relief as may be just
and proper.
DATED: New York, New York
May 3, 1995
Yours, etc.,
STULL, STULL & BRODY
6 East 45th Street
New York, New York 10017
Telephone: (212) 687-7230
LAW OFFICES OF JOSEPH H. WEISS
319 Fifth Avenue
New York, New York 10016
(212) 532-4171
Attorneys for Plaintiffs
