SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant[X]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
The Scotts Company
(Name of Registrant as Specified In Its Charter)
The Scotts Company
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
________________________________________________
2) Form, Schedule or Registration Statement No.:
________________________________________________
3) Filing Party:
________________________________________________
4) Date Filed:
________________________________________________
THE SCOTTS COMPANY
14111 Scottslawn Road
Marysville, Ohio 43041
August 16, 1994
Dear Fellow Stockholders:
A Special Meeting of the Stockholders (the "Special
Meeting") of The Scotts Company, a Delaware corporation (the
"Company"), will be held at 9:00 a.m., local time, on Tuesday,
September 20, 1994, at the Dwight G. Scott Research Center, R&D
Auditorium, 14310 Scottslawn Road, Marysville, Ohio 43041. The
enclosed Notice of Special Meeting and Proxy Statement contain
detailed information about the business to be transacted at the
Special Meeting.
You are being asked to consider and approve a proposal
(the "Reincorporation Proposal") which provides, among other
things, for the change of the Company's state of incorporation from
Delaware to Ohio through a merger of the Company into The Scotts
Company, an Ohio corporation ("Scotts Ohio"), in a transaction in
which the surviving corporation will be Scotts Ohio and the
stockholders of the Company will become owners of all of the
outstanding shares of Scotts Ohio, and related changes in the
Company's organizational documents.
Your Board of Directors believes that the Reincorporation
Proposal is in the best interest of The Scotts Company and all of
its stockholders and unanimously recommends that you vote "FOR"
this Proposal. The Reincorporation Proposal and the reasons for
our recommendations are set forth in the accompanying Proxy
Statement which you are asked to read at your earliest convenience.
On behalf of the Board of Directors and management, I
cordially invite you to attend the Special Meeting.
The prompt return of your proxy in the enclosed business
return envelope will save the Company additional expenses of
solicitation and will help ensure that as many shares as possible
are represented.
Sincerely,
Tadd C. Seitz
Chairman and Chief Executive
Officer
THE SCOTTS COMPANY
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held September 20, 1994
NOTICE IS HEREBY GIVEN that a Special Meeting of
Stockholders (the "Special Meeting") of The Scotts Company, a
Delaware corporation (the "Company"), will be held at the Dwight G.
Scott Research Center, R&D Auditorium, 14310 Scottslawn Road,
Marysville, Ohio 43041, on Tuesday, September 20, 1994, at
9:00 a.m., local time, for the following purposes:
1. To consider and vote upon a proposal (the
"Reincorporation Proposal") which pro-
vides, among other things, for the change
of the Company's state of incorporation
from Delaware to Ohio through a merger of
the Company into The Scotts Company, an
Ohio corporation and a wholly-owned sub-
sidiary of the Company ("Scotts Ohio"),
in a transaction in which the surviving
corporation will be Scotts Ohio and the
stockholders of the Company will become
owners of all of the outstanding shares
of Scotts Ohio and related changes in the
Company's organizational documents; and
2. To transact such other business as may
properly come before the Special Meeting
or any adjournment or adjournments there-
of.
The close of business on August 1, 1994, has been fixed
by the Board of Directors of the Company as the record date for
determining the stockholders entitled to notice of, and to vote
at, the Special Meeting. A list of stockholders eligible to vote
at the Special Meeting will be available for inspection at the
Special Meeting and during business hours from September 9, 1994
to the date of the Special Meeting at the Company's headquarters
at the address set forth below and at the law offices of Vorys,
Sater, Seymour and Pease, 52 East Gay Street, Columbus, Ohio
43215.
You are cordially invited to attend the Special Meeting.
Whether or not you plan to attend the Special Meeting, you may
insure your representation by completing, signing, dating and
promptly returning the enclosed proxy card. A return envelope,
which requires no postage if mailed in the United States, has been
provided for your use. If you attend the Special Meeting and
inform the Secretary of the Company in writing that you wish to
vote your shares in person, your proxy will not be used.
By Order of the Board of Directors,
Craig D. Walley,
Vice President and Secretary
The Scotts Company
14111 Scottslawn Road
Marysville, Ohio 43041
August 16, 1994
THE SCOTTS COMPANY
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held September 8, 1994
--
THE SCOTTS COMPANY
14111 Scottslawn Road
Marysville, Ohio 43041
PROXY STATEMENT
for
Special Meeting of Stockholders
Tuesday, September 20, 1994
This Proxy Statement is furnished in connection with
the solicitation on behalf of the Board of Directors of The
Scotts Company, a Delaware corporation (the "Company"), of
proxies for use at the Special Meeting of Stockholders (the
"Special Meeting") to be held at the Dwight G. Scott Research
Center, R&D Auditorium, 14310 Scottslawn Road, Marysville, Ohio
43041, on Tuesday, September 20, 1994, at 9:00 a.m., local time,
and at any adjournment or adjournments thereof, for the purposes
set forth in the accompanying Notice of Special Meeting of
Stockholders. This Proxy Statement and the accompanying proxy
card are first being mailed on or about August 16, 1994, to all
stockholders of the Company. Only holders of record of the
Company's Class A Common Stock, $.01 par value (the "Scotts
Delaware Shares"), at the close of business on August 1, 1994
(the "Record Date"), will be entitled to vote at the Special
Meeting. As of the Record Date, there were ___________ Scotts
Delaware Shares outstanding. Each Scotts Delaware Share entitles
the holder thereof to one vote. A quorum for the Special Meeting
is a majority of the Scotts Delaware Shares outstanding. There
is no cumulative voting. There are no other voting securities of
the Company outstanding.
If the accompanying proxy card is properly signed and
returned to the Company prior to the Special Meeting and not
revoked, it will be voted in accordance with the instructions
contained therein. If no instructions are given, the persons
designated as proxies in the accompanying proxy card will vote
the Scotts Delaware Shares represented thereby FOR the
Reincorporation Proposal described in this Proxy Statement.
The Board of Directors of the Company is not currently
aware of any matters other than those referred to herein which
will come before the Special Meeting. If any other matter should
be presented at the Special Meeting for action, the persons named
in the accompanying proxy card will vote the Scotts Delaware
Shares represented by the proxy in their discretion, in
accordance with their best judgment in light of the conditions
then prevailing.
Without affecting any vote previously taken, any
stockholder executing a proxy may revoke it at any time before it
actually voted at the Special Meeting by delivering written
notice of revocation to the Secretary of the Company, by
submitting a subsequently dated proxy, or by attending the
Special Meeting and requesting in writing that the proxy be
withdrawn. Attendance at the Special Meeting will not, in and of
itself, constitute revocation of a proxy.
The expense of preparing, printing and mailing proxy
materials to the Company's stockholders will be borne by the
Company. The Company has engaged Corporate Investor
Communications, Inc. to assist in the solicitation of proxies
from stockholders at a fee of $5,500 plus reimbursement of
reasonable out-of-pocket expenses. In addition, proxies may be
solicited personally or by telephone by officers or employees of
the Company, none of whom will receive additional compensation
therefor. The Company will also reimburse brokerage houses and
other nominees who are record holders of Scotts Delaware Shares
not beneficially owned by them for their reasonable expenses in
forwarding proxy materials to, and obtaining proxies from, the
beneficial owners of such Scotts Delaware Shares.
If a stockholder is a participant in The O. M. Scott &
Sons Company Profit Sharing and Savings Plan (the "O. M. Scott
Profit Sharing Plan") and Scotts Delaware Shares have been
allocated to such person's account in the O. M. Scott Profit
Sharing Plan, the trust will vote the allocated Scotts Delaware
Shares.
BENEFICIAL OWNERSHIP OF SCOTTS DELAWARE SHARES
The following table furnishes certain information as of
the Record Date (except as otherwise noted), as to the Scotts
Delaware Shares beneficially owned by each of the directors of
the Company, by each of the five most highly-paid executive
officers of the Company and by all directors and executive
officers of the Company as a group, and, to the Company's
knowledge, by the only persons beneficially owning more than 5%
of the outstanding Scotts Delaware Shares.
<TABLE>
Amount and Nature of Beneficial Ownership(1)
<C> <C> <C>
Scotts Delaware
Shares Which
Can Be Acquired
Name of Beneficial Scotts Upon Exercise of
Owner or Number of Delaware Shares Options Exercisable Percent
Persons in Group Presently Held Within 60 Days Total of Class(2)
Government of Singapore 1,060,600(3) 0 1,060,600(3) 5.7%(3)
Investment Corporation
Pte Ltd
250 North Bridge Road
#33-00 Raffles City Tower
Singapore 0617
Thorsell, Parker Partners 997,100(4) 0 997,100(4) 5.3%(4)
Incorporated
215 Main Street
Westport, CT 06880
James B. Beard 16,727 8,000 24,727 (5)
John S. Chamberlin 22,727 8,000 30,727 (5)
Alberto Cribiore 0 0 0 (5)
Joseph P. Flannery 25,454 8,000 33,454 (5)
Theodore J. Host(6) 45,454(7) 172,139 217,593 ___%
Tadd C. Seitz(6) 462,454 57,266 519,720 ___%
Donald A. Sherman 22,727 8,000 30,727 (5)
John M. Sullivan 1,000 4,000 5,000 (5)
L. Jack Van Fossen 1,200 4,000 5,200 (5)
J. Blaine McKinney(6) 1,100 18,472 19,572 (5)
Richard B. Stahl(6) 77,545(8) 9,799 87,344 (5)
Paul D. Yeager(6) 140,885(9) 12,622 153,507 (5)
All directors and
executive officers
as a group (18 persons) 1,244,123(10) 340,489 1,584,612 ___%
______________________
(1) Unless otherwise indicated, the beneficial owner has sole
voting and investment power as to all of the Scotts Delaware
Shares reflected in the table.
(2) The percent of class is based upon the sum of __________
Scotts Delaware Shares outstanding on the Record Date, and
the number of Scotts Delaware Shares as to which the named
person has the right to acquire beneficial ownership upon
the exercise of options exercisable within 60 days of the
Record Date.
(3) Based on information contained in a Schedule 13D, dated
October 18, 1993, filed with the Securities and Exchange
Commission, Government of Singapore Investment Corporation
Pte Ltd, an agency of the Singapore government and an
investment manager, shares voting and investment power with
respect to 749,400 Scotts Delaware Shares with the
Government of Singapore and shares voting and investment
power with respect to 311,200 Scotts Delaware Shares with
the Monetary Authority of Singapore.
(4) Based on information provided to the Company by Thorsell,
Parker Partners Incorporated ("Thorsell, Parker"), Thorsell,
Parker, a registered investment adviser, is deemed to have
beneficial ownership of 997,100 Scotts Delaware Shares as of
December 31, 1993, all of which Scotts Delaware Shares are
held in portfolios of clients for which Thorsell, Parker
serves as investment manager with investment discretion.
Thorsell, Parker also exercises sole voting power with
respect to 747,825 of such Scotts Delaware Shares.
(5) Represents ownership of less than 1% of the outstanding
Scotts Delaware Shares.
(6) Executive officer of the Company.
(7) Includes 45,454 Scotts Delaware Shares which were issued to
Mr. Host at the time of his employment by the Company and
which are pledged to Bank One, N.A.
(8) Includes 1,000 Scotts Delaware Shares held by the son of Mr.
Stahl who shares his home.
(9) Includes 100 Scotts Delaware Shares held by each of Mr.
Yeager's wife and his two daughters who share his home.
(10) See Notes (7), (8) and (9) above. Also includes Scotts
Delaware Shares held by the respective spouses of executive
officers of the Company and by their children who reside
with them.
</TABLE>
THE REINCORPORATION PROPOSAL
General
Each member of the Company's Board of Directors, for
the reasons set forth below, has approved and recommends that the
Company's stockholders approve a proposal (the "Reincorporation
Proposal") which provides, among other things, for the change of
the Company's state of incorporation from Delaware to Ohio. This
change in the state of incorporation (the "Reincorporation") will
be accomplished through a merger (the "Merger") of the Company
into The Scotts Company ("Scotts Ohio"), a wholly-owned
subsidiary of the Company which was recently formed as an Ohio
corporation as a vehicle to effect the Reincorporation. (The
name of the surviving corporation following the Merger will be
The Scotts Company and reference hereafter to Scotts Ohio shall,
where appropriate, mean the surviving corporation.)
Upon consummation of the Merger, Scotts Ohio will
succeed to all the business, properties, assets and liabilities
of the Company and to the Company's name; and the directors,
officers and employees of the Company will become directors,
officers and employees of Scotts Ohio. Outstanding Scotts
Delaware Shares will be converted into an equal number of common
shares, without par value, of Scotts Ohio (the "Scotts Ohio
Common Shares"). Approval of the Reincorporation Proposal will
not result in any change in the name, business, management,
location of the principal executive offices or other facilities,
capitalization, assets or liabilities of the Company. The
Company's employee benefit plans and arrangements will also be
continued by Scotts Ohio upon the same terms and subject to the
same conditions. See "Manner of Effecting the Reincorporation"
at page __.
Since the Scotts Delaware Shares were designated as a
NASDAQ National Market System security on the Record Date, under
Section 262 of the Delaware General Corporation Law (the "DGCL"),
stockholders of the Company who do not vote in favor of the
Reincorporation Proposal will not be entitled to appraisal rights
in connection with the Reincorporation Proposal. See "Manner of
Effecting the Reincorporation" at page __.
Immediately following the consummation of the Merger,
The O.M. Scott & Sons Company, a wholly-owned subsidiary of the
Company which would become a wholly-owned subsidiary of Scotts
Ohio as a result of the Merger ("OMS"), will be merged into
Scotts Ohio (the "OMS Merger"). Upon consummation of the OMS
Merger, Scotts Ohio will succeed to all the business, properties,
assets and liabilities of OMS and will become an operating
company and the outstanding shares of OMS will be extinguished.
Since OMS would be a wholly-owned subsidiary of Scotts Ohio
immediately prior to the OMS Merger and no Scotts Ohio Common
Shares would be issued in connection therewith, the shareholders
of Scotts Ohio would not be required to approve the OMS Merger.
The vote by the Company's stockholders upon the Reincorporation
Proposal will not constitute a vote upon the OMS Merger. If the
Reincorporation Proposal is not approved by the Company's
stockholders, OMS will be merged into the Company rather than
into Scotts Ohio. See "Manner of Effecting the Reincorporation"
at page ___.
Summary of the Effects of the Reincorporation
The Reincorporation will change the law applicable to
the Company's corporate affairs from Delaware to Ohio law and
will result in some differences in stockholders' rights. The
material differences between the Ohio General Corporation Law
(the "OGCL") and the Delaware General Corporation Law ("DGCL")
are more fully discussed below.
Because the Company incorporated in Delaware, it is
exposed to taxation not only in Ohio, but also in Delaware, where
it conducts no business. Following payment of an one-time Ohio
fee of $90,100, levied at the time of the Reincorporation, Scotts
Ohio's overall state tax liability, based on present rates, will
be approximately $134,000 per year less than that currently paid
by the Company. In addition, as a result of the OMS Merger,
Scotts Ohio would become an operating company. Since OMS and
Scotts Ohio would no longer be separately taxed entities, the
overall state tax liability of Scotts Ohio and its subsidiaries,
based on present rates, should decrease by approximately $184,000
per year, in addition to the previously mentioned $134,000. If
the Company's stockholders would not approve the Reincorporation
Proposal and OMS would merge into the Company rather than into
Scotts Ohio, the overall state tax liability of the Company and
its subsidiaries, based on present rates, should decrease by
approximately $184,000 per year. See "Reasons for the Proposed
Reincorporation" at page __.
The Reincorporation will also mean that the Company's
corporate affairs will be governed by the Articles of
Incorporation and Regulations of Scotts Ohio which are attached
to this Proxy Statement as Annex A and Annex B, respectively, and
are herein referred to as the "New Articles" and "New
Regulations," respectively. The New Articles and New Regulations
will carry over many of the provisions of the Company's Restated
Certificate of Incorporation (the "Present Charter") and By-
Laws, as amended (the "Present By-Laws"), and will also add
certain additional provisions more fully discussed below. Copies
of the Present Charter and the Present By-Laws are available for
inspection at the office of the Secretary of the Company at the
address set forth on the cover page of this Proxy Statement and
copies will be sent to stockholders upon written request.
The following table briefly describes significant
provisions of the DGCL and the Present Charter and Present By-
Laws applicable to the Company before the Reincorporation and
significant provisions of the OGCL and the New Articles and New
Regulations applicable to Scotts Ohio after the Reincorporation
which are more fully described below and in "Certain Significant
Differences Between the Organizational Documents of Scotts Ohio
and the Company" beginning at page __ and "Comparison of
Shareholders' Rights Under Ohio and Delaware Law" beginning at
page __.
Provisions Applicable to the Provisions Applicable to
Company Before the Scotts Ohio After the
Reincorporation Under the DGCL Reincorporation Under the OGCL
and the Present Charter and and the New Articles and New
Present By-Laws Regulations
1. Directors serve one-year terms 1. Directors serve one-year
terms
2. Affirmative vote of not less 2. Affirmative vote of not
than a majority of voting less than 2/3 voting power
power required to adopt amend required to adopt amend
ments to Present Charter and ments to New Articles,
Present By-Laws, approve approve mergers and
mergers and consolidations, consolidations, approve
approve the dissolution of the the dissolution of Scotts
Company, or approve the sale, Ohio, or approve the sale,
lease or exchange of all or lease, exchange, transfer
substantially all of the or other disposition of
assets of the Company all or substantially all
of the assets of Scotts
Ohio; affirmative vote of
not less than a majority
of voting power required
to adopt amendments to New
Regulations
3. Special meetings of 3. Special meetings of
stockholders may be called by shareholders may be called
persons holding at least a by persons holding at
majority of voting shares least a majority of voting
shares
4. Section 203 of DGCL prohibits 4. Chapter 1704 of OGCL
business combinations between prohibits business
the Company and a 15% combinations and certain
stockholder for a period of other transactions between
three years after the Scotts Ohio and a 10%
stockholder becomes such, shareholder for a period
unless certain conditions are of three years after the
satisfied shareholder becomes such,
unless certain conditions
are satisfied
5. Present By-Laws may be amended 5. Under Section 1701.831 of
by Board of Directors without OGCL, person undertaking
stockholder action to purchase 20% or more of
the voting power of Scotts
Ohio must obtain the
approval of a majority of
the voting power of Scotts
Ohio and a majority of the
portion of such voting
power excluding
"interested shares"
6. Action may be taken by 6. New Regulations may be
stockholders without a meeting amended only by
with written consent of shareholders
holders of shares having
number of votes necessary to
authorize action at a meeting
7. Stockholders have no right of 7. Action may be taken by
cumulative voting in the shareholders without a
election of directors meeting only by unanimous
written consent
8. Directors may be removed prior 8. Shareholders have no right
to expiration of term, with or of cumulative voting in
without cause, by holders of a the election of directors
majority of voting power of
the Company
9. Vacancies in the Board of 9. Directors may be removed
Directors may be filled by prior to expiration of
vote of a majority of term, with or without
directors then in office cause, by holders of a
majority of voting power
of Scotts Ohio
10.Personal liability of 10.Vacancies in the Board of
directors for monetary damages Directors may be filled by
for breach of fiduciary duty vote of a majority of
eliminated except in the directors then in office
instance of (a) breach of duty
of loyalty to the Company or
its stockholders, (b) acts or
omissions not in good faith or
involving intentional
misconduct or a knowing
violation of law, (c) the
paying of a dividend or the
approval of a stock repurchase
illegal under the DGCL or
(d) any transaction from which
director derived improper
personal benefit
11.Broad mandatory 11.Director not liable for
indemnification of directors monetary damages unless
and officers consistent with proved by clear and
DGCL convincing evidence that
his action or failure to
act was undertaken with
deliberate intent to cause
injury to, or with
reckless disregard for the
best interest of, Scotts
Ohio
12.Present Charter authorizes 12.Broad mandatory
35,000,000 Scotts Delaware indemnification of
Shares, 35,000,000 shares of directors and officers
Class B Common Stock, $.01 par consistent with OGCL
value, and 10,000,000 shares
of Preferred Stock, $.01 par
value
13.New Articles authorize
35,000,000 Scotts Ohio
Common Shares
Significant Carryover Provisions
Special Meetings. Under the Present By-Laws, a special
meeting of stockholders may be called by the Board of Directors
or by persons holding at least a majority of the voting shares of
the Company. The Present By-Laws also authorize the Chairman of
the Board or the President (or, in the event of their absence or
disability, any Vice President) to call special meetings of the
Company's stockholders. Under the New Regulations and consistent
with the OGCL, a special meeting of shareholders may be called by
the Board of Directors or by persons holding at least a majority
of the voting shares of Scotts Ohio. In addition, consistent
with the OGCL, the New Regulations authorize the Chairman of the
Board, the President (or the Vice President authorized to act in
his absence, death or disability) and the Secretary to call
special meetings of Scotts Ohio's shareholders. See "Special
Meetings" at page __.
Cumulative Voting. The stockholders of the Company do
not have, and the shareholders of Scotts Ohio will not have, the
right of cumulative voting in the election of directors. See
"Cumulative Voting" at page __.
Removal of Directors and Filling of Vacancies. Under
the Present By-Laws and the New Regulations, a director of the
Company or of Scotts Ohio, as appropriate, may be removed from
office prior to the expiration of his term, with or without
cause, by the holders of a majority of the Scotts Delaware Shares
or Scotts Ohio Common Shares, as appropriate. Both the Present
By-Laws and the New Regulations provide that vacancies in the
Board of Directors may be filled by a majority of the directors
then in office. See "Removal of Directors and Filling of
Vacancies" at page __.
Preemptive Rights. Neither the stockholders of the
Company nor the shareholders of Scotts Ohio have preemptive
rights. See "Preemptive Rights" at page __.
Terms of Directors. The directors of the Company
currently serve, and the directors of Scotts Ohio will serve, one-
year terms.
Significant Changes Resulting from the Reincorporation
The significant changes which would result from the
Reincorporation of the Company as an Ohio corporation are
discussed in the paragraphs which follow.
THE CHANGES DESCRIBED IN PARAGRAPHS 1 THROUGH 4 BELOW,
MAY HAVE AN ANTI-TAKEOVER IMPACT AND MAY MAKE TENDER OFFERS,
PROXY CONTESTS AND CERTAIN MERGERS MORE DIFFICULT. HOWEVER, THE
INTENT OF THESE CHANGES IS NOT TO PREVENT OFFERS TO ACQUIRE
SCOTTS OHIO FROM BEING MADE. RATHER, THESE CHANGES ARE DESIGNED
TO ENCOURAGE POTENTIAL ACQUIRERS TO MAKE FINANCIALLY ATTRACTIVE
NON-COERCIVE OFFERS AND TO NEGOTIATE DIRECTLY WITH THE BOARD OF
DIRECTORS.
1. Ohio Control Share Acquisition Statute and Merger
Moratorium Statute. Scotts Ohio and its shareholders would be
entitled to the protections afforded by Section 1701.831 of the
Ohio Revised Code (the "Ohio Control Share Acquisition Statute")
and Chapter 1704 of the Ohio Revised Code (the "Merger Moratorium
Statute").
The Ohio Control Share Acquisition Statute requires
shareholder approval of any proposed "control share acquisition"
of an Ohio corporation. A "control share acquisition" is the
acquisition, directly or indirectly, by any person (including any
individual, partnership, corporation, limited liability company,
society, association or two or more persons having a joint or
common interest) of shares of a corporation that, when added to
all other shares of the corporation that may be voted, directly
or indirectly, by the acquiring person, would entitle such person
to exercise or direct the exercise of 20% or more (but less than
33 1/3%) of the voting power of the corporation in the election
of directors or 33 1/3% or more (but less than a majority) of
such voting power or a majority or more of such voting power.
The control share acquisition must be approved in advance by the
holders of a majority of the outstanding voting shares
represented at a meeting at which a quorum is present and by the
holders of a majority of the portion of the outstanding voting
shares represented at such a meeting excluding the voting shares
owned by the acquiring shareholder and certain "interested
shares," including shares owned by officers elected or appointed
by the directors of Scotts Ohio and by directors of Scotts Ohio
who are also employees of Scotts Ohio. See "Anti-takeover
Statutes" at page __.
The purpose of the Ohio Control Share Acquisition
Statute is to give shareholders of Ohio corporations a reasonable
opportunity to express their views on a proposed shift in control
(thereby reducing the coercion inherent in an unfriendly
takeover). The provisions of the Ohio Control Share Acquisition
Statute would grant to the shareholders of Scotts Ohio the
assurance that they will have adequate time to evaluate the
proposal of the acquiring person, that they will be permitted to
vote on the issue of authorizing the acquiring person's purchase
program to go forward in the same manner and with the same proxy
information that would be available to them if a proposed merger
of Scotts Ohio were before them and, most importantly, that the
interests of all shareholders will be taken into account in
connection with such vote and the probability will be increased
that they will be treated equally regarding the price to be
offered for their Scotts Ohio Common Shares if the implementation
of the proposal is approved.
The Ohio Control Share Acquisition Statute applies not
only to traditional tender offers but also to open market
purchases, privately negotiated transactions and original
issuances by an Ohio corporation, whether friendly or unfriendly.
The procedural requirements of the Ohio Control Share Acquisition
Statute could render approval of any control share acquisition
difficult in that a majority of the voting power of Scotts Ohio,
excluding "interested shares," must be represented at the meeting
and must be voted in favor of the acquisition. It is recognized
that any corporate defense against persons seeking to acquire
control may have the affect of discouraging or preventing offers
which some shareholders might find financially attractive. On
the other hand, the need on the part of the acquiring person to
convince the shareholders of Scotts Ohio of the value and
validity of his offer may cause such offer to be more financially
attractive in order to gain shareholder approval. The Board of
Directors believes that the potential benefit of the procedures
contemplated by the Ohio Control Share Acquisition Statute
substantially outweighs the disadvantage that shareholders may
not have the opportunity to consider or to accept certain offers.
The DGCL does not contain a corresponding provision for
restrictions on transfer in connection with control share
acquisitions.
The Merger Moratorium Statute generally prohibits a
wide range of business combinations and other transactions
(including mergers, consolidations, asset sales, loans,
disproportionate distributions of property and disproportionate
issuances or transfers of shares or rights to acquire shares)
between an Ohio corporation and a person that owns, alone or with
others, shares representing at least 10% of the voting power of
the corporation (an "Interested Shareholder") for a period of
three (3) years after such person becomes an Interested
Shareholder, unless, prior to the date that the Interested
Shareholder became such, the directors approve either the
transaction or the acquisition of the corporation's shares that
resulted in the person becoming an Interested Shareholder. See
"Anti-takeover Statutes" at page __. The Merger Moratorium
Statute is designed to prevent many of the self-dealing
activities that often accompany highly-leveraged acquisitions by
prohibiting an Interested Shareholder from using the corporation
or its assets or shares for his special benefit. The Merger
Moratorium statute will encourage potential tender offerors to
negotiate with the Board of Directors of Scotts Ohio to ensure
that the shareholders of Scotts Ohio receive fair and equitable
consideration for their shares. However, the Merger Moratorium
Statute presents potential pitfalls for unwary shareholders.
Close attention to the impact of common corporate actions, such
as the grant of employee stock options and loans to Interested
Shareholders in the ordinary course of business, is necessary to
determine whether such actions are encompassed by the Merger
Moratorium Statute.
Delaware also has a business combination law; however,
unlike Delaware's business combination law, the Merger Moratorium
Statute does not include an exception to the three-year
moratorium on transactions with a significant shareholder in
circumstances in which the significant shareholder acquires more
than 85% of the outstanding shares of a corporation in a
transaction that results in the significant shareholder becoming
an Interested Shareholder, and the Merger Moratorium Statute does
not permit the directors or shareholders to approve a transaction
during the three-year merger moratorium period.
The Board of Directors believes that the limitation on
business combinations and other transactions between Scotts Ohio
and an Interested Shareholder provided by the Merger Moratorium
Statute substantially outweigh the disadvantage that shareholders
may not have the opportunity to consider or approve such
transactions until a period of three years has elapsed after a
person becomes an Interested Shareholder.
2. Director Liability and Indemnification. The Ohio
corporation laws would provide the directors of Scotts Ohio with
specific statutory direction to guide them in making decisions
relating to matters affecting the interests of the corporation,
including takeover proposals. These statutes codify the
directors' common law duty of care and, in part, their common law
duty of loyalty. In addition, a director of Scotts Ohio would be
liable in damages for actions taken (or not taken) as a director
only if the plaintiff proved by clear and convincing evidence
that the director's action or failure to act was done with
deliberate intent to cause injury to the corporation or with
reckless disregard for the best interests of the corporation.
The directors of Scotts Ohio, as an Ohio corporation, would under
most circumstances be entitled to advancement of litigation and
similar expenses related to lawsuits or claims arising out of
such person's service as a director. The directors of Scotts
Ohio would also be entitled to a broad right of indemnification
against not only expenses but also judgments, fines and amounts
paid in settlement if the standards for such indemnification are
satisfied. See "Comparison of Director and Officer Liability and
Indemnification Under Ohio and Delaware Law" at page __.
The Board of Directors may be deemed to have a conflict
of interest in recommending the adoption of the Reincorporation
Proposal by the stockholders because if the members of the Board
of Directors of Scotts Ohio are sued in their capacity as Board
members, they may be able to take advantage of the broad
indemnification provisions of the New Regulations and the
provisions of the OGCL limiting their liability for monetary
damages. The Company's Board of Directors believes that a broad
right of indemnification is necessary to encourage and retain
capable persons to serve as corporate directors. The quality of
a corporation's board of directors is a major factor in its long-
term success and any steps which improve the capacity of the
corporation to attract and retain the best possible directors is
of considerable value to the shareholders. The Board of
Directors also believes that a broad right of indemnification and
limitations upon directors' liability for monetary damages are
necessary to promote the desirable end that directors will
vigorously resist what they consider unjustified suits and claims
brought against them in their corporate capacities. At the same
time, the Board of Directors believes that directors should not
be completely immunized from personal liability resulting from
certain breaches of their duties by means of overly broad
indemnification and limitation of liability provisions. The
indemnification provisions in the New Regulations and the
limitation of liability provisions of the OGCL attempt to balance
these competing concerns.
The Board of Directors of the Company believes that the
indemnification provisions of the New Regulations are largely
confirmatory of the existing Ohio law. The Board recognizes
that, notwithstanding any provision in the New Regulations to the
contrary, Scotts Ohio's ability to indemnify pursuant to the
provisions of the New Regulations, or pursuant to any
indemnification agreement, at all times would be subject to
federal and state public policy limitations which may prevent
indemnification. The Board believes that public policy would
prevent indemnification for egregious intentional wrongdoing,
such as self-dealing or willful fraud. Insofar as
indemnification for liabilities under the Securities Act of 1933,
as amended, may be permitted under the indemnification provisions
of the New Regulations, the Company understands that, in the
opinion of the Securities and Exchange Commission, such
indemnification is against public policy and is, therefore,
unenforceable.
The Company is not aware of any current or past
indemnification or liability issues that will or could be
presented to Scotts Ohio in the event the Reincorporation
Proposal is consummated.
3. Constituencies Which May Be Considered by the
Directors. Ohio law gives directors broad discretion to consider
a variety of constituencies in determining what is in the best
interests of the corporation, including employees, suppliers,
creditors and customers, as well as state and local economic and
societal considerations, and to consider the long-term as well as
the short-term interests of the corporation and its shareholders.
See "Comparison of Director and Officer Liability and
Indemnification Under Ohio and Delaware Law" at page __.
4. Actions Without A Meeting. Consistent with Ohio law,
the New Regulations require unanimous consent of shareholders to
take action without a meeting. The Present By-Laws, consistent
with Delaware law, permit action to be taken by the stockholders
of the Company without a meeting with the written consent of the
holders of shares of the Company having the number of votes
necessary to authorize action at a meeting. The New Regulations
limit the ability of a holder of the requisite voting percentage
to take actions affecting Scotts Ohio and its shareholders
without convening a shareholder meeting. As a result, minority
shareholders will be assured of an opportunity to vote on matters
coming before them at a duly called meeting preceded by delivery
to them of a proxy statement describing the action proposed to be
taken. See "Actions Without a Meeting" at page __.
5. Amendment to Present Charter and New Articles;
Amendment to Present By-Laws and New Regulations; Mergers and
Consolidations; Other Corporate Transactions. Under the DGCL,
the affirmative vote of not less than the majority of the voting
power of the Company is required in order to adopt amendments to
the Present Charter and the Present By-Laws, to approve mergers
and consolidations, to approve the dissolution of the Company or
to approve the sale, lease or exchange of all or substantially
all of the assets of the Company. The New Regulations will also
require the affirmative vote of not less than a majority of the
voting power of Scotts Ohio in order to adopt amendments to the
New Regulations. Consistent with the OGCL, the affirmative vote
of not less than 2/3 of the voting power of Scotts Ohio will be
required to adopt amendments to the New Articles, approve mergers
and consolidations, approve the dissolution of Scotts Ohio, and
approve the sale, lease, exchange, transfer or other disposition
of all or substantially all of the assets of Scotts Ohio. See
"Amendment to Present By-Laws and New Regulations" at page __,
"Amendment to Present Charter and New Articles" at page __,
"Mergers and Consolidations" at page __, and "Other Corporate
Transactions" at page __.
6. No Amendment of New Regulations by Directors. The
Present By-Laws may be amended by the Board of Directors without
stockholder action. Consistent with the OGCL, the New
Regulations may be amended only by the shareholders. See
"Amendment to Present By-Laws and New Regulations" at page __.
Manner of Effecting the Reincorporation
The following summary does not purport to be a complete
description of the Reincorporation Proposal and is qualified in
its entirety by reference to the New Articles, the New
Regulations and the Agreement of Merger, dated as of July ___,
1994 (the "Merger Agreement"), by and between the Company and
Scotts Ohio, a copy of which is attached as Annex C.
The proposed Reincorporation will be effected by
merging the Company with and into Scotts Ohio (the "Merger")
pursuant to the terms of the Merger Agreement. At the Effective
Time (as defined in the Merger Agreement), the separate corporate
existence of the Company will cease; Scotts Ohio will succeed to
all the business, properties, assets and liabilities of the
Company and to the Company's name; and the directors, officers
and employees of the Company will become directors, officers and
employees of Scotts Ohio. Scotts Delaware Shares issued and
outstanding immediately prior to the Effective Time will, by
virtue of the Merger, be converted into an equal number of fully
paid and nonassessable Scotts Ohio Common Shares. Each of the
Scotts Ohio Common Shares will have the same terms as the Scotts
Delaware Shares, subject to the differences arising by virtue of
the differences between Delaware and Ohio law and between the
provisions of the Present Charter and the Present By-Laws and the
New Articles and New Regulations.
From and after the Effective Time, each holder of a
certificate representing Scotts Delaware Shares (a "Delaware
Certificate") will be deemed for all purposes to be the holder of
the number of Scotts Ohio Common Shares into which the Scotts
Delaware Shares represented by his Delaware Certificate(s) have
been converted. Such Delaware Certificates will continue to
represent Scotts Ohio Common Shares and need not be surrendered
for certificates representing Scotts Ohio Common Shares. It will
not be necessary for stockholders of the Company to surrender
their Delaware Certificates for certificates representing Scotts
Ohio Common Shares, although they may do so if they wish. Each
holder of a Delaware Certificate outstanding immediately prior to
the Effective Time will receive upon surrender of his Delaware
Certificate for cancellation, a new certificate representing the
same number of Scotts Ohio Common Shares.
Approval of the Reincorporation Proposal will not
result in any change in the name, business, management, location
of the principal executive offices or other facilities,
capitalization, assets or liabilities of the Company. The
Scotts Ohio Common Shares will continue to be traded without
interruption in the over-the-counter market and reported on the
NASDAQ National Market System. The Company's 1992 Long Term
Incentive Plan (the "1992 Plan") will be continued by Scotts Ohio
and each outstanding award issued pursuant to the 1992 Plan will
be converted into an award for Scotts Ohio Common Shares equal to
the number of Scotts Delaware Shares related to the 1992 Plan
immediately prior to the Effective Time, at the same prices per
share and upon the same terms and subject to the same conditions
as were in effect immediately prior to the Effective Time. The
Company's other employee benefit plans and arrangements will also
be continued by Scotts Ohio upon the same terms and subject to
the same conditions.
It is anticipated that the Merger will become effective
as soon as practicable following stockholder approval. However,
the Merger Agreement provides that the Merger may be abandoned by
the Board of Directors of the Company prior to the Effective
Time, either before or after stockholder approval, if the Board
determines that such abandonment is in the best interests of the
Company. The Board of Directors has made no determination as to
any circumstances which may prompt a decision to abandon the
proposed Reincorporation. In addition, the Merger Agreement may
be amended prior to the Effective Time, either before or after
stockholder approval, provided that the Merger Agreement may not
be amended after stockholder approval if such amendment would (i)
alter or change the number or kind of shares to be received by
stockholders of the Company in the Merger, (ii) alter or change
any term of the New Articles or New Regulations, or (iii) alter
or change any of the terms and conditions of the Merger Agreement
if such alteration or change would adversely affect the
stockholders of the Company.
Since the Scotts Delaware Shares were designated as a
NASDAQ National Market System security on the Record Date,
stockholders of the Company who do not vote in favor of the
Reincorporation Proposal will not be entitled to appraisal rights
in connection with the Reincorporation Proposal.
Immediately following the consummation of the Merger,
OMS will be merged into Scotts Ohio. Upon consummation of the
OMS Merger, Scotts Ohio will succeed to all the business,
properties, assets and liabilities of OMS and will become an
operating company and the outstanding shares of OMS will be
extinguished. Since OMS would be a wholly-owned subsidiary of
Scotts Ohio immediately prior to the OMS Merger and no Scotts
Ohio Common Shares would be issued in connection therewith, the
shareholders of Scotts Ohio would not be required to approve the
OMS Merger. The vote by the Company's stockholders upon the
Reincorporation Proposal will not constitute a vote upon the OMS
Merger. If the Reincorporation Proposal is not approved by the
Company's stockholders, OMS will be merged into the Company
rather than into Scotts Ohio.
Reasons for the Proposed Reincorporation
A major reason for incorporation under Ohio law is that
the overall state tax liability should decrease. Because the
Company incorporated in Delaware, it is exposed to taxation not
only in Ohio, but also in Delaware, where it conducts no
business. Following payment of an one-time Ohio fee of $90,100,
levied at the time of the Reincorporation, Scotts Ohio's overall
state tax liability, based on present rates, will be
approximately $134,000 per year less than that currently paid by
the Company.
In addition, as a result of the OMS Merger, Scotts Ohio
would become an operating company. Since OMS and Scotts Ohio
would no longer be separately taxed entities, the overall state
tax liability of Scotts Ohio and its subsidiaries, based on
present rates, should decrease by approximately $184,000 per
year, in addition to the previously mentioned $134,000. If the
Company's stockholders would not approve the Reincorporation
Proposal and OMS would merge into the Company rather than into
Scotts Ohio, the overall state tax liability of the Company and
its subsidiaries, based on present rates, should decrease by
approximately $184,000 per year.
Another major reason for incorporation under Ohio law
is that by expressly broadening the scope of judgment and
discretion which may be exercised by them, it affords directors
of Ohio corporations a better environment than does Delaware in
which to perform their duties. Both Ohio and Delaware law
require directors in the performance of their duties to be
careful and disinterested and to act in good faith, following
appropriate consideration, in the best interests of the
corporation and its shareholders. Ohio law, however, addresses
the specifics of the obligations of directors more clearly than
does Delaware in several very important areas. For example, it
provides explicit guidelines regarding the types of
considerations which are appropriate in corporate governance
generally and, in particular, in the evaluation of efforts to
take over control. It also provides that a person challenging
the actions of directors, including actions involving a change in
control, has the burden of proving by clear and convincing
evidence that the directors have not acted in good faith with
regard to a matter. The Ohio statutes also provide that in most
cases directors may be assured of the advancement of funds to
them by their corporation in connection with their defense of
litigation in which they are involved by reason of the
performance of their duties as directors. These provisions are
believed by the Board of Directors of the Company to be of value
to the shareholders by providing a greater degree of assurance to
a director regarding the range of discretion and judgment which
he may exercise. The advantages and disadvantages of the
provisions of the OGCL and the New Regulations governing
indemnification and limitations upon directors' liability for
monetary damages are more fully discussed in "Significant Changes
Resulting from the Reincorporation -- Director Liability and
Indemnification" at page __.
The Ohio Control Share Acquisition Statute is intended
to give shareholders of Ohio corporations, such as Scotts Ohio, a
reasonable opportunity to express their views on a proposed shift
in control (thereby reducing the coercion inherent in an
unfriendly takeover). The Ohio Control Share Acquisition Statute
would grant to the shareholders of Scotts Ohio the assurance that
they will have adequate time to evaluate the proposal of the
acquiring person and will be permitted to vote on the issue of
authorizing the acquiring person's purchase program to go forward
in the same manner and with the same proxy information that would
be available to them if a proposed merger of Scotts Ohio were
before them. The Merger Moratorium Statute is designed to
prevent many of the self-dealing activities that often accompany
highly-leveraged acquisitions by prohibiting an Interested
Shareholder from using Scotts Ohio or its assets or shares for
his special benefit. The advantages and disadvantages of the
Ohio Control Share Acquisition Statute and the Merger Moratorium
Statute are described fully in "Significant Changes Resulting
from the Reincorporation -- Ohio Control Share Acquisition
Statute and Merger Moratorium Statute" at page __.
Certain Significant Differences Between the
Organizational Documents of Scotts Ohio and the Company
The New Articles and New Regulations differ from the
Present Charter and the Present By-Laws in several significant
respects. The most important of these differences are described
below.
Amendment to Present By-Laws and New Regulations
The by-laws of a Delaware corporation may be amended by
the stockholders and, if the certificate of incorporation so
provides, by the board of directors. The Present Charter
provides that the Board may adopt, alter, amend or repeal the
Present By-Laws without stockholder action.
The regulations of an Ohio corporation may be amended
only by the corporation's shareholders. In the case of the New
Regulations, an amendment may be adopted by the shareholders by a
majority of the voting power entitled to vote in connection with
the amendment.
Actions Without a Meeting
Under the DGCL, unless the certificate of incorporation
provides otherwise, any action which may be authorized or taken
at a meeting of stockholders may be authorized or taken without
such meeting, and without prior notice and without a vote, by
written consent of the holders of shares of outstanding stock
having the number of votes necessary to authorize or take such an
action at a meeting at which all shares entitled to vote thereon
were present and voted. The Present Charter provides no limits
on the actions which may be taken by the stockholders of the
Company without a meeting.
The New Regulations contain provisions consistent with
the OGCL relating to the taking of shareholder action without a
meeting. Under the New Regulations and the OGCL, any action
which may be authorized or taken at a meeting of shareholders may
be authorized or taken without such meeting by the affirmative
vote or the written approval of all of the shareholders entitled
to notice of such meeting.
Comparison of Shareholders' Rights Under Ohio and Delaware Law
The rights of shareholders of Scotts Ohio will be
governed by the OGCL rather than the DGCL. The OGCL and the DGCL
differ in a number of respects, and it is not practical to
summarize all of such differences here. However, the following
is a summary of certain significant differences between the
provisions of these laws as they might affect the rights and
interests of stockholders of the Company, based on the provisions
contained in the New Articles and New Regulations.
Amendment to Present Charter and New Articles
Under the DGCL, the directors of a corporation must
adopt a resolution setting forth a proposed amendment to the
corporation's certificate of incorporation, declaring its
advisability and either calling a special meeting of the
stockholders entitled to vote thereon to consider the proposed
amendment or directing that the proposed amendment be considered
at the next annual meeting of stockholders. An amendment must be
adopted by the affirmative vote of the holders of a majority of
the outstanding shares entitled to vote thereon, or by a greater
vote as provided in the certificate of incorporation. The
Present Charter does not provide for a greater vote.
Under the OGCL, an amendment to the articles must be
adopted by the affirmative vote of the holders of shares
entitling them to exercise 2/3 of the voting power of the
corporation on the proposal, or a different proportion but not
less than a majority of the voting power, as provided in the
articles. The New Articles do not provide for a different vote.
Mergers and Consolidations
Under the DGCL, an agreement of merger or consolidation
must be approved by the directors of each constituent corporation
and adopted by the affirmative vote of the holders of a majority
of the outstanding shares entitled to vote thereon, or by a
greater vote as provided in the certificate of incorporation.
The Present Charter does not provide for a greater vote. Under
the DGCL, the separate vote of any class of shares is not
required. Additionally, the DGCL provides that, unless its
certificate of incorporation provides otherwise, no vote of the
stockholders of the surviving corporation is required to approve
a merger if (i) the agreement of merger does not amend in any
respect the corporation's certificate of incorporation, (ii) each
share outstanding immediately prior to the effective date of the
merger is to be an identical outstanding or treasury share of the
surviving corporation after the effective date of the merger, and
(iii) the number of shares of the surviving corporation's common
stock to be issued in the merger plus the number of shares of
common stock into which any other securities to be issued in the
merger are initially convertible does not exceed 20% of its
common stock outstanding immediately prior to the effective date
of the merger.
Under the OGCL, an agreement of merger or consolidation
must be approved by the directors of each constituent corporation
and adopted by the shareholders of each constituent Ohio
corporation (other than the surviving corporation in the case of
a merger) holding at least 2/3 of the corporation's voting power,
or a different proportion but not less than a majority of the
voting power, as provided in the articles. The New Articles do
not provide for a different vote. In the case of a merger, the
agreement must also be adopted by the shareholders of the
surviving corporation by similar vote, if one or more of the
following conditions exist: (a) the articles or regulations of
the surviving corporation then in effect require that the
agreement be adopted by the shareholders or by the holders of a
particular class of shares of that corporation; (b) the agreement
conflicts with the articles or regulations of the surviving
corporation then in effect, or changes the articles or
regulations, or authorizes any action that, if it were being made
or authorized apart from the merger, would otherwise require
adoption by the shareholders or by the holders of a particular
class of shares of that corporation; (c) the merger involves the
issuance or transfer by the surviving corporation to the
shareholders of the other constituent corporation or corporations
of such number of shares of the surviving corporation as will
entitle the holders of the shares immediately after the
consummation of the merger to exercise 1/6 or more of the voting
power of that corporation in the election of directors; or (d)
the agreement of merger makes such change in the directors of the
surviving corporation as would otherwise require action by the
shareholders or by the holders of a particular class of shares of
that corporation.
Other Corporate Transactions
The DGCL does not require stockholder approval in the
case of combinations and majority share acquisitions, and
provides for a majority vote on disposition of all or
substantially all of a corporation's assets and on dissolutions,
unless a greater vote is provided for in the certificate of
incorporation. The Present Charter does not provide for a
greater vote.
Subject to certain exceptions, under the OGCL, the
approval of 2/3 of the voting power of the corporation, or a
different proportion (not less than a majority of the
corporation's voting power) as provided in the articles, is
required for (i) the consummation of combinations and majority
share acquisitions involving the transfer or issuance of such
number of shares as would entitle the holders thereof to exercise
at least 1/6 of the voting power of such corporation in the
election of directors immediately after the consummation of such
transaction, (ii) the disposition of all or substantially all of
the corporation's assets other than in the regular course of
business and (iii) voluntary dissolutions. The New Articles do
not provide for a different vote.
Anti-takeover Statutes
Section 203 of the DGCL, designed primarily to regulate
the second step of a two-tiered takeover attempt, applies to a
broad range of "business combinations" between a Delaware
corporation, such as the Company, and an "interested
stockholder". That Section defines a "business combination" as
including mergers, consolidations, sales and other dispositions
of 10% or more of the assets, issuances of stock and almost any
related party transaction. An "interested stockholder" is
defined to include any person (other than the corporation or any
of its majority-owned subsidiaries) who beneficially owns,
directly or indirectly, 15% or more of the outstanding voting
stock of a corporation. Delaware law prohibits a corporation
from engaging in a business combination with an interested
stockholder for a period of three years following the date on
which the stockholder became an interested stockholder, unless
(a) the board of directors approved either the business
combination or the transaction which resulted in the
stockholder's becoming an interested stockholder before the
person became an interested stockholder; (b) upon consummation of
the transaction which resulted in the stockholder's becoming an
interested stockholder, such stockholder owned at least 85% of
the voting stock outstanding when the transaction began,
excluding for purposes of determining the number of shares
outstanding those shares owned by persons who are directors and
also officers of the corporation and by employee stock plans in
which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer; or (c) the board of
directors approved the business combination after the stockholder
became an interested stockholder and the business combination was
approved by at least 66 2/3% of the outstanding voting stock not
owned by such stockholder at a meeting of the stockholders. The
Company has not taken any action to opt out of the restrictions
contained in Delaware's business combination law.
Under the OGCL, unless the corporation's articles or
regulations otherwise provide, any "control share acquisition" of
an "issuing public corporation" may be made only with the prior
authorization of its shareholders in accordance with the Ohio
Control Share Acquisition Statute. Scotts Ohio qualifies as an
issuing public corporation.
The Ohio Control Share Acquisition Statute requires
shareholder approval of any proposed "control share acquisition"
of Scotts Ohio. A "control share acquisition" is the
acquisition, directly or indirectly, by any person (including any
individual, partnership, corporation, limited liability company,
society, association or two or more persons having a joint or
common interest) of shares of a corporation that, when added to
all other shares of the corporation that may be voted, directly
or indirectly, by the acquiring person, would entitle such person
to exercise or direct the exercise of 20% or more (but less than
33 1/3%) of the voting power of the corporation in the election
of directors or 33 1/3% or more (but less than a majority) of
such voting power or a majority or more of such voting power.
The control share acquisition must be approved in advance by the
holders of at least a majority of the outstanding voting shares
represented at a meeting at which a quorum is present and by the
holders of a majority of the portion of the outstanding voting
shares represented at such a meeting excluding the voting shares
owned by the acquiring shareholder and certain "interested
shares," including shares owned by officers elected or appointed
by the directors of Scotts Ohio and by directors of Ohio who are
also employees of Scotts Ohio. "Interested shares" also include
those shares acquired by a person or group between the date of
the first disclosure of a proposed control share acquisition or
change-in-control transaction and the date of the special meeting
of shareholders held pursuant to the Ohio Control Share
Acquisition Statute. Shares acquired during that period by a
person or group will be deemed "interested shares" only if (i)
the amount paid for the shares by such person or group exceeds
$250,000 or (ii) the number of shares acquired by such person or
group exceeds 1/2 of 1% of the outstanding voting shares.
The New Articles and New Regulations do not contain any
provision opting out of the Ohio Control Share Acquisition
Statute. Therefore, it applies to control share acquisitions of
Scotts Ohio's shares.
Unless the corporation's articles otherwise provide,
the Merger Moratorium Statute prohibits an Ohio corporation that
is a reporting company under the Exchange Act (Scotts Ohio will
be such a reporting company) from engaging in a wide range of
business combinations and other transactions (including mergers,
consolidations, asset sales, loans, disproportionate
distributions of property and disproportionate issuances or
transfers of shares or rights to acquire shares) with an
Interested Shareholder for a period of three years after such
person becomes an Interested Shareholder unless, prior to the
date that the Interested Shareholder became such, the directors
approve either the transaction or the acquisition of the
corporation's shares that resulted in the person's becoming an
Interested Shareholder. Following the three-year moratorium
period, the corporation may engage in covered transactions with
an Interested Shareholder only if, among other things, (i) the
transaction receives the approval of the holders of 2/3 of all
the voting shares and the approval of the holders of a majority
of the voting shares held by persons other than an Interested
Shareholder or (ii) the remaining shareholders receive an amount
for their shares equal to the higher of the highest amount paid
in the past by the Interested Shareholder for the corporation's
shares or the amount that would be due the shareholders if the
corporation were to dissolve. Among other differences, unlike
Delaware, Ohio does not include an exception to the three-year
moratorium on transactions with a significant shareholder in
circumstances in which the significant shareholder acquires more
than 85% of the outstanding shares of a corporation in a
transaction that results in the significant shareholder becoming
an Interested Shareholder, and Ohio does not permit the directors
or shareholders to approve a transaction during the three-year
merger moratorium period.
The New Articles do not contain any provision to opt
out of the Merger Moratorium Statute. Therefore, it applies to
Scotts Ohio.
Section 1707.041 of the Ohio Revised Code provides in
part that no offeror may make a control bid pursuant to a tender
offer or a request or invitation for tenders unless, on the day
the offeror commences a control bid, it files with the Ohio
Division of Securities (the "Securities Division") and the target
company certain information in respect of the offeror, his
ownership of the company's shares and his plans for the company
(including, among other things, plans to terminate employee
benefit plans, close any plant or facility, or reduce the work
force). If the Securities Division determines that the offeror's
disclosures are inadequate, it must act within three calendar
days from the date of the offeror's filing to issue a suspension
order. If a bid is suspended, a hearing must be held within ten
calendar days from the date of the Securities Division's
suspension order. The hearing procedure must be completed no
later than sixteen calendar days after the date on which the
suspension was imposed. A control bid is the purchase of or
offer to purchase any equity security of an issuer with certain
connections to Ohio from a resident of Ohio if (i) after the
purchase of such security, the offeror would directly or
indirectly be the beneficial owner of more than 10% of any class
of the issued and outstanding equity securities of the issuer or
(ii) the offeror is the issuer, there is a pending control bid by
a person other than the issuer, and the number of the issued and
outstanding shares of the company would be reduced by more than
10%. Section 1707.041 does not apply when the offeror or the
target company is a bank, a bank holding company or a savings and
loan holding company and the control bid is subject to approval
by the appropriate federal regulatory agency.
Unless the corporation's articles or regulations
otherwise provide, Section 1707.043 of the Ohio Revised Code (the
"Profit Recovery Statute") permits an Ohio corporation to recover
any profit realized from the disposition of equity securities of
the corporation by a person or group who made a proposal to
acquire control of the corporation within eighteen months before
the disposition of the equity securities. Certain profits are
not recoverable pursuant to the Profit Recovery Statute,
including profits that do not exceed $250,000 in the aggregate,
profits with respect to securities that were acquired prior to
April 11, 1990 or more than eighteen months prior to the date on
which the acquisition proposal was made, and profits realized by
a person or group that establishes in court that its motives were
not manipulative. Neither the New Articles nor the New
Regulations provide that the Profit Recovery Statute will not
apply to Scotts Ohio and its equity securities.
Special Meetings
Under the DGCL, a special meeting of stockholders may
be called by the board of directors or by such person or persons
as may be authorized by the certificate of incorporation or by-
laws. Under the Present By-Laws, a special meeting of
stockholders of the Company may be called by the Board of
Directors, the Chairman of the Board or the President (or, in the
event of their absence or disability, any Vice President) or by
any stockholders owning, in the aggregate, not less than a
majority of the Scotts Delaware Shares. Under the OGCL, persons
who may call a special meeting of shareholders include the
chairman of the board, the president, or, in case of the
president's absence, death, or disability, the vice-president
authorized to exercise the authority of the president; the
directors by action at a meeting or a majority of the directors
acting without a meeting; persons holding 25% or more of the
voting power of all shares entitled to vote, unless the articles
or regulations specify a smaller or larger portion, but not more
than 50%; or such other officers or persons as the articles or
regulations may authorize. The New Regulations, in addition to
authorizing the Chairman of the Board, the President (or, in the
event of his absence, death or disability, the Vice President
authorized to exercise the authority of the President), the
Secretary or the Board of Directors to call a special meeting of
shareholders, authorize a special meeting of shareholders to be
called by persons holding at least a majority of all shares
outstanding and entitled to vote thereat.
Cumulative Voting
Where cumulative voting is permitted, each share of
stock is entitled to as many votes as there are directors to be
elected and each shareholder may cast all his votes for a single
candidate or distribute such votes among two or more candidates.
Under the DGCL, cumulative voting is permitted only if it is
provided for in the certificate of incorporation. The Present
Charter does not provide for cumulative voting.
Under the OGCL, unless specifically eliminated by an
amendment to the corporation's articles, or in the case of a
merger, in the constituent corporations' merger agreement,
cumulative voting in the election of directors is mandatory if
written notice is given by any shareholder to the president, a
vice president or the secretary of the corporation, not less than
48 hours before a meeting held for the purpose of electing
directors (if the meeting notice has been given at least 10 days
prior thereto, and otherwise not less than 24 hours before the
meeting), that the shareholder desires that the vote for the
election of directors be cumulative, and if an announcement of
the giving of such notice is made upon the convening of the
meeting by the chairman or secretary or by or on behalf of the
shareholder giving such notice. The Merger Agreement provides
that at and after the Effective Time, no shareholders of Scotts
Ohio will be entitled to vote cumulatively in the election of
directors of Scotts Ohio and Article SEVENTH of the New Articles
pursuant to the Merger Agreement also expressly eliminates
cumulative voting. AN EFFECT OF THE ELIMINATION OF CUMULATIVE
VOTING WOULD BE BOTH TO (A) PERMIT A MAJORITY OF A QUORUM OF THE
VOTING POWER IN THE ELECTION OR REMOVAL OF DIRECTORS TO ELECT OR
REMOVE EVERY DIRECTOR; AND (B) PRECLUDE A MINORITY OF A QUORUM OF
THE VOTING POWER IN THE ELECTION OR REMOVAL OF DIRECTORS FROM
ELECTING OR PREVENTING THE REMOVAL OF ANY DIRECTOR. However, the
elimination of cumulative voting for the shareholders of Scotts
Ohio as an Ohio corporation does not represent any substantive
change in the voting rights of the stockholders of the Company as
a Delaware corporation.
Class Voting
The DGCL requires voting by separate classes only with
respect to amendments to the certificate of incorporation which
adversely affect the holders of such classes or which increase or
decrease the aggregate number of authorized shares or the par
value of the shares of any such classes. Under the OGCL, holders
of a particular class of shares are entitled to vote as a
separate class if the rights of such class are affected by
mergers, consolidations or amendments to the articles.
Removal of Directors and Filling of Vacancies
Under the Present By-Laws, a director of the Company
may be removed from office prior to the expiration of his term,
with or without cause, by the holders of a majority of the Scotts
Delaware Shares. Under the Present By-Laws and the DGCL,
vacancies in the Board of Directors of the Company and any newly-
created directorships resulting from any increase in the number
of the Company's directors may be filled by the Company's Board
of Directors, acting by the vote of a majority of the directors
then in office, even if less than a quorum, and any director so
chosen shall serve until the next annual election of directors
and until his successor is elected and qualified.
Under the New Regulations, a director or directors may
be removed from office, with or without cause, by the affirmative
vote of the holders of at least a majority of the voting power of
Scotts Ohio entitling them to elect directors in place of those
to be removed. Vacancies in the Board of Directors of Scotts
Ohio and any newly-created directorships resulting from any
increase in the number of Scotts Ohio's directors may be filled
by Scotts Ohio's Board of Directors, acting by the vote of a
majority of the directors then in office, even if less than a
quorum. A director elected to the Board to fill a vacancy would
hold office for the unexpired portion of the term of the director
whose place has been filled. A director elected by the Board to
fill a newly created directorship resulting from an increase in
the number of directors would hold office until the next election
of the class for which the director was elected.
Appraisal Rights
Under the DGCL, appraisal rights are available only in
connection with statutory mergers or consolidations. Even in
such cases, unless the certificate of incorporation otherwise
provides (and the Present Charter does not so provide), the DGCL
does not recognize dissenters' rights for any class or series of
stock which is either listed on a national securities exchange or
designated as a national market system security on an interdealer
quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 stockholders
except that appraisal rights are available for holders of stock
who, by the terms of the merger or consolidation, are required to
accept anything except (i) stock of the corporation surviving or
resulting from the merger or consolidation, (ii) shares of any
other corporation which at the effective time of the merger or
consolidation are either listed on a national securities exchange
or designated as a national market system security on an
interdealer quotation system by the National Association of
Securities Dealers, Inc. or held of record by more than 2,000
shareholders, (iii) cash in lieu of fractional shares of stock
described in the foregoing clauses (i) and (ii), or (iv) any
combination of stock and cash in lieu of fractional shares
described in the foregoing clauses (i), (ii) or (iii).
Under the OGCL, dissenting shareholders are entitled to
appraisal rights in connection with the lease, sale, exchange,
transfer or other disposition of all or substantially all of the
assets of a corporation and in connection with amendments to its
articles which change the rights of shareholders in a
substantially prejudicial manner. In addition, shareholders of
an Ohio corporation being merged into a new corporation are also
entitled to appraisal rights. Shareholders of an acquiring
corporation are entitled to appraisal rights in a merger,
combination or majority share acquisition in which such
shareholders are entitled to voting rights.
Dividends
A Delaware corporation may pay dividends out of any
surplus and, if it has no surplus, out of any net profits for the
fiscal year in which the dividend is declared and/or the
preceding fiscal year provided that such payment will not reduce
capital below the amount of capital represented by all classes of
shares having a preference upon the distribution of assets. An
Ohio corporation may pay dividends in an amount which does not
exceed the combination of the surplus of the corporation and the
difference between (a) the reduction in surplus that results from
the immediate recognition of the transition obligation under
Statement of Financial Accounting Standards No. 106 ("SFAS No.
106") issued by the Financial Accounting Standards Board and (b)
the aggregate amount of the transition obligation that would have
been recognized as of the date of the declaration of a dividend
or distribution if the corporation had elected to amortize its
recognition of the transition obligation under SFAS No. 106. An
Ohio corporation must notify its shareholders if a dividend is
paid out of capital surplus.
Repurchases
Under the DGCL, a corporation may repurchase its shares
only out of surplus and only if such purchase does not impair
capital. Under the OGCL, a corporation may repurchase its own
shares if authorized to do so by its articles or under certain
other circumstances but may not do so if immediately thereafter
its assets would be less than its liabilities plus its stated
capital, if any, or if the corporation is insolvent or would be
rendered insolvent by such a purchase or redemption. Article
FIFTH of the New Articles permits Scotts Ohio to repurchase
shares to the extent permitted by law.
Preemptive Rights
Under the DGCL, stockholders have no preemptive rights
unless such rights are expressly granted to them by the
certificate of incorporation. The Present Charter does not grant
preemptive rights to the Company's stockholders.
With few exceptions, the OGCL grants preemptive rights
to shareholders of an Ohio corporation, unless specifically
denied in the articles. The New Articles specifically deny
preemptive rights to shareholders of Scotts Ohio.
Revocability of Proxies
Under the DGCL, a duly executed proxy is irrevocable if
it states that it is irrevocable and if, and only so long as, it
is coupled with an interest. Under the OGCL, a duly executed
proxy is revocable unless such appointment is coupled with an
interest, except that proxies given in connection with the
shareholder authorization of a control share acquisition are
revocable at all times prior to the obtaining of such shareholder
authorization, whether or not coupled with an interest.
Comparison of Director and Officer Liability
and Indemnification Under Ohio and Delaware Law
Delaware
Section 102(b)(7) of the DGCL permits a Delaware
corporation to limit or eliminate a director's personal liability
to the Company or its stockholders for monetary damages for
breach of fiduciary duty as a director except in the instance of
(i) a breach of the director's duty of loyalty to the Company or
its stockholders, (ii) acts or omissions not in good faith or
which involved intentional misconduct or a knowing violation of
law, (iii) the paying of a dividend or the approving of a stock
repurchase or redemption which is illegal under the DGCL, or (iv)
any transaction from which the director derived an improper
personal benefit. Article FIFTH of the Present Charter
eliminates the personal liability of the directors of the Company
to the fullest extent permitted by Section 102(b)(7) of the DGCL.
Under Section 145 of the DGCL, directors, officers and
other employees and individuals may be indemnified against
expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with specified actions,
suits or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
corporation--a "derivative action") if they acted in good faith
and in a manner they reasonably believed to be in, or not opposed
to, the best interests of the corporation, and, regarding any
criminal action or proceeding, had no reasonable cause to believe
their conduct was unlawful. A similar standard is applicable in
the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) incurred in
connection with defense or settlement of such actions. The DGCL
requires court approval before there can be any indemnification
where the person seeking indemnification has been found liable to
the corporation. To the extent that a person otherwise eligible
to be indemnified is successful on the merits of any claim or
defense described above, indemnification for expenses (including
attorneys' fees) is mandated by the DGCL. Advancement of such
expenses (i.e., payment prior to a determination on the merits)
is permissive only and such person must repay such expenses if it
is ultimately determined that he is not entitled to
indemnification.
Consistent with Section 145 of the DGCL, the Present By-
Laws provide that any person made a party to any action, suit or
proceeding (other than an action threatened or instituted
directly by the Company) by reason of the fact that he is or was
a director or officer of the Company or of any corporation which
he served as such at the request of the Company, shall be
indemnified by the Company against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with such action,
suit or proceeding, if such person acted in good faith and in a
manner which such person reasonably believed to be in the best
interests of the Company, and, with respect to any criminal
action or proceeding, had no reason to believe the conduct was
unlawful. Similar indemnification of employees and agents of the
Company is permissive only. A similar standard is applicable in
the case of derivative actions, except, consistent with Section
145 of the DGCL, indemnification only extends to expenses
(including attorneys' fees) incurred in connection with defense
or settlement of such actions. Consistent with Section 145 of
the DGCL, court approval is required before there can be any
indemnification where the person seeking indemnification has been
found liable to the Company.
Consistent with Section 145 of the DGCL, to the extent
that a person otherwise eligible to be indemnified is successful
on the merits of any claim or defense described above,
indemnification for expenses (including attorneys' fees) is
mandated by the Present By-Laws. In addition, advancement of
such expenses incurred by officers and directors is required by
the Present By-Laws (permitted in the case of employees and
agents) as long as such person agrees to repay such expenses if
it is ultimately determined that he is not entitled to
indemnification.
Section 145 of the DGCL also grants express power to a
Delaware corporation to purchase liability insurance for its
directors, officers, employees and agents, regardless of whether
any such individual is otherwise eligible for indemnification by
the corporation. Similarly, the Present By-Laws requires the
Company to purchase such insurance for directors and officers.
Ohio
Under Section 1701.13(E) of the Ohio Revised Code,
directors, officers, employees and agents of Ohio corporations
have an absolute right to indemnification for expenses (including
attorneys' fees) actually and reasonably incurred by them to the
extent they are successful in defense of any action, suit or
proceeding, including derivative actions, brought against them,
or in defense of any claim, issue or matter asserted in any such
proceeding. A director or officer is entitled to such
indemnification if his success is "on the merits or otherwise",
thus mandating indemnification if the indemnitee is successful on
the merits or if he is successful, for example, in asserting a
procedural defense, such as a claim that the action is barred by
the applicable statute of limitations or if he is released
pursuant to a negotiated settlement without making payment or
providing other consideration. Directors (but not officers,
employees or agents) are entitled to mandatory payment of
expenses by the corporation as they are incurred, in advance of
the final disposition of the action, suit or proceeding, provided
the director agrees to cooperate with the corporation concerning
the matter and to repay the amount advanced if it is proved by
clear and convincing evidence that his act or failure to act was
done with deliberate intent to cause injury to the corporation or
with reckless disregard for the corporation's best interests.
The OGCL, like the DGCL, permits a corporation to
indemnity directors, officers, employees or agents of the
corporation in circumstances where indemnification is not
mandated by the statute if certain statutory standards are
satisfied. A corporation may grant indemnification in actions
other than actions brought by, or derivatively in the right of,
the corporation if the indemnitee has acted in good faith and in
a manner he reasonably believed to be in, or not opposed to, the
best interests of the corporation, and with respect to any
criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. Such indemnification is permitted
against expenses (including attorneys' fees) as well as
judgments, fines and amounts paid in settlement actually and
reasonably incurred by the indemnitee.
An Ohio corporation may also provide indemnification in
actions brought by, or derivatively in the right of, the
corporation for attorneys' fees and expenses actually and
reasonably incurred in connection with the defense or settlement
of an action if the officer, director, employee or agent acted in
good faith and in a manner he reasonably believed to be in, or
not opposed to, the best interests of the corporation. Ohio law
does not expressly authorize indemnification against judgments,
fines and amounts paid in settlement in such actions. The
corporation may not indemnify a director, officer, employee or
agent in such actions for attorneys' fees and expenses if the
director, officer, employee or agent is adjudged to be liable to
the corporation for negligence or misconduct in the performance
of his duties to the corporation, unless and only to the extent
that a court determines that, despite the adjudication of
liability, such person is fairly and reasonably entitled to
indemnity.
The OGCL grants express power to an Ohio corporation to
purchase and maintain insurance or furnish similar protection,
including but not limited to trust funds, letters of credit and
self-insurance, for director, officer, employee or agent
liability. Such insurance may be purchased for, or other
protection provided to, any director, officer, employee or agent,
regardless of whether that individual is otherwise eligible for
indemnification by the corporation.
The New Regulations provide for indemnification
consistent with Section 1701.13(E) of the Ohio Revised Code. The
New Regulations provide that Scotts Ohio must indemnity officers
and directors against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement incurred in
connection with any pending, threatened or completed action
(whether criminal, civil, administrative or investigative) by
reason of the fact that such individual is or was a director,
officer, employee or agent of Scotts Ohio or is or was serving at
the request of Scotts Ohio as a director, trustee, officer,
employee, member, manager or agent of another corporation or
other entity so long as such individual acted in good faith and
in a manner he reasonably believed was in, or not opposed to, the
best interests of Scotts Ohio and, with respect to any criminal
matter, he had no reasonable cause to believe his conduct was
unlawful. The New Regulations forbid Scotts Ohio from
indemnifying an officer or director if such person is adjudged to
be liable for acting with reckless disregard for the best
interests of Scotts Ohio or misconduct (other than negligence) in
the performance of his duty to Scotts Ohio unless and only to the
extent a court, in view of all the circumstances, concludes that
such person is fairly and reasonably entitled to such indemnity
as the court deems proper. The New Regulations recite a
presumption that a director or officer acted in good faith and in
a manner he reasonably believed to be in, or not opposed to, the
best interests of Scotts Ohio, and with respect to any criminal
matter to have had no reasonable cause to believe his conduct was
unlawful. Because of this presumption, Scotts Ohio believes that
a director or officer will not have the initial burden of showing
that he acted in good faith or in a manner he reasonably believed
to be in, or not opposed to, the best interests of Scotts Ohio.
In addition, the New Regulations require Scotts Ohio to advance
expenses on behalf of officers and directors if they agree in
writing to repay such amounts if they are not successful in
litigation.
The New Regulations state that the indemnification
provided thereby is not exclusive of any other rights to which
any person seeking indemnification may be entitled.
Additionally, the New Regulations provide that Scotts Ohio may
purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee or agent of Scotts Ohio, or who
is or was serving another entity at the request of Scotts Ohio,
against any liability asserted against him and incurred by him in
such capacity, or arising out of his status as such, whether or
not Scotts Ohio would have the obligation or power to indemnify
him under the New Regulations. The New Regulations also
authorize Scotts Ohio to purchase and maintain trust funds,
letters of credit or self-insurance on behalf of any person who
is or was a director, officer, employee or agent of Scotts Ohio
or who is or has served another entity at the request of Scotts
Ohio.
Ohio has codified the directors' common law duty of
care and, in part, their common law duty of loyalty. Section
1701.59(B) of the Ohio Revised Code provides in pertinent part:
A director shall perform his duties as a
director, including his duties as a member of
any committee of the directors upon which he
may serve, in good faith, in a manner he
reasonably believes to be in or not opposed
to the best interests of the corporation, and
with the care that an ordinarily prudent
person in a like position would use under
similar circumstances.
Under Ohio law, a director is not liable for monetary
damages unless it is proved by clear and convincing evidence that
his action or failure to act was undertaken with deliberate
intent to cause injury to the corporation or with reckless
disregard for the best interests of the corporation. This higher
standard of proof must be met in any action brought against a
director for breach of his duties, including any action involving
or affecting (i) a change or potential change in control of the
corporation, (ii) a termination or potential termination of a
director's service to the corporation as a director or (iii) his
service in any other position or relationship with the
corporation. The higher standard of proof, however, does not
affect the liability of directors for unlawful loans, dividends
or distributions under Section 1701.95 of the Ohio Revised Code.
There is no comparable provision limiting the liability of
officers, employees or agents of Ohio corporations.
The Company is not aware of any current or past
indemnification or liability issues that will or could be
presented to Scotts Ohio in the event the Reincorporation
Proposal is consummated.
Ohio law provides specific statutory authority for
directors, in determining what they reasonably believe to be in
the best interests of the corporation, to consider, in addition
to the interests of the corporation's shareholders, other factors
such as the interests of the corporation's employees, suppliers,
creditors and customers; the economy of the state and nation;
community and societal considerations; the long-term and the
short-term interests of the corporation and its shareholders; and
the possibility that these interests may be best served by the
continued independence of the corporation.
Federal Income Tax
Consequences of the Reincorporation
The Company has been advised by Coopers & Lybrand, the
Company's independent public accountants, that for Federal income
tax purposes, the Reincorporation will constitute a
reorganization under Section 368 of the Code and that,
consequently, the holders of Scotts Delaware Shares will not
recognize any gain or loss as a result of the Merger. For
Federal income tax purposes, each stockholder of the Company will
retain the same tax basis in his Scotts Ohio Common Shares as he
had in the corresponding Scotts Delaware Shares held by him
immediately prior to the Effective Time, and his holding period
for his Scotts Ohio Common Shares will include the period during
which he held the corresponding Scotts Delaware Shares.
Although it is not anticipated that state or local
income tax consequences will vary from the Federal income tax
consequences described above, stockholders should consult their
own tax advisors as to the effect of the reorganization under
state, local or foreign income tax laws.
The Company further has been advised by Coopers &
Lybrand that Scotts Ohio will not recognize any gain, loss or
income for Federal income tax purposes as a result of the
Reincorporation and Merger and that it will succeed, without
adjustment, to the tax attributes of the Company.
Vote Required; Board Recommendation
Pursuant to the DGCL and the Present Charter, the
affirmative vote of the holders of a majority of the outstanding
Scotts Delaware Shares entitled to vote thereon is required for
approval of the Reincorporation Proposal. Under Delaware law,
abstentions are counted as present for quorum purposes; however,
the effect of an abstention on the Reincorporation Proposal is
the same as a "no" vote. The Reincorporation Proposal is
considered "non-discretionary" and brokers who have received no
instructions from their clients by the tenth day before the
Special Meeting, do not have discretion to vote on the
Reincorporation Proposal. Such "broker non-votes" will not be
considered as votes entitled to be cast in determining the
outcome of the proposal to approve the Reincorporation Proposal.
As of the Record Date, the current officers and directors of the
Company and their respective associates held approximately ____%
of the Scotts Delaware Shares and corresponding voting power.
See "BENEFICIAL OWNERSHIP OF SCOTTS DELAWARE SHARES."
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE
REINCORPORATION PROPOSAL AND UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS OF THE COMPANY VOTE FOR THE REINCORPORATION
PROPOSAL. A vote FOR the Reincorporation Proposal will
constitute approval of the Merger Agreement and the transactions
contemplated thereby.
Unless otherwise directed, the persons named in the
enclosed proxy will vote the Scotts Delaware Shares represented
by all proxies received prior to the Special Meeting, and not
properly revoked, in favor of the Reincorporation Proposal.
PROPOSALS BY STOCKHOLDERS
Proposals by stockholders intended to be presented at
the 1995 Annual Meeting of Stockholders must be received by the
Secretary of the Company no later than September 27, 1994, to be
included in the Company's proxy, notice of meeting and proxy
statement relating to such meeting and should be mailed to The
Scotts Company, 14111 Scottslawn Road, Marysville, Ohio 43041,
Attention: Secretary.
OTHER BUSINESS
The Board of Directors is aware of no other matter that
will be presented for action at the Special Meeting. If any
other matter requiring a vote of the stockholders properly comes
before the Special Meeting, the persons authorized under
management proxies will vote and act according to their best
judgment in light of the conditions then prevailing.
The form of proxy and the Proxy Statement have been
approved by the Board of Directors of the Company and are being
mailed and delivered to stockholders by its authority.
Craig D. Walley
Vice President and Secretary
AMENDED
ARTICLES OF INCORPORATION
OF
THE SCOTTS COMPANY
The undersigned, desiring to form a corporation for profit under
Chapter 1701 of the Ohio Revised Code, does hereby certify:
FIRST: The name of the corporation shall be The Scotts
Company.
SECOND: The place in Ohio where the principal office of the
corporation is to be located is in the City of Marysville, County of Union.
THIRD: The purpose for which the corporation is formed is to
engage in any lawful act or activity for which corporations may be formed
under Sections 1701.01 to 1701.98 of the Ohio Revised Code.
FOURTH: The authorized number of shares of the corporation
shall be Thirty-Five Million (35,000,000), all of which shall be common
shares, each without par value.
FIFTH: The directors of the corporation shall have the power
to cause the corporation from time to time and at any time to purchase, hold,
sell, transfer or otherwise deal with (A) shares of any class or series issued
by it, (B) any security or other obligation of the corporation which may
confer upon the holder thereof the right to convert the same into shares of
any class or series authorized by the articles of the corporation, and (C) any
security or other obligation which may confer upon the holder thereof the
right to purchase shares of any class or series authorized by the articles of
the corporation. The corporation shall have the right to repurchase, if and
when any shareholder desires to sell, or on the happening of any event is
required to sell, shares of any class or series issued by the corporation.
The authority granted in this Article FIFTH of these Articles shall not limit
the plenary authority of the directors to purchase, hold, sell, transfer or
otherwise deal with shares of any class or series, securities or other obliga-
tions issued by the corporation or authorized by its articles.
SIXTH: No shareholder of the corporation shall have, as a
matter of right, the pre-emptive right to purchase or subscribe for shares of
any class, now or hereafter authorized, or to purchase or subscribe for
securities or other obligations convertible into or exchangeable for such
shares or which by warrants or otherwise entitle the holders thereof to
subscribe for or purchase any such share.
SEVENTH: Shareholders of the corporation shall not have the
right to vote cumulatively in the election of directors.
EIGHTH: These Amended Articles of Incorporation take the place
of and supersede the existing Articles of Incorporation of The Scotts Company.
REGULATIONS
OF
THE SCOTTS COMPANY
INDEX
Section Caption Page No.
ARTICLE ONE
MEETINGS OF SHAREHOLDERS
1.01 Annual Meetings . . . . . . . . . . . 1
1.02 Calling of Meetings . . . . . . . . . 1
1.03 Place of Meetings . . . . . . . . . . 1
1.04 Notice of Meetings. . . . . . . . . . 1
1.05 Waiver of Notice. . . . . . . . . . . 2
1.06 Quorum. . . . . . . . . . . . . . . . 2
1.07 Votes Required. . . . . . . . . . . . 2
1.08 Order of Business . . . . . . . . . . 2
1.09 Shareholders Entitled to Vote . . . . 3
1.10 Proxies . . . . . . . . . . . . . . . 3
1.11 Inspectors of Election. . . . . . . . 3
ARTICLE TWO
DIRECTORS
2.01 Authority and Qualifications. . . . . 3
2.02 Number of Directors and Term of
Office. . . . . . . . . . . . . . . . 3
2.03 Election. . . . . . . . . . . . . . . 4
2.04 Removal . . . . . . . . . . . . . . . 4
2.05 Vacancies . . . . . . . . . . . . . . 4
2.06 Meetings. . . . . . . . . . . . . . . 5
2.07 Notice of Meetings. . . . . . . . . . 5
2.08 Waiver of Notice. . . . . . . . . . . 5
2.09 Quorum. . . . . . . . . . . . . . . . 6
2.10 Executive and Other Committees. . . . 6
2.11 Compensation. . . . . . . . . . . . . 6
2.12 By-Laws . . . . . . . . . . . . . . . 7
ARTICLE THREE
OFFICERS
3.01 Officers. . . . . . . . . . . . . . . 7
3.02 Tenure of Office. . . . . . . . . . . 7
3.03 Duties of the Chairman of the Board . 7
3.04 Duties of the President . . . . . . . 8
3.05 Duties of the Vice Presidents . . . . 8
3.06 Duties of the Secretary . . . . . . . 8
3.07 Duties of the Treasurer . . . . . . . 9
ARTICLE FOUR
SHARES
4.01 Certificates. . . . . . . . . . . . . 10
4.02 Transfers . . . . . . . . . . . . . . 10
4.03 Transfer Agents and Registrars. . . . 11
4.04 Lost, Wrongfully Taken or Destroyed
Certificates. . . . . . . . . . . . . 11
ARTICLE FIVE
INDEMNIFICATION AND INSURANCE
5.01 Mandatory Indemnification . . . . . . 11
5.02 Court-Approved Indemnification. . . . 12
5.03 Indemnification for Expenses. . . . . 13
5.04 Determination Required. . . . . . . . 13
5.05 Advances for Expenses . . . . . . . . 14
5.06 Article FIVE Not Exclusive. . . . . . 14
5.07 Insurance . . . . . . . . . . . . . . 14
5.08 Certain Definitions . . . . . . . . . 15
5.09 Venue . . . . . . . . . . . . . . . . 15
ARTICLE SIX
MISCELLANEOUS
6.01 Amendments. . . . . . . . . . . . . . 16
6.02 Action by Shareholders or Directors
Without a Meeting . . . . . . . . . . 16
CODE OF REGULATIONS
OF
THE SCOTTS COMPANY
ARTICLE ONE
MEETINGS OF SHAREHOLDERS
Section 1.01. Annual Meetings. The annual meeting of
the shareholders for the election of directors, for the
consideration of reports to be laid before such meeting and for the
transaction of such other business as may properly come before such
meeting, shall be held on the second Tuesday of March in each year
or on such other date as may be fixed from time to time by the
directors.
Section 1.02. Calling of Meetings. Meetings of the
shareholders may be called only by the chairman of the board, the
president, or, in case of the president's absence, death, or
disability, the vice president authorized to exercise the author-
ity of the president; the secretary; the directors by action at a
meeting, or a majority of the directors acting without a meeting;
or the holders of at least a majority of all shares outstanding
and entitled to vote thereat.
Section 1.03. Place of Meetings. All meetings of share-
holders shall be held at the principal office of the corporation,
unless otherwise provided by action of the directors. Meetings of
shareholders may be held at any place within or without the State
of Ohio.
Section 1.04. Notice of Meetings. (A) Written notice
stating the time, place and purposes of a meeting of the share-
holders shall be given either by personal delivery or by mail not
less than seven nor more than sixty days before the date of the
meeting, (1) to each shareholder of record entitled to notice of
the meeting, (2) by or at the direction of the chairman of the
board, the president or the secretary. If mailed, such notice
shall be addressed to the shareholder at his address as it appears
on the records of the corporation. Notice of adjournment of a
meeting need not be given if the time and place to which it is
adjourned are fixed and announced at such meeting. In the event
of a transfer of shares after the record date for determining the
shareholders who are entitled to receive notice of a meeting of
shareholders, it shall not be necessary to give notice to the
transferee. Nothing herein contained shall prevent the setting of
a record date in the manner provided by law, the Articles or the
Regulations for the determination of shareholders who are entitled
to receive notice of or to vote at any meeting of shareholders or
for any purpose required or permitted by law.
(B) Following receipt by the president or the secretary
of a request in writing, specifying the purpose or purposes for
which the persons properly making such request have called a
meeting of the shareholders, delivered either in person or by
registered mail to such officer by any persons entitled to call a
meeting of shareholders, such officer shall cause to be given to
the shareholders entitled thereto notice of a meeting to be held
on a date not less than seven nor more than sixty days after the
receipt of such request, as such officer may fix. If such notice
is not given within fifteen days after the receipt of such request
by the president or the secretary, then, and only then, the persons
properly calling the meeting may fix the time of meeting and give
notice thereof in accordance with the provisions of the
Regulations.
Section 1.05. Waiver of Notice. Notice of the time,
place and purpose or purposes of any meeting of shareholders may
be waived in writing, either before or after the holding of such
meeting, by any shareholder, which writing shall be filed with or
entered upon the records of such meeting. The attendance of any
shareholder, in person or by proxy, at any such meeting without
protesting the lack of proper notice, prior to or at the
commencement of the meeting, shall be deemed to be a waiver by such
shareholder of notice of such meeting.
Section 1.06. Quorum. At any meeting of shareholders,
the holders of a majority of the voting shares of the corporation
then outstanding and entitled to vote thereat, present in person
or by proxy, shall constitute a quorum for such meeting. The
holders of a majority of the voting shares represented at a
meeting, whether or not a quorum is present, or the chairman of
the board, the president, or the officer of the corporation acting
as chairman of the meeting, may adjourn such meeting from time to
time, and if a quorum is present at such adjourned meeting any
business may be transacted as if the meeting had been held as
originally called.
Section 1.07. Votes Required. At all elections of
directors, the candidates receiving the greatest number of votes
shall be elected. Any other matter submitted to the shareholders
for their vote shall be decided by the vote of such proportion of
the shares, or of any class of shares, or of each class, as is
required by law, the Articles or the Regulations.
Section 1.08. Order of Business. The order of business
at any meeting of shareholders shall be determined by the officer
of the corporation acting as chairman of such meeting unless
otherwise determined by a vote of the holders of a majority of the
voting shares of the corporation then outstanding, present in
person or by proxy, and entitled to vote at such meeting.
Section 1.09. Shareholders Entitled to Vote. Each
shareholder of record on the books of the corporation on the record
date for determining the shareholders who are entitled to vote at
a meeting of shareholders shall be entitled at such meeting to one
vote for each share of the corporation standing in his name on the
books of the corporation on such record date. The directors may
fix a record date for the determination of the shareholders who are
entitled to receive notice of and to vote at a meeting of
shareholders, which record date shall not be a date earlier than
the date on which the record date is fixed and which record date
may be a maximum of sixty days preceding the date of the meeting
of shareholders.
Section 1.10. Proxies. At meetings of the share-
holders, any shareholder of record entitled to vote thereat may be
represented and may vote by a proxy or proxies appointed by an
instrument in writing signed by such shareholder, but such
instrument shall be filed with the secretary of the meeting before
the person holding such proxy shall be allowed to vote thereunder.
No proxy shall be valid after the expiration of eleven months after
the date of its execution, unless the shareholder executing it
shall have specified therein the length of time it is to continue
in force.
Section 1.11. Inspectors of Election. In advance of
any meeting of shareholders, the directors may appoint inspectors
of election to act at such meeting or any adjournment thereof; if
inspectors are not so appointed, the officer of the corporation
acting as chairman of any such meeting may make such appointment.
In case any person appointed as inspector fails to appear or act,
the vacancy may be filled only by appointment made by the directors
in advance of such meeting or, if not so filled, at the meeting by
the officer of the corporation acting as chairman of such meeting.
No other person or persons may appoint or require the appointment
of inspectors of election.
ARTICLE TWO
DIRECTORS
Section 2.01. Authority and Qualifications. Except
where the law, the Articles or the Regulations otherwise provide,
all authority of the corporation shall be vested in and exercised
by its directors. Directors need not be shareholders of the
corporation.
Section 2.02. Number of Directors and Term of Office.
(A) Until changed in accordance with the provisions of
the Regulations, the number of directors of the corporation shall
be nine. Each director shall be elected to serve until the next
annual meeting of shareholders and until his successor is duly
elected and qualified or until his earlier resignation, removal
from office or death.
(B) The number of directors may be fixed or changed at
a meeting of the shareholders called for the purpose of electing
directors at which a quorum is present, only by the affirmative
vote of the holders of not less than a majority of the voting
shares which are represented at the meeting, in person or by proxy,
and entitled to vote on such proposal.
(C) The directors may fix or change the number of
directors and may fill any director's office that is created by an
increase in the number of directors; provided, however, that the
directors may not reduce the number of directors to less than
three.
(D) No reduction in the number of directors shall of
itself have the effect of shortening the term of any incumbent
director.
Section 2.03. Election. At each annual meeting of
shareholders for the election of directors, the successors to the
directors whose term shall expire in that year shall be elected,
but if the annual meeting is not held or if one or more of such
directors are not elected thereat, they may be elected at a special
meeting called for that purpose. The election of directors shall
be by ballot whenever requested by the presiding officer of the
meeting or by the holders of a majority of the voting shares
outstanding, entitled to vote at such meeting and present in person
or by proxy, but unless such request is made, the election shall
be viva voce.
Section 2.04. Removal. A director or directors may be
removed from office, with or without assigning any cause, only by
the vote of the holders of shares entitling them to exercise not
less than a majority of the voting power of the corporation to
elect directors in place of those to be removed. In case of any
such removal, a new director may be elected at the same meeting
for the unexpired term of each director removed. Failure to elect
a director to fill the unexpired term of any director removed shall
be deemed to create a vacancy in the board.
Section 2.05. Vacancies. The remaining directors,
though less than a majority of the whole authorized number of
directors, may, by the vote of a majority of their number, fill
any vacancy in the board for the unexpired term. A vacancy in the
board exists within the meaning of this Section 2.05 in case the
shareholders increase the authorized number of directors but fail
at the meeting at which such increase is authorized, or an
adjournment thereof, to elect the additional directors provided
for, or in case the shareholders fail at any time to elect the
whole authorized number of directors.
Section 2.06. Meetings. A meeting of the directors
shall be held immediately following the adjournment of each annual
meeting of shareholders at which directors are elected, and notice
of such meeting need not be given. The directors shall hold such
other meetings as may from time to time be called, and such other
meetings of directors may be called only by the chairman of the
board, the president, or any two directors. All meetings of
directors shall be held at the principal office of the corporation
in Marysville or at such other place within or without the State
of Ohio, as the directors may from time to time determine by a
resolution. Meetings of the directors may be held through any
communications equipment if all persons participating can hear each
other and participation in a meeting pursuant to this provision
shall constitute presence at such meeting.
Section 2.07. Notice of Meetings. Notice of the time
and place of each meeting of directors for which such notice is
required by law, the Articles, the Regulations or the By-Laws shall
be given to each of the directors by at least one of the following
methods:
(A) In a writing mailed not less than three days
before such meeting and addressed to the residence or
usual place of business of a director, as such address
appears on the records of the corporation; or
(B) By telegraph, cable, radio, wireless, facsimile
or a similar writing sent or delivered to the residence
or usual place of business of a director as the same
appears on the records of the corporation, not later than
the day before the date on which such meeting is to be
held; or
(C) Personally or by telephone not later than the
day before the date on which such meeting is to be held.
Notice given to a director by any one of the methods specified in
the Regulations shall be sufficient, and the method of giving
notice to all directors need not be uniform. Notice of any meeting
of directors may be given only by the chairman of the board, the
president or the secretary of the corporation. Any such notice
need not specify the purpose or purposes of the meeting. Notice
of adjournment of a meeting of directors need not be given if the
time and place to which it is adjourned are fixed and announced at
such meeting.
Section 2.08. Waiver of Notice. Notice of any meeting
of directors may be waived in writing, either before or after the
holding of such meeting, by any director, which writing shall be
filed with or entered upon the records of the meeting. The
attendance of any director at any meeting of directors without
protesting, prior to or at the commencement of the meeting, the
lack of proper notice, shall be deemed to be a waiver by him of
notice of such meeting.
Section 2.09. Quorum. A majority of the whole
authorized number of directors shall be necessary to constitute a
quorum for a meeting of directors, except that a majority of the
directors in office shall constitute a quorum for filling a vacancy
in the board. The act of a majority of the directors present at
a meeting at which a quorum is present is the act of the board,
except as otherwise provided by law, the Articles or the
Regulations.
Section 2.10. Executive and Other Committees. The
directors may create an executive committee or any other committee
of directors, to consist of not less than three directors, and may
authorize the delegation to such executive committee or other
committees of any of the authority of the directors, however
conferred, other than that of filling vacancies among the directors
or in the executive committee or in any other committee of the
directors.
Such executive committee or any other committee of
directors shall serve at the pleasure of the directors, shall act
only in the intervals between meetings of the directors, and shall
be subject to the control and direction of the directors. Such
executive committee or other committee of directors may act by a
majority of its members at a meeting or by a writing or writings
signed by all of its members.
Any act or authorization of any act by the executive
committee or any other committee within the authority delegated to
it shall be as effective for all purposes as the act or
authorization of the directors. No notice of a meeting of the
executive committee or of any other committee of directors shall
be required. A meeting of the executive committee or of any other
committee of directors may be called only by the president or by
a member of such executive or other committee of directors.
Meetings of the executive committee or of any other committee of
directors may be held through any communications equipment if all
persons participating can hear each other and participation in such
a meeting shall constitute presence thereat.
Section 2.11. Compensation. Directors shall be entitled
to receive as compensation for services rendered and expenses
incurred as directors, such amounts as the directors may determine.
<PAGE>
Section 2.12. By-Laws. The directors may adopt, and
amend from time to time, By-Laws for their own government, which
By-Laws shall not be inconsistent with the law, the Articles or
the Regulations.
ARTICLE THREE
OFFICERS
Section 3.01. Officers. The officers of the corporation
to be elected by the directors shall be a chairman of the board,
a president, a secretary, a treasurer, and, if desired, one or more
vice presidents and such other officers and assistant officers as
the directors may from time to time elect. The chairman of the
board must be a director. Officers need not be shareholders of the
corporation, and may be paid such compensation as the board of
directors may determine. Any two or more offices may be held by
the same person, but no officer shall execute, acknowledge, or
verify any instrument in more than one capacity if such instrument
is required by law, the Articles, the Regulations or the By-Laws
to be executed, acknowledged, or verified by two or more officers.
Section 3.02. Tenure of Office. The officers of the
corporation shall hold office at the pleasure of the directors.
Any officer of the corporation may be removed, either with or
without cause, at any time, by the affirmative vote of a majority
of all the directors then in office; such removal, however, shall
be without prejudice to the contract rights, if any, of the person
so removed.
Section 3.03. Duties of the Chairman of the Board. The
chairman of the board shall preside at all meetings of the
shareholders and directors at which he is present, shall be the
chief executive officer of the corporation, and shall have general
control and supervision of the policies and operations of the
corporation and shall see that all orders and resolutions of the
board of directors are carried into effect. He shall manage and
administer the corporation's business and affairs and shall also
perform all duties and exercise all powers usually pertaining to
the office of a chief executive officer of a corporation. He shall
have the authority to sign, in the name and on behalf of the
corporation, checks, orders, contracts, leases, notes, drafts and
other documents and instruments in connection with the business of
the corporation, and together with the secretary or an assistant
secretary, conveyances of real estate and other documents and
instruments. He shall have the authority to cause the employment
or appointment of such employees and agents of the corporation as
the conduct of the business of the corporation may require, and to
fix their compensation; and to remove or suspend any employee or
agent elected or appointed by the chairman of the board.
Section 3.04. Duties of the President. The president
shall be chief operating officer of the corporation, and, subject
to the control of the chairman of the board, shall have general
and active management of the ordinary business of the corporation
and shall see that all orders and resolutions of the board of
directors are carried into effect. In the absence of the chairman
of the board, the president shall exercise all the powers of the
chairman, including, without limitation, the authority to: (A)
sign, in the name and on behalf of the corporation, checks, orders,
contracts, leases, notes, drafts and other documents and
instruments in connection with the business of the corporation,
and, together with the secretary or an assistant secretary,
conveyances of real estate and other documents and instruments; (B)
cause the employment or appointment of such employees and agents
of the corporation as the conduct of the business of the
corporation may require and to fix their compensation; and (C)
remove or suspend any employee or agent who shall not have been
elected or appointed by the chairman of the board or the board of
directors. The president shall perform such other duties and have
such other powers as the board of directors or the chairman of the
board may from time to time prescribe.
Section 3.05. Duties of the Vice Presidents. Each vice
president shall perform such duties and exercise such powers as may
be assigned to him from time to time by the chairman of the board
or the president. In the absence of the chairman of the board or
the president, the duties of the chairman of the board or the
president shall be performed and his powers may be exercised by
such vice president as shall be designated by the chairman of the
board or the president, or failing such designation, such duties
shall be performed and such powers may be exercised by each vice
president in the order of their earliest election to that office,
subject in any case to review and superseding action by the
chairman of the board or the president.
Section 3.06. Duties of the Secretary. The secretary
shall have the following powers and duties:
(A) He shall keep or cause to be kept a record of
all the proceedings of the meetings of the shareholders
and of the board of directors in books provided for that
purpose.
(B) He shall cause all notices to be duly given in
accordance with the provisions of these Regulations and
as required by law.
(C) Whenever any committee shall be appointed
pursuant to a resolution of the board of directors, he
shall furnish a copy of such resolution to the members
of such committee.
(D) He shall be the custodian of the records of the
corporation.
(E) He shall properly maintain and file all books,
reports, statements, certificates and all other documents
and records required by law, the Articles or these
Regulations.
(F) He shall have charge of the stock books and
ledgers of the corporation and shall cause the stock and
transfer books to be kept in such manner as to show at
any time the number of shares of the corporation of each
class issued and outstanding, the names (alphabetically
arranged) and the addresses of the holders of record of
such shares, the number of shares held by each holder and
the date as of which each became such holder of record.
(G) He shall sign (unless the treasurer, an
assistant treasurer or assistant secretary shall have
signed) certificates representing shares of the
corporation the issuance of which shall have been
authorized by the board of directors.
(H) He shall perform, in general, all duties
incident to the office of secretary and such other duties
as may be specified in these Regulations or as may be
assigned to him from time to time by the board of
directors, the chairman of the board or the president.
Section 3.07. Duties of the Treasurer. The treasurer
shall have the following powers and duties:
(A) He shall have charge and supervision over and
be responsible for the moneys, securities, receipts and
disbursements of the corporation, and shall keep or cause
to be kept full and accurate records of all receipts of
the corporation.
(B) He shall cause the moneys and other valuable
effects of the corporation to be deposited in the name
and to the credit of the corporation in such banks or
trust companies or with such bankers or other
depositaries as shall be selected by the board of
directors, the chairman of the board or the president.
(C) He shall cause the moneys of the corporation
to be disbursed by checks or drafts upon the authorized
depositaries of the corporation and cause to be taken and
preserved proper vouchers for all moneys disbursed.
(D) He shall render to the board of directors, the
chairman of the board or the president, whenever
requested, a statement of the financial condition of the
corporation and of all his transactions as treasurer, and
render a full financial report at the annual meeting of
the shareholders, if called upon to do so.
(E) He shall be empowered from time to time to
require from all officers or agents of the corporation
reports or statements giving such information as he may
desire with respect to any and all financial transactions
of the corporation.
(F) He may sign (unless an assistant treasurer or
the secretary or an assistant secretary shall have
signed) certificates representing shares of the
corporation the issuance of which shall have been
authorized by the board of directors.
(G) He shall perform, in general, all duties
incident to the office of treasurer and such other duties
as may be specified in these Regulations or as may be
assigned to him from time to time by the board of
directors, the chairman of the board or the president.
ARTICLE FOUR
SHARES
Section 4.01. Certificates. Certificates evidencing
ownership of shares of the corporation shall be issued to those
entitled to them. Each certificate evidencing shares of the
corporation shall bear a distinguishing number; the signatures of
the chairman of the board, the president, or a vice president, and
of the secretary, an assistant secretary, the treasurer or an
assistant treasurer (except that when any such certificate is
countersigned by an incorporated transfer agent or registrar, such
signatures may be facsimile, engraved, stamped or printed); and
such recitals as may be required by law. Certificates evidencing
shares of the corporation shall be of such tenor and design as the
directors may from time to time adopt and may bear such recitals
as are permitted by law.
Section 4.02. Transfers. Where a certificate evidencing
a share or shares of the corporation is presented to the
corporation or its proper agents with a request to register
transfer, the transfer shall be registered as requested if:
(1) An appropriate person signs on each certificate so
presented or signs on a separate document an assignment or trans-
fer of shares evidenced by each such certificate, or signs a power
to assign or transfer such shares, or when the signature of an
appropriate person is written without more on the back of each such
certificate; and
(2) Reasonable assurance is given that the indorsement
of each appropriate person is genuine and effective; the
corporation or its agents may refuse to register a transfer of
shares unless the signature of each appropriate person is
guaranteed by a commercial bank or trust company having an office
or a correspondent in the City of New York or by a firm having
membership in the New York Stock Exchange; and
(3) All applicable laws relating to the collection of
transfer or other taxes have been complied with; and
(4) The corporation or its agents are not otherwise
required or permitted to refuse to register such transfer.
Section 4.03. Transfer Agents and Registrars. The
directors may appoint one or more agents to transfer or to register
shares of the corporation, or both.
Section 4.04. Lost, Wrongfully Taken or Destroyed
Certificates. Except as otherwise provided by law, where the owner
of a certificate evidencing shares of the corporation claims that
such certificate has been lost, destroyed or wrongfully taken, the
directors must cause the corporation to issue a new certificate in
place of the original certificate if the owner:
(1) So requests before the corporation has notice that
such original certificate has been acquired by a bona fide
purchaser; and
(2) Files with the corporation, unless waived by the
directors, an indemnity bond, with surety or sureties satisfactory
to the corporation, in such sums as the directors may, in their
discretion, deem reasonably sufficient as indemnity against any
loss or liability that the corporation may incur by reason of the
issuance of each such new certificate; and
(3) Satisfies any other reasonable requirements which
may be imposed by the directors, in their discretion.
ARTICLE FIVE
INDEMNIFICATION AND INSURANCE
Section 5.01. Mandatory Indemnification. The corpor-
ation shall indemnify any officer or director of the corporation
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative
(including, without limitation, any action threatened or instituted
by or in the right of the corporation), by reason of the fact that
he is or was a director, officer, employee or agent of the cor-
poration, or is or was serving at the request of the corporation
as a director, trustee, officer, employee, member, manager or agent
of another corporation (domestic or foreign, nonprofit or for
profit), limited liability company, partnership, joint venture,
trust or other enterprise, against expenses (including, without
limitation, attorneys' fees, filing fees, court reporters' fees and
transcript costs), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal
action or proceeding, he had no reasonable cause to believe his
conduct was unlawful. A person claiming indemnification under this
Section 5.01 shall be presumed, in respect of any act or omission
giving rise to such claim for indemnification, to have acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and with respect
to any criminal matter, to have had no reasonable cause to believe
his conduct was unlawful, and the termination of any action, suit
or proceeding by judgment, order, settlement or conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself,
rebut such presumption.
Section 5.02. Court-Approved Indemnification. Anything
contained in the Regulations or elsewhere to the contrary
notwithstanding:
(A) the corporation shall not indemnify any officer or
director of the corporation who was a party to any completed action
or suit instituted by or in the right of the corporation to procure
a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director,
trustee, officer, employee, member, manager or agent of another
corporation (domestic or foreign, nonprofit or for profit), limited
liability company, partnership, joint venture, trust or other
enterprise, in respect of any claim, issue or matter asserted in
such action or suit as to which he shall have been adjudged to be
liable for acting with reckless disregard for the best interests
of the corporation or misconduct (other than negligence) in the
performance of his duty to the corporation unless and only to the
extent that the Court of Common Pleas of Union County, Ohio or the
court in which such action or suit was brought shall determine upon
application that, despite such adjudication of liability, and in
view of all the circumstances of the case, he is fairly and
reasonably entitled to such indemnity as such Court of Common Pleas
or such other court shall deem proper; and
(B) the corporation shall promptly make any such unpaid
indemnification as is determined by a court to be proper as contem-
plated by this Section 5.02.
Section 5.03. Indemnification for Expenses. Anything
contained in the Regulations or elsewhere to the contrary notwith-
standing, to the extent that an officer or director of the
corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in
Section 5.01, or in defense of any claim, issue or matter therein,
he shall be promptly indemnified by the corporation against ex-
penses (including, without limitation, attorneys' fees, filing
fees, court reporters' fees and transcript costs) actually and
reasonably incurred by him in connection therewith.
Section 5.04. Determination Required. Any indemni-
fication required under Section 5.01 and not precluded under
Section 5.02 shall be made by the corporation only upon a
determination that such indemnification of the officer or director
is proper in the circumstances because he has met the applicable
standard of conduct set forth in Section 5.01. Such determination
may be made only (A) by a majority vote of a quorum consisting of
directors of the corporation who were not and are not parties to,
or threatened with, any such action, suit or proceeding, or (B) if
such a quorum is not obtainable or if a majority of a quorum of
disinterested directors so directs, in a written opinion by in-
dependent legal counsel other than an attorney, or a firm having
associated with it an attorney, who has been retained by or who has
performed services for the corporation, or any person to be
indemnified, within the past five years, or (C) by the share-
holders, or (D) by the Court of Common Pleas of Union County, Ohio
or (if the corporation is a party thereto) the court in which such
action, suit or proceeding was brought, if any; any such
determination may be made by a court under division (D) of this
Section 5.04 at any time [including, without limitation, any time
before, during or after the time when any such determination may
be requested of, be under consideration by or have been denied or
disregarded by the disinterested directors under division (A) or
by independent legal counsel under division (B) or by the
shareholders under division (C) of this Section 5.04]; and no
failure for any reason to make any such determination, and no
decision for any reason to deny any such determination, by the
disinterested directors under division (A) or by independent legal
counsel under division (B) or by shareholders under division (C)
of this Section 5.04 shall be evidence in rebuttal of the
presumption recited in Section 5.01. Any determination made by the
disinterested directors under division (A) or by independent legal
counsel under division (B) of this Section 5.04 to make
indemnification in respect of any claim, issue or matter asserted
in an action or suit threatened or brought by or in the right of
the corporation shall be promptly communicated to the person who
threatened or brought such action or suit, and within ten days
after receipt of such notification such person shall have the right
to petition the Court of Common Pleas of Union County, Ohio or the
court in which such action or suit was brought, if any, to review
the reasonableness of such determination.
Section 5.05. Advances for Expenses. Expenses
(including, without limitation, attorneys' fees, filing fees, court
reporters' fees and transcript costs) incurred in defending any
action, suit or proceeding referred to in Section 5.01 shall be
paid by the corporation in advance of the final disposition of such
action, suit or proceeding to or on behalf of the officer or
director promptly as such expenses are incurred by him, but only
if such officer or director shall first agree, in writing, to repay
all amounts so paid in respect of any claim, issue or other matter
asserted in such action, suit or proceeding in defense of which he
shall not have been successful on the merits or otherwise:
(A) if it shall ultimately be determined as provided in
Section 5.04 that he is not entitled to be indemnified by the
corporation as provided under Section 5.01; or
(B) if, in respect of any claim, issue or other matter
asserted by or in the right of the corporation in such action or
suit, he shall have been adjudged to be liable for acting with
reckless disregard for the best interests of the corporation or
misconduct (other than negligence) in the performance of his duty
to the corporation, unless and only to the extent that the Court
of Common Pleas of Union County, Ohio or the court in which such
action or suit was brought shall determine upon application that,
despite such adjudication of liability, and in view of all the
circumstances, he is fairly and reasonably entitled to all or part
of such indemnification.
Section 5.06. Article FIVE Not Exclusive. The
indemnification provided by this Article FIVE shall not be
exclusive of, and shall be in addition to, any other rights to
which any person seeking indemnification may be entitled under the
Articles or the Regulations or any agreement, vote of shareholders
or disinterested directors, or otherwise, both as to action in his
official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has
ceased to be an officer or director of the corporation and shall
inure to the benefit of the heirs, executors, and administrators
of such a person.
Section 5.07. Insurance. The corporation may purchase
and maintain insurance or furnish similar protection, including but
not limited to trust funds, letters of credit, or self-insurance,
on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request
of the corporation as a director, trustee, officer, employee,
member, manager or agent of another corporation (domestic or
foreign, nonprofit or for profit), limited liability company,
partnership, joint venture, trust or other enterprise, against any
liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the obligation or the power to indemnify him
against such liability under the provisions of this Article FIVE.
Insurance may be purchased from or maintained with a person in
which the corporation has a financial interest.
Section 5.08. Certain Definitions. For purposes of this
Article FIVE, and as examples and not by way of limitation:
(A) A person claiming indemnification under this
Article FIVE shall be deemed to have been successful on the merits
or otherwise in defense of any action, suit or proceeding referred
to in Section 5.01, or in defense of any claim, issue or other
matter therein, if such action, suit or proceeding shall be
terminated as to such person, with or without prejudice, without
the entry of a judgment or order against him, without a conviction
of him, without the imposition of a fine upon him and without his
payment or agreement to pay any amount in settlement thereof
(whether or not any such termination is based upon a judicial or
other determination of the lack of merit of the claims made against
him or otherwise results in a vindication of him); and
(B) References to an "other enterprise" shall include
employee benefit plans; references to a "fine" shall include any
excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the
corporation" shall include any service as a director, officer,
employee or agent of the corporation which imposes duties on, or
involves services by, such director, officer, employee or agent
with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner
he reasonably believed to be in the best interests of the
participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner "not opposed to the best
interests of the corporation" within the meaning of that term as
used in this Article FIVE.
Section 5.09. Venue. Any action, suit or proceeding to
determine a claim for indemnification under this Article FIVE may
be maintained by the person claiming such indemnification, or by
the corporation, in the Court of Common Pleas of Union County,
Ohio. The corporation and (by claiming such indemnification) each
such person consent to the exercise of jurisdiction over its or his
person by the Court of Common Pleas of Union County, Ohio in any
such action, suit or proceeding.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. Amendments. The Regulations may be
amended, or new regulations may be adopted, at a meeting of
shareholders held for such purpose, only by the affirmative vote
of the holders of shares entitling them to exercise not less than
a majority of the voting power of the corporation on such proposal,
or without a meeting by the written consent of the holders of
shares entitling them to exercise not less than all of the voting
power of the corporation on such proposal.
Section 6.02. Action by Shareholders or Directors
Without a Meeting. Anything contained in the Regulations to the
contrary notwithstanding, any action which may be authorized or
taken at a meeting of the shareholders or of the directors or of
a committee of the directors, as the case may be, may be author-
ized or taken without a meeting with the affirmative vote or
approval of, and in a writing or writings signed by, all the
shareholders who would be entitled to notice of a meeting of the
shareholders held for such purpose, or all the directors, or all
the members of such committee of the directors, respectively, which
writings shall be filed with or entered upon the records of the
corporation.
AGREEMENT OF MERGER
AGREEMENT OF MERGER ("Merger Agreement"), dated as of
July ___, 1994, by and between THE SCOTTS COMPANY, a Delaware
corporation ("SCOTTS DELAWARE"), and THE SCOTTS COMPANY, an Ohio
corporation ("SCOTTS OHIO"). SCOTTS DELAWARE and SCOTTS OHIO are
hereinafter sometimes collectively referred to as the
"Constituent Corporations."
The authorized capital stock of SCOTTS OHIO consists of
35,000,000 Common Shares, each without par value, 100 of which
are issued and outstanding and owned by SCOTTS DELAWARE.
SCOTTS DELAWARE, as the sole shareholder of SCOTTS
OHIO, desires to effect a merger of SCOTTS DELAWARE with and into
SCOTTS OHIO pursuant to the provisions of the General Corporation
Law of the State of Delaware (the "DGCL") and the General
Corporation Law of the State of Ohio (the "OGCL").
The respective Boards of Directors of SCOTTS DELAWARE
and SCOTTS OHIO have determined that it is advisable and in the
best interest of each of such corporations that SCOTTS DELAWARE
merge with and into SCOTTS OHIO upon the terms and subject to the
conditions herein provided.
The Board of Directors of SCOTTS OHIO has, by
resolution duly adopted, approved this Merger Agreement and
directed that it be executed by the undersigned officers.
The Board of Directors of SCOTTS DELAWARE has, by
resolution duly adopted, approved this Merger Agreement and
directed that it be executed by the undersigned officers and that
it be submitted to a vote of the stockholders of SCOTTS DELAWARE.
In consideration of the mutual agreements herein
contained, the parties agree that SCOTTS DELAWARE shall be merged
with and into SCOTTS OHIO and that the terms and conditions of
the merger, the mode of carrying the merger into effect, the
manner of converting the shares of the Constituent Corporations
and certain other provisions relating thereto shall be as
hereinafter set forth.
ARTICLE I
THE MERGER
Section 1.01. Surviving Corporation. Subject to the
terms and provisions of this Merger Agreement, and in accordance
with the DGCL and the OGCL, at the Effective Time (as defined in
Section 1.07 hereof), SCOTTS DELAWARE shall be merged with and
into SCOTTS OHIO (the "Merger"). SCOTTS OHIO shall be the
surviving corporation (hereinafter sometimes called the
"Surviving Corporation") of the Merger and shall continue its
corporate existence under the laws of the State of Ohio. At the
Effective Time, the separate corporate existence of SCOTTS
DELAWARE shall cease.
Section 1.02. Effect of the Merger. At the Effective
Time, the Merger shall have the effects provided for herein and
in Section 1701.82 of the OGCL and Section 259 of the DGCL.
Section 1.03. Articles of Incorporation. As of the
Effective Time, the Articles of Incorporation of SCOTTS OHIO, as
in effect immediately prior to the Effective Time, shall be
amended and replaced in their entirety by the Articles of
Incorporation attached hereto as Annex I, which Articles of
Incorporation shall become, at the Effective Time, the Articles
of Incorporation of the Surviving Corporation until thereafter
duly amended in accordance with the provisions thereof and
applicable law.
Section 1.04. Regulations. As of the Effective Time,
the Regulations of SCOTTS OHIO, as in effect immediately prior to
the Effective Time, shall be the Regulations of the Surviving
Corporation until thereafter duly amended in accordance with the
provisions thereof, the Articles of Incorporation of the
Surviving Corporation and applicable law.
Section 1.05. Directors of the Surviving Corporation.
At and after the Effective Time and until changed in the manner
provided in the Regulations or the Articles of Incorporation of
the Surviving Corporation or as otherwise provided by law, the
number of directors of the Surviving Corporation shall be the
number of directors of SCOTTS OHIO immediately prior to the
Effective Time. At the Effective Time, each person who is a
director of SCOTTS OHIO immediately prior to the Effective Time
shall become a director of the Surviving Corporation and each
such person shall serve as a director of the Surviving
Corporation for the balance of the term for which such person was
elected a director of SCOTTS OHIO and until his successor is duly
elected and qualified in the manner provided in the Regulations
or the Articles of Incorporation of the Surviving Corporation or
as otherwise provided by law or until his earlier death,
resignation or removal in the manner provided in the Regulations
or the Articles of Incorporation of the Surviving Corporation or
as otherwise provided by law.
Section 1.06. Officers of the Surviving Corporation.
At the Effective Time, each person who is an officer of SCOTTS
OHIO immediately prior to the Effective Time shall become an
officer of the Surviving Corporation with each such person to
hold the same office in the Surviving Corporation, in accordance
with the Regulations thereof, as he or she held in SCOTTS OHIO
immediately prior to the Effective Time.
Section 1.07. Effective Time. The Merger shall become
effective in accordance with the provisions of Section 1701.81 of
the OGCL and Sections 252 and 103 of the DGCL, upon the later to
occur of (a) completion of the filing of a certificate of merger
with the Secretary of State of the State of Ohio, and (b) comple-
tion of the filing of a certificate of merger with the Secretary
of State of the State of Delaware. The date and time when the
Merger shall become effective is herein referred to as the
"Effective Time."
Section 1.08. Cumulative Voting. At and after the
Effective Time, no holder of shares of SCOTTS OHIO shall be
entitled to vote cumulatively in the election of directors.
Section 1.09. Additional Actions. If, at any time
after the Effective Time, the Surviving Corporation shall
consider or be advised that any further deeds, assignments or
assurances in law or any other acts are necessary or desirable
(a) to vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation, title to and possession of any property or
right of SCOTTS DELAWARE acquired or to be acquired by reason of,
or as a result of, the Merger, or (b) otherwise to carry out the
purposes of this Merger Agreement, SCOTTS DELAWARE and its proper
officers and directors shall be deemed to have granted hereby to
the Surviving Corporation an irrevocable power of attorney to
execute and deliver all such proper deeds, assignments and
assurances in law and to do all acts necessary or proper to vest,
perfect or confirm title to and the possession of such property
or rights in the Surviving Corporation and otherwise to carry out
the purposes of this Merger Agreement; and the proper officers
and directors of the Surviving Corporation are hereby fully
authorized in the name of SCOTTS DELAWARE or otherwise to take
any and all such action.
ARTICLE II
MANNER, BASIS AND EFFECT OF CONVERTING SHARES
Section 2.01. Conversion of Shares. At the Effective
Time:
(a) Each share of Class A Common Stock, par value
$0.01 per share (the "Scotts Delaware Shares"), of SCOTTS
DELAWARE issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into one
fully paid and nonassessable Common Share, without par value (the
"Scotts Ohio Common Shares"), of SCOTTS OHIO.
(b) Each Scotts Delaware Share held in the
treasury of SCOTTS DELAWARE immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the
part of SCOTTS DELAWARE, be converted into one fully paid and
nonassessable Scotts Ohio Common Share and shall be held in the
treasury of the Surviving Corporation; and
(c) Each Scotts Ohio Common Share, issued and
outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the
holder thereof, be cancelled and retired and shall cease to
exist, and shall not be converted into shares of the Surviving
Corporation or the right to receive cash.
Section 2.02. Effect of Conversion. At and after the
Effective Time, each share certificate which immediately prior to
the Effective Time represented outstanding Scotts Delaware Shares
(a "Delaware Certificate") shall be deemed for all purposes to
evidence ownership of, and to represent, the number of Scotts
Ohio Common Shares into which the Scotts Delaware Shares
represented by such Delaware Certificate immediately prior to the
Effective Time have been converted pursuant to Section 2.01
hereof. The registered owner of any Delaware Certificate
outstanding immediately prior to the Effective Time, as such
owner appears in the books and records of SCOTTS DELAWARE or its
transfer agent immediately prior to the Effective Time, shall,
until such Delaware Certificate is surrendered for transfer or
exchange, have and be entitled to exercise any voting and other
rights with respect to and to receive any dividends or other
distributions on the Scotts Ohio Common Shares into which the
Scotts Delaware Shares represented by any such Delaware
Certificate have been converted pursuant to Section 2.01 hereof.
Section 2.03. Exchange of Certificates. Each holder
of a Delaware Certificate shall, upon the surrender of such
Delaware Certificate to SCOTTS OHIO or its transfer agent for
cancellation after the Effective Time, be entitled to receive
from SCOTTS OHIO or its transfer agent a certificate (an "Ohio
Certificate") representing the number of Scotts Ohio Common
Shares into which the Scotts Delaware Shares represented by such
Delaware Certificate have been converted pursuant to Section 2.01
hereof. If any such Ohio Certificate is to be issued in a name
other than that in which the Delaware Certificate surrendered for
exchange is registered, it shall be a condition of such exchange
that the Delaware Certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that the
person requesting such exchange shall either pay any transfer or
other taxes required by reason of the issuance of the Ohio
Certificate in a name other than that of the registered holder of
the Delaware Certificate surrendered, or establish to the
satisfaction of SCOTTS OHIO or its transfer agent that such tax
has been paid or is not applicable.
Section 2.04. Long Term Incentive Plan and Profit
Sharing Plan.
(a) Each option to purchase Scotts Delaware Shares and
each performance share granted under The Scotts Company 1992 Long
Term Incentive Plan (the "Long Term Incentive Plan") which is
outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the
holder of any such option or performance share, as appropriate,
be converted into and become an option to purchase, or a
performance share with respect to, the same number of Scotts Ohio
Common Shares as the number of Scotts Delaware Shares which were
subject to such option or performance share immediately prior to
the Effective Time at the same option price per share (in the
case of options) and upon the same terms and subject to the same
conditions as are in effect at the Effective Time. The Surviving
Corporation shall reserve for purposes of the Long Term Incentive
Plan a number of Scotts Ohio Common Shares equal to the number of
Scotts Delaware Shares reserved by SCOTTS DELAWARE for issuance
under the Long Term Incentive Plan as of the Effective Time. As
of the Effective Time, SCOTTS OHIO hereby assumes the Long Term
Incentive Plan and all obligations of SCOTTS DELAWARE under the
Long Term Incentive Plan including the outstanding options and
performance shares or portions thereof granted or awarded
pursuant thereto.
(b) The O. M. Scott & Sons Company Profit Sharing and
Savings Plan (the "Profit Sharing Plan") shall become an
identical plan of the Surviving Corporation at the Effective
Time, automatically and without further act of either of the
Constituent Corporations or any participant thereunder, and each
person who is a participant under the Profit Sharing Plan shall
thereafter continue to participate thereunder upon identical
terms and conditions; provided, however, that at and after the
Effective Time, each right to acquire Scotts Delaware Shares
shall thereafter be a right to acquire Scotts Ohio Common Shares.
Section 2.05. Subordinated Indenture. As of the
Effective Time, SCOTTS OHIO hereby assumes all of the obligations
of SCOTTS DELAWARE under the Subordinated Indenture, dated as of
June 1, 1994, of SCOTTS DELAWARE to Chemical Bank and the Senior
Subordinated Notes issued thereunder.
ARTICLE III
APPROVAL; AMENDMENT; TERMINATION; MISCELLANEOUS
Section 3.01. Approval. This Merger Agreement shall
be submitted for approval by the stockholders of SCOTTS DELAWARE
at a special meeting of stockholders.
Section 3.02. Amendment. Subject to applicable law,
this Merger Agreement may be amended, modified or supplemented by
written agreement of the Constituent Corporations, after authori-
zation of such action by the Boards of Directors of the Constit-
uent Corporations, at any time prior to the filing of certifi-
cates of merger, as contemplated by Section 1.07 of this Merger
Agreement, with the Secretary of State of the State of Delaware
and with the Secretary of State of the State of Ohio, except that
after the approval contemplated by Section 3.01 hereof, there
shall be no amendments that would (a) alter or change the amount
or kind of shares to be received by the holders of any class or
series of shares of either of the Constituent Corporations in the
Merger, (b) alter or change any term of the Articles of
Incorporation or Regulations of SCOTTS OHIO, or (c) alter or
change any of the terms and conditions of this Merger Agreement
if such alteration or change would adversely affect the holders
of any class or series of shares of either of the Constituent
Corporations.
Section 3.03. Abandonment. At any time prior to the
filing of certificates of merger, as contemplated by Section 1.07
of this Merger Agreement, with the Secretary of State of the
State of Delaware and with the Secretary of State of the State of
Ohio, this Merger Agreement may be terminated and the Merger may
be abandoned by the Board of Directors of either SCOTTS OHIO or
SCOTTS DELAWARE, or both, notwithstanding approval of this Merger
Agreement by the sole shareholder of SCOTTS OHIO or by the stock-
holders of SCOTTS DELAWARE, or by both.
Section 3.04. Counterparts. This Merger Agreement may
be executed in one or more counterparts, each of which shall be
deemed to be a duplicate original, but all of which, taken
together, shall be deemed to constitute a single instrument.
Section 3.05. Statutory Agent in Ohio. The name and
address of the statutory agent in Ohio upon whom any process,
notice or demand against SCOTTS DELAWARE or the Surviving
Corporation may be served are:
CT Corporation System
3810 Carew Tower
Cincinnati, Ohio 45202
Section 3.06. Designated Agent in Delaware. The
Surviving Corporation agrees that it may be served with process
in the State of Delaware in any proceeding for enforcement of any
obligation of SCOTTS DELAWARE, as well as for enforcement of any
obligation of the Surviving Corporation arising from the Merger,
and the Surviving Corporation irrevocably appoints the Secretary
of State of the State of Delaware as its agent to accept service
of process in any such suit or other proceeding; a copy of such
process shall be mailed by the Secretary of State of the State of
Delaware to:
Craig D. Walley
Vice President and Secretary
The Scotts Company
14111 Scottslawn Road
Marysville, Ohio 43041
IN WITNESS WHEREOF, SCOTTS DELAWARE and SCOTTS OHIO
have caused this Merger Agreement to be signed by their
respective duly authorized officers as of the date first above
written.
THE SCOTTS COMPANY,
Attest: an Ohio corporation
By: By:
Craig D. Walley, Secretary Tadd C. Seitz, President
THE SCOTTS COMPANY,
Attest: a Delaware corporation
By: By:
Craig D. Walley, Secretary Tadd C. Seitz, President
THE SCOTTS COMPANY
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS TO BE HELD
ON SEPTEMBER 20, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder(s) of shares of Class A Common Stock of
The Scotts Company (the "Company") hereby appoints Craig D.
Walley and Paul D. Yeager, and each of them, the Proxies of the
undersigned, with full power of substitution, to attend the
Special Meeting of Stockholders of the Company to be held at the
Dwight G. Scott Research Center, R&D Auditorium, 14310 Scottslawn
Road, Marysville, Ohio 43041, on Tuesday, September 20, 1994, at
9:00 a.m., local time, and any adjournment or adjournments
thereof, and to vote all of the shares of Class A Common Stock
which the undersigned is entitled to vote at such Special Meeting
or at any adjournment or adjournments thereof:
1. To approve a Reincorporation Proposal which provides, among
other things, for the change of the Company's state of
incorporation from Delaware to Ohio through a merger of the
Company into The Scotts Company, an Ohio corporation, and
related changes in the Company's organizational documents.
___ FOR ___ AGAINST ___ ABSTAIN
2. In their discretion, the Proxies are authorized to vote upon
such other matters (none known at the time of solicitation
of this proxy) as may properly come before the Special
Meeting or any adjournment or adjournments thereof.
WHERE A CHOICE IS INDICATED, THE SHARES REPRESENTED BY THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED OR NOT VOTED AS
SPECIFIED. IF NO CHOICE IS INDICATED, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED "FOR" PROPOSAL NO.
1. IF ANY OTHER MATTERS ARE PROPERLY BROUGHT BEFORE THE
SPECIAL MEETING OR ANY ADJOURNMENT OR ADJOURNMENTS THEREOF,
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE
DISCRETION OF THE PROXIES ON SUCH MATTERS AS THE DIRECTORS
MAY RECOMMEND.
(THIS PROXY CONTINUES AND MUST BE SIGNED AND DATED ON THE REVERSE SIDE)
The undersigned hereby acknowledges receipt of the Notice of
the Special Meeting of Stockholders, dated August 16, 1994, and
the Proxy Statement furnished therewith. Any proxy heretofore
given to vote the shares of Class A Common Stock which the
undersigned is entitled to vote at the Special Meeting of
Stockholders is hereby revoked.
Date________________________________________
____________________________________________
____________________________________________
(Stockholder sign name exactly as
it is stenciled hereon.)
NOTE: Please fill in, sign and
return this proxy in the
enclosed envelope. When
signing as Attorney,
Executor, Administrator,
Trustee or Guardian,
please give full title as
such. If signer is a
corporation, please sign
the full corporate name
by authorized officer.
Joint Owners should sign
individually. (Please
note any change of
address on this proxy.)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE SCOTTS COMPANY
PROXY CARD
THE SCOTTS COMPANY
