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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
October 4, 1999 (October 1, 1999)
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The Scotts Company
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(Exact name of registrant as specified in its charter)
Ohio 1-11593 31-1414921
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
41 South High Street, Suite 3500, Columbus Ohio 43215
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (614) 719-5500
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Not Applicable
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(Former name or former address, if changed since last report.)
Index to Exhibits is on Page 5.
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Item 5. Other Events
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Effective October 1, 1999, the preferred shareholders of The
Scotts Company converted all of their Class A Convertible Preferred Shares into
approximately 10.1 million common shares of Scotts. In exchange for this early
conversion, the preferred shareholders received an aggregate payment of
approximately $6.4 million, representing the amount of the dividends on the
Preferred Shares that would otherwise have been payable through May 2000. Scotts
also agreed to accelerate, from May 2000 (the month during which the Preferred
Shares could first be redeemed by Scotts) to October 1, 1999, the termination of
certain of the standstill provisions in the Amended and Restated Agreement and
Plan of Merger, dated as of May 19, 1995 (the "Miracle-Gro Merger Agreement"),
among Scotts' Miracle-Gro Products, Inc. (as successor to ZYX Corporation and
Stern's Miracle-Gro Products, Inc.), Miracle-Gro Lawn Products Inc., Miracle-Gro
Products Limited, Hagedorn Partnership, L.P., the general partners of Hagedorn
Partnership, L.P., Horace Hagedorn, Community Funds, Inc., and John Kenlon and
Scotts. These transactions were consummated pursuant to the terms of the First
Amendment to Amended and Restated Agreement and Plan of Merger, dated as of
October 1, 1999 (the "First Amendment"), a copy of which is filed as Exhibit 2
to this Form 8-K.
Under the terms of the First Amendment, the voting and transfer
restrictions on Hagedorn Partnership, L.P., Community Funds, Inc., Horace
Hagedorn and John Kenlon (collectively, the "Miracle-Gro Shareholders")
contained in the Miracle-Gro Merger Agreement terminated as of October 1, 1999.
The limitations on the ability of the Miracle-Gro Shareholders to acquire
additional voting securities of Scotts contained in the Miracle-Gro Merger
Agreement terminated as of October 1, 1999, except for the restriction under
which the Miracle-Gro Shareholders may not acquire, directly or indirectly,
beneficial ownership of Voting Stock (as that term is defined in the Miracle-Gro
Merger Agreement as amended) representing more than 49% of the total voting
power of the outstanding Voting Stock except pursuant to a tender offer for 100%
of that total voting power, which tender offer is made at a price per share
which is not less than the market price per share on the last trading day before
the announcement of the tender offer and conditioned upon the receipt of at
least 50% of the Voting Stock beneficially owned by Scotts shareholders other
than the Miracle-Gro Shareholders and their affiliates and associates.
Further information about the conversion of the Convertible
Preferred Stock and the related transactions is included in the Press Release
issued by Scotts on October 4, 1999, a copy of which is included as Exhibit 99
to this Form 8-K.
Item 7. Financial Statements and Exhibits.
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(a) and (b) Not applicable.
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(c) Exhibits:
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Exhibit No. Description
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2 First Amendment to Amended and Restated
Agreement and Plan of Merger, made and
entered into as of October 1, 1999,
among The Scotts Company, Scotts'
Miracle-Gro Products, Inc. (as successor
to ZYX Corporation and Stern's
Miracle-Gro Products, Inc.), Miracle-Gro
Lawn Products Inc., Miracle-Gro Products
Limited, Hagedorn Partnership, L.P.,
Community Funds, Inc., Horace Hagedorn
and John Kenlon, and James Hagedorn,
Katherine Hagedorn Littlefield, Paul
Hagedorn, Peter Hagedorn, Robert
Hagedorn and Susan Hagedorn
99 Press Release issued October 4, 1999
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
THE SCOTTS COMPANY
Date: October 4, 1999 By: /s/ Charles M. Berger
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Its: Chairman, President and Chief Executive Officer
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INDEX TO EXHIBITS
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Exhibit No. Description Page No.
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2 First Amendment to Amended and Restated *
Agreement and Plan of Merger, made and
entered into as of October 1, 1999, among
The Scotts Company, Scotts' Miracle-Gro
Products, Inc. (as successor to ZYX
Corporation and Stern's Miracle-Gro
Products, Inc.), Miracle-Gro Lawn
Products Inc., Miracle-Gro Products
Limited, Hagedorn Partnership, L.P.,
Community Funds, Inc., Horace Hagedorn
and John Kenlon, and James Hagedorn,
Katherine Hagedorn Littlefield, Paul
Hagedorn, Peter Hagedorn, Robert Hagedorn
and Susan Hagedorn
99 Press Release issued October 4, 1999 *
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*Filed herewith.
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Exhibit 2
FIRST AMENDMENT
TO
AMENDED AND RESTATED AGREEMENT
AND PLAN OF MERGER
THIS FIRST AMENDMENT to the Amended and Restated Agreement and Plan of
Merger is made and entered into as of the 1st day of October, 1999, by and among
THE SCOTTS COMPANY ("Scotts"), SCOTTS' MIRACLE-GRO PRODUCTS, INC. (as successor
to ZYX Corporation and Stern's Miracle-Gro Products, Inc., the "Company"),
MIRACLE-GRO LAWN PRODUCTS INC. ("Miracle-Gro New York"), MIRACLE-GRO PRODUCTS
LIMITED ("Miracle-Gro UK" and, together with the Company and Miracle-Gro New
York, the "Miracle-Gro Constituent Companies"), HAGEDORN PARTNERSHIP, L.P. (the
"Partnership"), COMMUNITY FUNDS, INC. (the "Charity"), Horace Hagedorn and John
Kenlon (together with the Partnership and Horace Hagedorn (the "Preferred
Shareholders")) and James Hagedorn, Katherine Hagedorn Littlefield, Paul
Hagedorn, Peter Hagedorn, Robert Hagedorn and Susan Hagedorn (the "General
Partners").
W I T N E S S E T H :
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WHEREAS, the parties hereto are the surviving parties to an Amended and
Restated Agreement and Plan of Merger dated as of May 19, 1995 (the "Miracle-Gro
Merger Agreement");
WHEREAS, in connection with the transactions contemplated by the
Miracle-Gro Merger Agreement and certain subsequent transfers permitted by the
Miracle-Gro Merger Agreement, the Preferred Shareholders acquired an aggregate
of 195,000 shares of Class A Convertible Preferred Stock, without par value (the
"Convertible Preferred Stock"), of Scotts;
WHEREAS, on April 27, 1999, John Kenlon converted 571 shares of
Convertible Preferred Stock and on August 30, 1999, the Partnership converted
3,135 shares of Convertible Preferred Stock, leaving 191,294 outstanding shares
of Convertible Preferred Stock as of the date of this First Amendment;
WHEREAS, pursuant to its terms, the Convertible Preferred Stock may not
be redeemed by Scotts prior to May 31, 2000;
WHEREAS, Scotts desires that the Preferred Shareholders convert all
191,294 outstanding shares of Convertible Preferred Stock on October 1, 1999
(the "Conversion Date");
WHEREAS, pursuant to the terms, and subject to the conditions, set
forth herein, the Preferred Shareholders desire to convert all 191,294
outstanding shares of Convertible Preferred Stock on the Conversion Date; and
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WHEREAS, in connection with, and as a condition to, such conversion,
the parties hereto desire to amend the Miracle-Gro Merger Agreement to amend
certain provisions contained in Article VI thereof.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties do hereby agree as
follows:
Section 1. Conversion of Convertible Preferred Stock.
(a) Subject to the terms and conditions hereof, on the
Conversion Date, each of the Preferred Shareholders shall surrender a
certificate or certificates representing all of the shares of Convertible
Preferred Stock held by such Preferred Shareholder, duly endorsed, at the
principal offices of Scotts and shall give written notice to Scotts at such
office that such Preferred Shareholder elects to convert the same.
(b) The parties hereto acknowledge and agree that, pursuant to
the terms of the Convertible Preferred Stock, conversion of the Convertible
Preferred Stock shall be deemed to have been made immediately prior to the close
of business on the Conversion Date, and the Preferred Shareholder surrendering
such Convertible Preferred Stock shall be treated for all purposes as the record
holder of the common shares of Scotts issuable upon conversion of such shares of
Convertible Preferred Stock on such date.
(c) The parties further acknowledge and agree that the current
Conversion Price of the Convertible Preferred Stock is $19 per common share, and
the aggregate number of common shares into which each Preferred Shareholder's
shares of Convertible Preferred Stock are currently convertible is set forth on
Schedule A attached hereto.
(d) Scotts shall, on the Conversion Date, issue and deliver to
each Preferred Shareholder that surrenders shares of Convertible Preferred Stock
(or to any other person specified in the notice delivered by such Preferred
Shareholder), a certificate or certificates for the number of common shares of
Scotts to which such Preferred Shareholder shall be entitled and a check payable
to such Preferred Shareholder for any cash amounts payable as the result of a
conversion into fractional common shares, calculated as provided by the terms of
the Convertible Preferred Stock. Unless otherwise requested by any Preferred
Shareholder, Scotts shall issue a separate certificate for common shares of
Scotts in respect of each certificate representing shares of Convertible
Preferred Stock surrendered for conversion by each Preferred Shareholder.
Section 2. Payment Upon Conversion.
(a) Pursuant to the terms of the Convertible Preferred Stock, on
September 30, 1999, Scotts shall pay to the holders of record as they appear on
the register for the Convertible Preferred Stock as of September 15, 1999, the
applicable quarterly cumulative dividend.
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(b) In addition to such quarterly cumulative dividend, Scotts
shall on the Conversion Date pay (by wire transfer of same day funds) to each
Preferred Shareholder who surrenders all of such Preferred Shareholder's shares
of Convertible Preferred Stock in accordance with Section 1(a) above, the amount
in cash set forth opposite such Preferred Shareholder's name on Schedule A,
which represents the dividends that would otherwise have been payable pursuant
to the terms of the Convertible Preferred Stock from the Conversion Date through
May 30, 2000.
Section 3. Representations and Warranties of the Preferred
Shareholders.
Each Preferred Shareholder severally represents and warrants to Scotts
as follows:
(a) Such Preferred Shareholder is the owner of the number of
shares of Convertible Preferred Stock set forth opposite such Preferred
Shareholder's name on Schedule A, free and clear of any liens, encumbrances,
pledges, options, claims, charges, assessments and restrictions.
(b) In the case of each of Horace Hagedorn and John Kenlon, such
Preferred Shareholder has full power and authority to convert his shares of
Convertible Preferred Stock. In the case of the Partnership, the Partnership has
full partnership power and authority to convert its shares of Convertible
Preferred Stock.
(c) This First Amendment has been duly authorized by all
necessary partnership action of the Partnership.
(d) This First Amendment constitutes the legal, valid and
binding obligation of such Preferred Shareholder, enforceable against such
Preferred Shareholder in accordance with its terms.
Section 4. Representations and Warranties of Scotts. Scotts
represents and warrants to the Preferred Shareholders as follows:
(a) After common shares of Scotts have been issued and delivered
by Scotts to each Preferred Shareholder in the aggregate number set forth on
Schedule A, upon the conversion of shares of Convertible Preferred Stock held by
such Preferred Shareholder in accordance with Section 1(a) above, such common
shares will be duly authorized, validly issued and non-assessable.
(b) This First Amendment has been duly authorized by all
necessary corporate action of Scotts and no shareholder approval of this First
Amendment is required.
(c) This First Amendment constitutes the legal, valid and
binding obligation of Scotts, enforceable against Scotts in accordance with its
terms.
(d) Scotts has not taken, or caused or permitted to be taken,
any action that would require an adjustment in the Conversion Price of the
Convertible Preferred Stock.
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Section 5. Amendments to Miracle-Gro Merger Agreement.
(a) The text of Sections 6.02(b), 6.06, 6.08, 6.09 and 6.10 of
the Miracle-Gro Merger Agreement, including, in the case of Sections 6.06, 6.08,
6.09 and 6.10, the headings thereof, shall be of no further force and effect
from and after October 1, 1999.
(b) The first sentence of Section 6.07 of the Miracle-Gro Merger
Agreement is hereby amended by deleting the reference to "the fifth anniversary
of the Effective Time" contained therein and by replacing such reference with
the words "October 1, 1999."
Section 6. Conditions Precedent to the Obligations of the
Preferred Shareholders and Scotts.
(a) Conditions Precedent to Each Preferred Shareholder's
Obligation. The obligation of each Preferred Shareholder to consummate the
conversion of such Preferred Shareholder's shares of Convertible Preferred Stock
contemplated by Section 1 of this First Amendment is subject to the satisfaction
on or before the Conversion Date of the following conditions:
(i) The representations and warranties of Scotts made in
this First Amendment shall be true and correct in all
material respects on and as of the Conversion Date,
as though made on and as of the Conversion Date, and
Scotts shall have delivered a certificate executed by
a duly authorized officer of Scotts to such effect.
(ii) No event requiring an adjustment in the Conversion
Price for the Convertible Preferred Stock on the
Conversion Date shall have occurred.
(b) Conditions Precedent to Scotts' Obligation. The obligation
of Scotts to consummate the transactions contemplated by this First Amendment is
subject to the satisfaction on or before the Conversion Date of the following
conditions:
(i) The representations and warranties of the Preferred
Shareholders made in this First Amendment shall be
true and correct in all material respects on and as
of the Conversion Date, as though made on and as of
the Conversion Date, and each Preferred Shareholder
shall have delivered a certificate to such effect,
executed by the Preferred Shareholder in the case of
Horace Hagedorn and John Kenlon, or by a duly
authorized partner in the case of the Partnership.
(ii) No event requiring an adjustment in the Conversion
Price for the Convertible Preferred Stock on the
Conversion Date shall have occurred.
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Section 7. Miscellaneous.
(a) This First Amendment may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same agreement.
(b) This First Amendment shall be construed in accordance with
and governed by the law of the State of Ohio.
(c) Except as expressly provided for in this First Amendment,
the Miracle-Gro Merger Agreement shall remain in full force and effect in
accordance with its terms.
[Remainder of page intentionally left blank; signatures on following page.]
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IN WITNESS WHEREOF, the parties have executed this First Amendment, or
caused this First Amendment to be executed by their duly authorized
representatives, as of the date first written above.
MIRACLE-GRO CONSTITUENT COMPANIES:
SCOTTS' MIRACLE-GRO PRODUCTS, INC.
By: /s/ John Kenlon
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Name: John Kenlon
Title: Chairman and Chief Executive Officer
MIRACLE-GRO LAWN PRODUCTS INC.
By: /s/ John Kenlon
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Name: John Kenlon
Title: Executive Vice President
MIRACLE-GRO PRODUCTS LIMITED
By: /s/ John Kenlon
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Name: John Kenlon
Title: Executive Vice President
CHARITY:
COMMUNITY FUNDS, INC.
By: /s/ Jane L. Wilton
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Name: Jane L. Wilton
Title: Secretary and General Counsel
PREFERRED SHAREHOLDERS:
/s/ Horace Hagedorn
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HORACE HAGEDORN
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HAGEDORN PARTNERSHIP, L.P.
By: /s/ Katherine Hagedorn Littlefield
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A General Partner
/s/ John Kenlon
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JOHN KENLON
GENERAL PARTNERS:
/s/ James Hagedorn
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JAMES HAGEDORN
/s/ Katherine Hagedorn Littlefield
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KATHERINE HAGEDORN LITTLEFIELD
/s/ Paul Hagedorn
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PAUL HAGEDORN
/s/ Peter Hagedorn
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PETER HAGEDORN
/s/ Robert Hagedorn
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ROBERT HAGEDORN
/s/ Susan Hagedorn
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SUSAN HAGEDORN
SCOTTS:
THE SCOTTS COMPANY
By: /s/ Charles M. Berger
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Name: Charles M. Berger
Title: Chairman, President and Chief Executive
Officer
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SCHEDULE A
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<TABLE>
<CAPTION>
Number of Common Shares Amount of Cash to be
Number of Shares of into which Said Shares of Received Pursuant to
Name of Preferred Convertible Preferred Convertible Preferred Stock Section 2(b) of
Shareholder Stock Owned are Convertible First Amendment
----------- ----------- --------------- ---------------
<S> <C> <C> <C>
Hagedorn Partnership, L.P. 187,523 9,869,631.58* $6,250,766.67
Horace Hagedorn 10 526.32* $ 333.33
John Kenlon 3,761 197,947.37* $ 125,366.67
</TABLE>
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* In lieu of fractional share interest, Preferred Shareholder will receive cash
equal to such fractional interest multiplied by "market price" (as determined
under terms of Convertible Preferred Stock) at time of conversion.
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Exhibit 99
THE SCOTTS COMPANY NEWS
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SCOTTS' PREFERRED SHAREHOLDERS CONVERT SHARES TO COMMON
COLUMBUS, OHIO -- October 4, 1999 -- The Scotts Company (NYSE:SMG) announced
that its preferred shareholders had converted all of their Class A Convertible
Preferred Shares ("Preferred Shares") into approximately 10.1 million common
shares today. In exchange for this early conversion, shareholders consisting
primarily of the Hagedorn Partnership, L.P., received a payment of approximately
$6.4 million, representing the amount of the dividends on the Preferred Shares
that would otherwise have been payable through May 2000. Scotts agreed to
accelerate the termination of certain standstill provisions in the Miracle-Gro
Merger Agreement that would otherwise have terminated in May 2000, the month the
Preferred Shares first could have been redeemed by the Company.
The Preferred Shares, issued in conjunction with Scotts' 1995 merger with
Miracle-Gro, had a face value of $195 million, and an annual dividend yield of
5% or approximately $9.8 million.
Upon completion of the conversion, Scotts expects its number of basic common
shares outstanding to be approximately 28.6 million shares.
In addition to reducing Scotts' future cash flow requirements by the amount of
the $9.8 million annual dividend, the conversion of the Preferred Shares will
simplify the Company's earnings per share calculation. Due to seasonal factors,
Scotts has historically recognized a loss in its first and fourth fiscal
quarters. In addition, due to the existence of the Preferred Shares and other
securities exercisable into common shares, the number of actual common shares
outstanding have differed significantly from the number that would be
outstanding on a fully diluted basis. Generally accepted accounting principles
require the calculation of diluted earnings per share in loss periods to be
based on the actual number of common shares outstanding, while the calculation
for profitable quarters is based on the number of common shares outstanding on a
diluted basis. As a result, the Company's annual diluted earnings per share did
not equal the sum of the individual quarters. The conversion of the Preferred
Shares will greatly reduce this difference (but will not reduce it entirely due
to other securities exercisable into common shares), and should improve the
calculation of Scotts' price earnings ratios and market capitalization by
investors, financial information services and media.
For more information on The Scotts Company including access to the company's SEC
filings, please visit our newly expanded investor relations web site at
www.smgnyse.com.
The Scotts Company is the world's leading supplier of consumer products for lawn
and garden care, with a full range of products for professional turf care and
horticulture as well. The company owns what are by far the industry's most
recognized brands. In the U.S., consumer awareness of the company's Scotts(R),
Miracle-Gro(R) and Ortho(R) brands outscores the nearest competitors in their
categories by several times, as does awareness of the consumer Roundup(R) brand
which is owned by Monsanto. Scotts has entered into an agreement with Monsanto
to be the exclusive marketing agent for consumer Roundup(R) worldwide. In the
U.K., Scotts' brands
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include Weedol(R) and Pathclear(R), the top-selling consumer herbicides;
Evergreen(R), the leading lawn fertilizer line, the Levington(R) line of lawn
and garden products; and Miracle-Gro(R), the leading plant fertilizer. The
Company's leading brands in continental Europe include KB(R) and Fertiligene(R)
in France and NexaLotte(R) and Celaflor(R) in Germany.
Statement under the Private Securities Litigation Act of 1995: Certain of the
statements contained in this press release, including, but not limited to,
information regarding the future economic performance and financial condition of
the company, the plans and objectives of the company's management, and the
company's assumptions regarding such performance and plans are forward looking
in nature. Actual results could differ from the forward looking information in
this release, due to a variety of factors, including, but not limited to:
o Continued marketplace acceptance of the Company's "pull" advertising
marketing strategies;
o The ability to maintain profit margins and to produce products and add
production capacity on a timely basis;
o Competition in the North American and European consumer and professional
segments;
o Competition between and the recent consolidation within the retail outlets
selling the Company's products;
o Public perceptions regarding the safety of the Company's products;
o Changes in economic conditions, interest rates and currency exchange rates
in the countries in which the company operates;
o The possibility of new competitors entering into the Company's business;
o The ability to improve processes and business practices to keep pace with
the economic, competitive and technological environment, including
successful completion of the Company's Enterprise Resource Planning
project;
o The Company's ability, and that of its third party suppliers and customers,
to address information technology issues related to the year 2000; and
o The ability to integrate several recent acquisitions.
Additional detailed information concerning a number of the important factors
that could cause actual results to differ materially from the forward looking
information contained in this release is readily available in the company's
publicly filed quarterly, annual, and other reports.
Contacts:
William Jenks
Broadgate Consultants, Inc.
(212) 232-2222
Rebecca Bruening
The Scotts Company
(614) 719-5607
