SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-B
REGISTRATION OF SECURITIES OF CERTAIN SUCCESSOR ISSUERS
Filed Pursuant to Section 12(b) or (g) of
The Securities Exchange Act of 1934
The Scotts Company
(Exact name of Registrant as specified in its charter)
Ohio 31-1199481
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14111 Scottslawn Road, Marysville, Ohio 43041
(Address of principal executive offices) (Zip Code)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
9 7/8% Senior Subordinated Notes New York Stock Exchange
Due August 1, 2004
($100,000,000 aggregate
principal amount outstanding
at September 20, 1994)
Securities to be registered pursuant to Section 12(g) of the Act:
Common Shares, Without Par Value
(18,667,064 Common Shares outstanding at September 20, 1994)
(Title of class)
Index to Exhibits appears beginning at Page 6.
Page 1 of 70 Pages.
Item 1. General Information.
(a) The Scotts Company (the "Registrant") is an Ohio
corporation which was incorporated on August 15, 1994.
(b) The fiscal year of the Registrant ends on September 30.
Item 2. Transaction of Succession.
(a) The Scotts Company, a Delaware corporation ("Scotts
Delaware") and the predecessor of the Registrant, had securities
registered pursuant to Section 12(b) and pursuant to Section 12(g) of
the Securities Exchange Act of 1934, as amended (the "Act"), at the time
of the succession.
(b) On September 20, 1994, Scotts Delaware was merged with
and into the Registrant (the "Merger") and each share of Class A Common
Stock, par value $.01 per share, of Scotts Delaware was converted into
one fully paid and nonassessable common share, without par value, of the
Registrant. In addition, each 9 7/8% Senior Subordinated Note Due
August 1, 2004 of Scotts Delaware was assumed by, and became the
obligation of, the Registrant.
Item 3. Securities to be Registered.
The following tables set forth, as of September 20, 1994, with
respect to each class of securities to be registered, the number of
securities (1) presently authorized, (2) presently issued, (3) presently
outstanding and (4) presently held in treasury:
<TABLE>
<CAPTION>
Authorized
by Amended
Articles of Held in
Class of Shares Incorporation Issued Outstanding Treasury
<S> <C> <C> <C> <C>
Common Shares, 35,000,000 21,081,959 18,667,064 2,414,895
Without Par
Value
Authorized
by
Subordinated Held in
Class of Notes Indenture Issued Outstanding Treasury
9 7/8% Senior $100,000,000 $100,000,000 $100,000,000 $ 0
Subordinated
Notes Due
August 1, 2004
</TABLE>
Item 4. Description of Registrant's Securities To Be Registered.
Common Shares
The Amended Articles of Incorporation of the Registrant (the
"Articles") authorize the issuance of 35,000,000 common shares, each
without par value (the "Common Shares"), of which 18,667,064 were issued
and outstanding as of September 20, 1994, the effective date of the
Merger. The following statements with respect to the Common Shares are
brief summaries of the provisions of the Articles and the Registrant's
Regulations (the "Regulations"), which are filed as exhibits hereto, and
the following statements are qualified in their entirety by reference
thereto.
Dividend Rights
Holders of outstanding Common Shares are entitled to receive
dividends when and if declared by the Board of Directors of the
Registrant from funds legally available therefor. An Ohio corporation,
such as the Registrant, 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 aggregated 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. The Registrant must notify its shareholders if a dividend
on the Common Shares is paid out of capital surplus.
Voting Rights
Each Common Share entitles the holder thereof (the "Common
Shareholder") to one vote for the election of directors and for all
other matters submitted to the shareholders of the Registrant for their
consideration. Common Shareholders are not entitled to vote
cumulatively in the election of directors.
The Regulations provide that all elections of directors will
be determined by a plurality of the votes cast. Any other matter
submitted to the shareholders of the Registrant for their vote will be
decided by the vote of such proportion as is required by law, the
Articles or the Regulations.
The Regulations also provide that they 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
Registrant 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 Registrant on such proposal.
Removal of Directors
A director or directors of the Registrant may be removed from
office, with or without assigning any cause, 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 Registrant to elect directors in
place of those to be removed. In the 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 will be deemed to create a vacancy in the
board.
Preemptive Rights
Common Shareholders do not have preemptive rights.
Repurchases
The Registrant has the right to repurchase, if and when any
Common Shareholder desires to sell, or on the happening of any event is
required to sell, Common Shares previously issued by the Registrant;
provided, however, that the Registrant may not repurchase any Common
Shares if immediately thereafter the Registrant's assets would be less
than its liabilities plus its stated capital, if any, or if the
Registrant is insolvent or would be rendered insolvent by such a
repurchase.
Liquidation Rights
In the event of liquidation, after payment in full of all
amounts required to be paid to creditors or provision for such payment,
each Common Shareholder is entitled to share ratably, according to the
number of Common Shares held by such Common Shareholder, in all
remaining assets of the Registrant legally available for distribution to
its shareholders.
9 7/8% Senior Subordinated Notes Due August 1, 2004
The description of the 9 7/8% Senior Subordinated Notes Due
August 1, 2004 set forth in the Registration Statement on Form S-3 filed
with the Securities and Exchange Commission (the "Commission") by Scotts
Delaware on June 1, 1994 (Registration No. 33-53941) is incorporated
herein by this reference.
Item 5. Financial Statements and Exhibits.
(a) Financial Statements.
No response required.
(b) Exhibits.
See Index to Exhibits beginning at page 6.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this application
for registration (or registration statement) to be signed on its behalf
by the undersigned, thereunto duly authorized.
THE SCOTTS COMPANY
Date: January 16, 1995 By: /s/ Tadd C. Seitz
Tadd C. Seitz, Chairman of
the Board and Chief
Executive Officer
INDEX TO EXHIBITS
Exhibit No. Description Location
2 Agreement of Merger, dated as Incorporated herein by
of August 16, 1994, by and reference to
between The Scotts Company, a Registrant's Current
Delaware corporation ("Scotts Report on Form 8-K
Delaware"), and The Scotts filed on September 30,
Company, an Ohio corporation 1994 (File No. 0-19768)
("Registrant") [Exhibit 2(a)]
3(a) Amended Articles of Incorporated herein by
Incorporation of Registrant reference to
Registrant's Annual
Report on Form 10-K for
the fiscal year ended
September 30, 1994
(File No. 0-19768)
[Exhibit 3(a)]
3(b) Regulations of Registrant Incorporated herein by
reference to
Registrant's Annual
Report on Form 10-K for
the fiscal year ended
September 30, 1994
(File No. 0-19768)
[Exhibit 3(b)]
4(a) Third Amended and Restated Incorporated herein by
Revolving Credit Agreement, reference to Scotts
dated as of April 7, 1992, Delaware's Quarterly
among Scotts Delaware, The O.M. Report on Form 10-Q for
Scott & Sons Company ("OMS"), the fiscal quarter
Manufacturers Hanover Trust ended March 28, 1992
Company ("MHT"), as agent, and (File No. 0-19768)
the banks parties thereto [Exhibit 10(a)]
4(b) First Amendment and Waiver, Incorporated herein by
dated as of November 19, 1992, reference to Scotts
to the Third Amended and Delaware's Current
Restated Credit Agreement among Report on Form 8-K
Scotts Delaware, OMS, the banks dated December 2, 1992
listed therein and Chemical (File No. 0-19768)
Bank, as agent [Exhibit 4(a)]
4(c) Second Amendment, dated as of Incorporated herein by
February 23, 1993, to the Third reference to Scotts
Amended and Restated Credit Delaware's Annual
Agreement, among Scotts Report on Form 10-K for
Delaware, OMS, the banks listed the fiscal year ended
therein and Chemical Bank, as September 30, 1993
agent (File No. 0-19768)
[Exhibit 4(c)]
4(d) Third Amendment to the Third Incorporated herein by
Amended and Restated Credit reference to Scotts
Agreement, dated December 16, Delaware's Annual
1993, among Scotts Delaware, Report on Form 10-K for
OMS, the banks listed therein the fiscal year ended
and Chemical Bank, as agent September 30, 1993
(File No. 0-19768)
[Exhibit 4(d)]
4(e) Fourth Amendment and Consent, Incorporated herein by
dated as of July 5, 1994, to reference to
the Third Amended and Restated Registrant's Annual
Credit Agreement among Scotts Report on Form 10-K for
Delaware, OMS, the banks listed the fiscal year ended
therein and Chemical Bank, as September 30, 1994
agent (File No. 0-19768)
[Exhibit 4(e)]
4(f) Fifth Amendment and Consent, Incorporated herein by
dated as of September 20, 1994, reference to
to the Third Amended and Registrant's Annual
Restated Credit Agreement among Report on Form 10-K for
Scotts Delaware, OMS, the banks the fiscal year ended
listed therein and Chemical September 30, 1994
Bank, as agent (File No. 0-19768)
[Exhibit 4(f)]
4(g) Subordinated Indenture, dated Incorporated herein by
as of June 1, 1994, among reference to Scotts
Scotts Delaware, OMS and Delaware's Registration
Chemical Bank, as trustee Statement on Form S-3
filed June 1, 1994
(Registration No. 33-
53941) [Exhibit 4(b)]
4(h) First Supplemental Indenture, Incorporated herein by
dated as of July 12, 1994, reference to Scotts
among Scotts Delaware, OMS and Delaware's Current
Chemical Bank, as trustee Report on Form 8-K
dated July 18, 1994
(File No. 0-19768)
[Exhibit 4.1]
4(i) Second Supplemental Indenture, Incorporated herein by
dated as of September 20, 1994, reference to
among Registrant, OMS, Scotts Registrant's Annual
Delaware and Chemical Bank, as Report on Form 10-K for
trustee the fiscal year ended
September 30, 1994
(File No. 0-19768)
[Exhibit 4(i)]
4(j) Third Supplemental Indenture, Incorporated herein by
dated as of September 30, 1994, reference to
among Registrant, OMS and Registrant's Annual
Chemical Bank, as trustee Report on Form 10-K for
the fiscal year ended
September 30, 1994
(File No. 0-19768)
[Exhibit 4(j)]
10(a) The Scotts Company Employees' Incorporated herein by
Pension Plan reference to
Registrant's Annual
Report on Form 10-K for
the fiscal year ended
September 30, 1994
(File No. 0-19768)
[Exhibit 10(a)]
10(b) Second Restatement of The Incorporated herein by
Scotts Company Profit Sharing reference to
and Savings Plan Registrant's Annual
Report on Form 10-K for
the fiscal year ended
September 30, 1994
(File No. 0-19768)
[Exhibit 10(b)]
10(c) Supplemental Indemnification Incorporated herein by
Agreement, dated as of November reference to Scotts
10, 1988, between RSL Holding Delaware's Current
Company, Inc. and OMS Report on Form 8-K
Acquisition Corp. ("Hyponex") dated November 9, 1988
(File No. 33-18713)
[Exhibit 2(d)]
10(d) Tax Administration Agreement, Incorporated herein by
dated November 10, 1988, reference to Scotts
between RSL Holding Company, Delaware's Annual
Inc. and Hyponex Report on Form 10-K for
the fiscal year ended
September 30, 1988
(File No. 33-18713)
[Exhibit 10(rr)]
10(e) Employment Agreement, dated as Incorporated herein by
of October 21, 1991, between reference to Scotts
OMS and Theodore J. Host Delaware's Annual
Report on Form 10-K for
the fiscal year ended
September 30, 1993
(File No. 0-19768)
[Exhibit 10(g)]
10(f) Stock Option Plan and Incorporated herein by
Agreement, dated as of reference to
January 9, 1992, between Scotts Registrant's Annual
Delaware and Theodore J. Host Report on Form 10-K for
the fiscal year ended
September 30, 1994
(File No. 0-19768)
[Exhibit 10(f)]
10(g) The O.M. Scott & Sons Company Incorporated herein by
Excess Benefit Plan reference to Scotts
Delaware's Annual
Report on Form 10-K for
the fiscal year ended
September 30, 1993
(File No. 0-19768)
[Exhibit 10(h)]
10(h) The Scotts Company 1992 Long Incorporated herein by
Term Incentive Plan reference to Scotts
Delaware's Registration
Statement on Form S-8
filed on March 26, 1993
(Registration No. 33-
60056) [Exhibit 4(f)]
10(i) O. M. Scott & Sons Company 1994 Incorporated herein by
Executive Annual Incentive Plan reference to Scotts
Delaware's Annual
Report on Form 10-K for
the fiscal year ended
September 30, 1994
(File No. 0-19768)
[Exhibit 10(i)]
11 Computation of Net Income Per Incorporated herein by
Common Share reference to
Registrant's Annual
Report on Form 10-K for
the fiscal year ended
September 30, 1994
(File No. 0-19768)
[Exhibit 11(a)]
21 Subsidiaries of Registrant Incorporated herein by
reference to
Registrant's Annual
Report on Form 10-K for
the fiscal year ended
September 30, 1994
(File No. 0-19768)
[Exhibit 21]
99 Notice of Special Meeting of Pages 11 through 70
Stockholders and Proxy
Statement, dated August 16,
1994, provided to stockholders
of Scotts Delaware in
connection with Scotts
Delaware's Special Meeting of
Stockholders held on
September 20, 1994
EXHIBIT 99
Notice of Special Meeting of Stockholders and
Proxy Statement, dated August 16, 1994, provided
to stockholders of Scotts Delaware in connection
with Scotts Delaware's Special Meeting of
Stockholders held on September 20, 1994
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<PAGE>
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 18,667,064 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 for action at the Special Meeting, 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
is 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)
<CAPTION>
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)
<S> <C> <C> <C> <C>
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 1.2%
Tadd C. Seitz(6) 462,454 57,266 519,720 2.8%
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 8.3%
</TABLE>
______________________
(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 18,667,064
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.
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 12.
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 12.
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 12.
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 14.
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 15 and "Comparison of Shareholders'
Rights Under Ohio and Delaware Law" beginning at page 16.
Provisions Applicable to the Provisions Applicable to Scotts
Company Before the Ohio After the Reincorporation
Reincorporation Under the DGCL Under the OGCL and the New
and the Present Charter and Articles and New Regulations
Present By-Laws
1. Directors serve one-year
terms 1. Directors serve one-year
terms
2. Affirmative vote of not
less than a majority of
voting power required to
adopt amendments to Present
Charter and Present By-
Laws, approve mergers and
consolidations, approve the
dissolution of the Company,
or approve the sale, lease
or exchange of all or
substantially all of the
assets of the Company 2. Affirmative vote of not
less than 2/3 of voting
power required to adopt
amendments to New Articles,
approve mergers and
consolidations, approve the
dissolution of Scotts Ohio,
or approve the sale, lease,
exchange, transfer or other
disposition of 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
stockholders may be called
by persons holding at least
a majority of voting shares 3. Special meetings of
shareholders may be called
by persons holding at least
a majority of voting shares
4. Section 203 of DGCL
prohibits business
combinations between the
Company and a 15%
stockholder for a period of
three years after the
stockholder becomes such,
unless certain conditions
are satisfied 4. Chapter 1704 of OGCL
prohibits business
combinations and certain
other transactions between
Scotts Ohio and a 10%
shareholder for a period of
three years after the
shareholder becomes such,
unless certain conditions
are satisfied
5. Present By-Laws may be
amended by Board of
Directors without
stockholder action 5. Under Section 1701.831 of
OGCL, person undertaking 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
stockholders without a
meeting with written
consent of holders of
shares having number of
votes necessary to
authorize action at a
meeting 6. New Regulations may be
amended only by
shareholders
7. Stockholders have no right
of cumulative voting in the
election of directors 7. Action may be taken by
shareholders without a
meeting only by unanimous
written consent
8. Directors may be removed
prior to expiration of
term, with or without
cause, by holders of a
majority of voting power of
the Company 8. Shareholders have no right
of cumulative voting in the
election of directors
9. Vacancies in the Board of
Directors may be filled by
vote of a majority of
directors then in office 9. Directors may be removed
prior to expiration of
term, with or without
cause, by holders of a
majority of voting power of
Scotts Ohio
10. Personal liability of
directors for monetary
damages for breach of
fiduciary duty eliminated
except in the 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 10. Vacancies in the Board of
Directors may be filled by
vote of a majority of
directors then in office
11. Broad mandatory
indemnification of
directors and officers
consistent with DGCL 11. Director not liable for
monetary damages unless
proved by clear and
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
35,000,000 Scotts Delaware
Shares, 35,000,000 shares
of Class B Common Stock,
$.01 par value, and
10,000,000 shares of
Preferred Stock, $.01 par
value 12. Broad mandatory
indemnification of
directors and officers
consistent with OGCL
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 20.
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 20.
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 21.
Preemptive Rights. Neither the stockholders of the
Company nor the shareholders of Scotts Ohio have preemptive rights.
See "Preemptive Rights" at page 23.
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 17.
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 17.
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. Each director 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 23.
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 23.
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 15.
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 a 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 15, "Amendment to
Present Charter and New Articles" at page 16, "Mergers and
Consolidations" at page 16, and "Other Corporate Transactions" at
page 17.
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 15.
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 August 16, 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 10.
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 9.
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 the 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 Scotts 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 Securities Exchange Act of 1934 (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 approved 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
indemnify 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 indemnify 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
executive officers and directors of the Company and their
respective associates held approximately 6.7% of the outstanding
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
Annex A
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 corpora-
tion 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 obligations 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 . . . . . . . . . . . . . . . B-1
1.02 Calling of Meetings . . . . . . . . . . . . . B-1
1.03 Place of Meetings . . . . . . . . . . . . . . B-1
1.04 Notice of Meetings. . . . . . . . . . . . . . B-1
1.05 Waiver of Notice. . . . . . . . . . . . . . . B-2
1.06 Quorum. . . . . . . . . . . . . . . . . . . . B-2
1.07 Votes Required. . . . . . . . . . . . . . . . B-2
1.08 Order of Business . . . . . . . . . . . . . . B-2
1.09 Shareholders Entitled to Vote . . . . . . . . B-3
1.10 Proxies . . . . . . . . . . . . . . . . . . . B-3
1.11 Inspectors of Election. . . . . . . . . . . . B-3
ARTICLE TWO
DIRECTORS
2.01 Authority and Qualifications. . . . . . . . . B-3
2.02 Number of Directors and Term of
Office. . . . . . . . . . . . . . . . . . . . B-3
2.03 Election. . . . . . . . . . . . . . . . . . . B-4
2.04 Removal . . . . . . . . . . . . . . . . . . . B-4
2.05 Vacancies . . . . . . . . . . . . . . . . . . B-4
2.06 Meetings. . . . . . . . . . . . . . . . . . . B-5
2.07 Notice of Meetings. . . . . . . . . . . . . . B-5
2.08 Waiver of Notice. . . . . . . . . . . . . . . B-5
2.09 Quorum. . . . . . . . . . . . . . . . . . . . B-6
2.10 Executive and Other Committees. . . . . . . . B-6
2.11 Compensation. . . . . . . . . . . . . . . . . B-6
2.12 By-Laws . . . . . . . . . . . . . . . . . . . B-7
<PAGE>
ARTICLE THREE
OFFICERS
3.01 Officers. . . . . . . . . . . . . . . . . . . B-7
3.02 Tenure of Office. . . . . . . . . . . . . . . B-7
3.03 Duties of the Chairman of the Board . . . . . B-7
3.04 Duties of the President . . . . . . . . . . . B-8
3.05 Duties of the Vice Presidents . . . . . . . . B-8
3.06 Duties of the Secretary . . . . . . . . . . . B-8
3.07 Duties of the Treasurer . . . . . . . . . . . B-9
ARTICLE FOUR
SHARES
4.01 Certificates. . . . . . . . . . . . . . . . . B-10
4.02 Transfers . . . . . . . . . . . . . . . . . . B-10
4.03 Transfer Agents and Registrars. . . . . . . . B-11
4.04 Lost, Wrongfully Taken or Destroyed
Certificates. . . . . . . . . . . . . . . . . B-11
ARTICLE FIVE
INDEMNIFICATION AND INSURANCE
5.01 Mandatory Indemnification . . . . . . . . . . B-11
5.02 Court-Approved Indemnification. . . . . . . . B-12
5.03 Indemnification for Expenses. . . . . . . . . B-13
5.04 Determination Required. . . . . . . . . . . . B-13
5.05 Advances for Expenses . . . . . . . . . . . . B-14
5.06 Article FIVE Not Exclusive. . . . . . . . . . B-14
5.07 Insurance . . . . . . . . . . . . . . . . . . B-14
5.08 Certain Definitions . . . . . . . . . . . . . B-15
5.09 Venue . . . . . . . . . . . . . . . . . . . . B-15
ARTICLE SIX
MISCELLANEOUS
6.01 Amendments. . . . . . . . . . . . . . . . . . B-16
6.02 Action by Shareholders or Directors
Without a Meeting . . . . . . . . . . . . . . B-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.
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.
<PAGE>
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.
Annex C
AGREEMENT OF MERGER
AGREEMENT OF MERGER ("Merger Agreement"), dated as of
August 16, 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 resolu-
tion 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 Corpora-
tion") 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") repre-
senting 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 there-
after 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, as supplemented, 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 certificates
of merger, as contemplated by Section 1.07 of this Merger Agree-
ment, 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 Corpora-
tion 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:/s/ Craig D. Walley By:/s/ Tadd C. Seitz
Craig D. Walley, Secretary Tadd C. Seitz, Chairman and
Chief Executive Officer
THE SCOTTS COMPANY,
Attest: a Delaware corporation
By:/s/ Craig D. Walley By:/s/ Tadd C. Seitz
Craig D. Walley, Secretary Tadd C. Seitz, Chairman and
Chief Executive Officer
Annex I
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 obligations 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.
